REG - Anpario PLC - Final Results
16/03/2022 07:00
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RNS Number : 9112E Anpario PLC 16 March 2022
Anpario plc
("Anpario", "Group" or the "Company")
Final results
Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable
feed additives for animal health, nutrition and biosecurity is pleased to
announce its full year results for the twelve months to 31 December 2021.
Financial highlights
- 9% increase in revenue to £33.4m (2020: £30.5m), constant
currency basis increase of 13% to £34.5m.
- 6% increase in adjusted EBITDA(1) to £7.0m (2020: £6.6m).
- 7% increase in profit before tax to £5.7m (2020: £5.4m).
- Basic earnings per share up 11% to 22.92p (2020: 20.63p).
- Diluted adjusted earnings(1) per share up 10% to 23.01p (2020:
20.98p).
- Proposed final dividend of 7.0p (2020: 6.25p) per share, total
dividend for the year 10.0p (2020: 9.0p) an increase of 11.1%.
- Cash balances of £15.5m at the year-end (2020: £15.8m).
Operational highlights
- Sales growth across all regions, Asia, Europe, Middle East &
Africa (MEA) and the Americas.
- Strong demand for Orego-Stim® and pHorce® with sales growth of
24% and 23% respectively.
- Mastercube® pellet binder grew by 37%, driven by demand for
natural products in aquaculture.
- 100% natural and sustainably sourced omega 3 supplement
Optomega® Algae launched.
- Orego-Stim® patent granted for reducing antimicrobial
resistance.
ESG highlights
- Establishment of a net-zero carbon emissions target by 2030.
- Remuneration policy changes for the coming year that incentivise
achievement of ESG objectives.
- Installation of solar panels to reduce carbon emissions.
"The Board is delighted to report the Group's continued strong operating
performance against a backdrop of the Covid-19 pandemic, supply chain
disruption and raw material price inflation. This excellent performance is due
in no small part to all stakeholders, especially our staff around the world,
who have adapted to new ways of working and put every effort into ensuring
continued production and delivery of our products to customers and our
subsidiaries around the world. In addition, recent investments in automation,
stockholding and systems have meant the company was able to operate as near to
normal as possible.
Our research and development programmes over the past few years have given the
Group a strong portfolio of environmentally friendly and sustainable
solutions, as demonstrated by the recent granting of a patent for
Orego-Stim®. It is also particularly pleasing to see our key product brands
experiencing strong demand as the industry moves away from the use of harmful
applications such as formaldehyde and zinc oxide for antimicrobial control in
addition to the trend to reduce antibiotic use.
The Company is maintaining the progress of last year, but we are acutely aware
of the inflationary pressures and challenges in the food supply chain. Whilst
we will monitor the effect of these issues and manage any potential impact on
the business, we remain confident of continuing the profitable development of
the Group with further investments in our operations, product technology and
global sales channels to deliver effective solutions to the animal production
industry."
Kate Allum, Chairman
1. Adjusted profit measures for the prior year have been revised to remove
adjustments for foreign exchange which are no longer felt to be appropriate,
see note 6 for further commentary.
Chairman's statement
Overview
Anpario is pleased to report a strong revenue and profit performance for the
period, with sales of £33.4m and a 6% improvement in Adjusted EBITDA(1) to
£7.0m, during a period of extraordinary disruption as the Covid-19 pandemic
continues and re-opening of economies created supply chain challenges and
significant raw material price inflation, not to mention dealing with the
ongoing impact of Brexit. I am immensely proud of the way the Group planned
and reacted swiftly to ensure customer orders were fulfilled with minimal
disruption to deliver an excellent financial result. Strong controllable cost
control helped deliver profits ahead of the previous year, whilst also
returning cash to shareholders by way of double-digit growth in the total
dividend subject to shareholder approval at the Annual General Meeting (AGM).
There were strong sales performances in Australasia, China, the Middle East
& Africa (MEA) and South America driven by growth in Orego-Stim® pHorce®
and Mastercube® also delivered strong sales performances in the US swine
industry and the Latin American aquaculture sector respectively. The Middle
East region recovered strongly from a low base in 2020 with overall sales
growth of 31% and China continued to benefit with sales growth also of 32%
helped by the ban in the use of antibiotic growth promoters (AGP's) in animal
feed.
We have, however, experienced increased logistics costs, raw material price
inflation and some additional costs due to Brexit. As a result, our gross
margins are not unexpectedly lower than last years but these costs are being
passed on through planned sales price increases. More recently, we have seen
some encouraging signs that cost price inflation is stabilising, however some
of our raw material pricing is dependent on energy prices, which may have a
further impact.
We continue to invest in our sales channels and during the period set up new
subsidiaries in Mexico, New Zealand and Vietnam. This localisation strategy
has proved invaluable during the pandemic in supporting our end customers. We
have also made additional investments at our Manton Wood production plant in
raw material storage, bulk handling and the installation of solar panels to
further reduce our carbon emissions. Given the global supply chain challenges
we considered it necessary to increase our stockholding of both raw materials
and finished goods in our subsidiaries to ensure continuity of supply, with
further investment in a European stockholding hub to minimise disruption due
to Brexit.
We launched a new 100% natural omega-3 supplement branded Optomega® Algae.
The product has been well received in both the production animal and pet
sector where customers are increasingly looking for sustainable solutions from
non-animal derived sources.
Dividend
The Board is recommending a final dividend of 7.0 pence per share (2020: 6.25
pence) making a total of 10.0 pence per share for the year (2020: 9.0 pence),
an increase of 11.1%. This dividend, payable on 29 July to shareholders on the
register on 15 July, reflects the Board's continued confidence in the Group
and its ability to generate cash.
AGM
The Board plans to hold the AGM on Thursday 16 June 2022, at 11.00am. We
recognise that the AGM is a good opportunity for shareholders to meet and ask
questions of the Board, especially given the recent new appointments. We will
let shareholders know nearer the time the arrangements for the AGM, but these
will depend on Covid-19 restrictions and government advice in place at that
time.
Environmental, Social and Governance (ESG)
Anpario's philosophy has always been to provide innovative solutions for
animal health challenges by working in synergy with the animal's natural
biological processes to support natural immunity through improved gut health.
This is complemented by our culture and ethics which we have encapsulated in
our 3 Pillars: People, Planet and Promise to communicate our sustainable
behaviours and objectives including achievement of net zero carbon emissions
by 2030. We are committed to continual improvement and implementing strong
governance and stakeholder accountability which is central to our values. More
information can be found in the Environment and Social Responsibility Report
and the Corporate Governance section of this Report.
People
Our staff across the globe have risen to the challenge of not only the
Covid-19 pandemic but also significant disruption in global supply chains to
deliver an excellent performance. In addition to supporting our customers the
Anpario team has also fully embraced our environmental, social and governance
strategy by wholeheartedly embracing targets not only preserve our planet but
because in doing so we can differentiate the Group by helping our customers
meet their challenges and achieve their targets through our innovative
solutions and production processes.
Ukraine
We are shocked and saddened by the tragic events unfolding in Ukraine and our
thoughts are with everyone affected. To support the humanitarian response
Anpario is currently engaged with British Red Cross to make a £25,000
donation to the DEC Ukraine Humanitarian Appeal.
We have considered the sanctions that have been put in place against Russia
and Belarus and although our products can be described as being for
humanitarian purposes, we have ceased all trading with these countries. In
2021, our revenues from Russia and Belarus were less than 1% of Group
revenues, with no revenues from Ukraine. We have no dependency on material
supply from these countries.
Outlook
The Company is maintaining the progress of last year and the priority is to
pass on raw material price inflation through planned sales price increases. We
are seeing some encouraging signs that cost price inflation has begun to
stabilise but given the very live events in Ukraine there could be further
challenges in global supply chains and energy markets which may affect raw
material prices. The significant increases in grain prices will also present
difficulties for our customers, however, Anpario's products improve animal
feed conversion rates through natural gut health improvement making the animal
more efficient in nutrient utilisation.
We look forward to delivering profitable growth for the year, capitalising on
the investments made in new products and significant market opportunities such
as aquaculture. Investment and development in our sales and marketing channels
will continue with the recruitment of local sales teams which will be helped
by the improving international travel situation enabling our sales teams to
drive business development initiatives in person.
Our geographic and product diversity does help the Group smooth out these
disruptions and our strong balance sheet enables us to invest not only in
innovative natural product solutions but also support our delivery service
levels with good local stockholding. We remain confident in capturing the
opportunities to grow the business both organically and by acquisition, should
the opportunity arise, for the long-term benefit of all stakeholders.
Kate Allum
Chairman
16 March 2022
Chief Executive Officer's statement
Overview of the financial year
Group sales for the year to 31 December 2021 grew by 9% to £33.4m (2020:
£30.5m) and by 13% to £34.5m on a constant currency basis, with sales growth
across all regions: Asia, Europe, Middle East & Africa (MEA) and the
Americas. Within these regions South America which includes Brazil and Chile
grew sales by 42% largely due to sales of Orego-Stim® to both the aquaculture
and poultry sectors. China continued to benefit from the recent ban on the use
of antibiotic growth promoters (AGP's) in animal feed delivering sales growth
of 32% and the Middle East recovered from its low in 2020 with 31% sales
growth helped by strong performances from Iraq and India where we have
recently appointed new distributors.
The Asia Pacific region, excluding Australasia and China, experienced an 11%
decline in sales compared to the same period last year as continued lockdowns
across the region and lack of tourism affected meat consumption. Overall
Europe, including the UK, delivered sales growth of 8%, but there were notable
declines from Austria and Spain as our distributors increased their stocks at
the end of 2020 to prior to Brexit taking effect at the beginning of the
period.
Group gross profit increased by 3% to £16.3m (2020: £15.9m) for the year to
31 December 2021 due to increased sales, however gross margins were lower at
48.7% (2020: 51.9%) compared to the same period last year impacted by
increased logistics costs and significant raw material price inflation, which
was partially mitigated with sales price increases during the year. The strong
demand for Orego-Stim® and pHorce® with sales growth of 24% and 23%
respectively compared to the same period last year has improved our
value-added sales and gross profit mix and is encouraging as these products
have significant market opportunities in helping customers reduce antibiotic
use, and at the same time move away from using other harmful applications such
as formaldehyde and zinc oxide.
Further investment has been made at our Manton Wood production plant to enable
the Group to store more raw materials and finished goods as well as receive
bulk deliveries of certain mineral materials which will improve both
efficiency and input pricing. These investments helped maintain continuity of
production during periods when production staff were absent due to Covid-19
isolation requirements.
Operational review
Asia
Overall, the region grew sales by 3% with China and Australasia delivering
growth of 32% and 20% respectively, but sales for the remaining Asia Pacific
countries, which account for 64% of the Asia region, were down 11%. China's
strong performance benefited from the ban on the use of antibiotic growth
promoters (AGP's) in animal feed with Orego-Stim® primarily replacing AGP's
in piglet feed. We are also beginning to target the Chinese aquaculture
industry starting with one of our acid-based eubiotic products for ammonia
control and plan to recruit sales personnel to target this significant market
sector.
Elsewhere in the region Bangladesh and Taiwan delivered sales growth of 121%
and 96% respectively compared to the same period last year, which was a
significant reversal from 2020 when these two territories were impacted
severely by the Covid-19 pandemic. In contrast, Indonesia, Japan, the
Philippines and South Korea suffered double digit declines as the pandemic
subdued protein consumption. Despite these regional challenges business
development is focused on launching a gut health programme specific to poultry
broiler production and sales initiatives to the aquaculture industry which
includes expanding the aquaculture sales team. We also established a new
subsidiary in Vietnam during the period to support growth of direct business
in the country.
We anticipate our customers in Asia will continue to experience challenges
including animal feed price inflation and disruption to supply chains.
However, our products are used in a variety of end markets which gives the
team the opportunity to target less disrupted sectors.
Americas
Overall, the region grew sales by 13% with Latin America delivering growth of
26%, sales in the US declined by 7%. As mentioned previously group sales were
higher on a constant currency basis and this affected each region, however,
the impact was more pronounced in the US region where sales were flat when
currency movements are excluded.
Latin America saw strong sales performances in Brazil, Chile and Ecuador with
sales of Orego-Stim® to Chile increasing tenfold predominantly for the
aquaculture sector. Ecuador grew sales by 82% compared to the same period last
year driven by the success of our natural pellet binder for aquaculture feed,
and Brazil grew by 14%, against two previous years of strong growth, as it
continued to gain customers both in the egg-layer segment; where we have been
able to increase the output for the producer and also the aquaculture market
with Prefect®, a unique acid-based eubiotic product.
During the period we also set up a Mexican subsidiary to target larger
customers on a direct basis and to support our distributors in the region with
a local stockholding, which is also important to demonstrate to the larger
producers we can guarantee continuity of supply.
US sales declined by 7% but were flat on a constant currency basis. Actual
volumes in tonnes grew 21% driven by pHorce® which is successfully being used
to mitigate the risk of virus-contaminated feed in the swine sector. This is
the one area where business development was affected owing to the global
shipping and supply chain issues, which limited the amount of stock we could
ship to the US. These bottlenecks have been resolved and sufficient stock is
now available in the US with new customers ready to start using the product.
In contrast to the volume growth, the flat sales growth is due to product mix
where a customer reduced its requirement for Orego-Stim®, which is a higher
value-add product but is used on a lower inclusion in feed compared to
pHorce® and our mycotoxin binder range.
The Middle East and Africa
The Middle East delivered the fastest growth of our main regions with sales
increasing by 31% compared to the same period last year, when the region was
severely impacted by the Covid-19 pandemic. Sales from our top three product
groups, phytogenics, acid-based acidifiers and mycotoxin binders, grew by 46%,
44% and 86% respectively demonstrating the broad-based recovery across the
region. India and Iraq experienced significant sales growth helped by the
recent appointment of new distributors. Sales are still 10% below its 2019
pre-pandemic performance and challenges do remain in various territories
across the region.
In addition to the poultry sector, Orego-Stim® will also be marketed to the
shrimp export market where antibiotic free production is a requirement for
certain export markets. We have just recruited a technical sales manager to
accelerate growth in North Africa and in particular Egypt.
Europe
Sales in Europe including the UK grew by 8% compared to the same period last
year, driven by strong performances from the UK, Italy and Israel. Spain and
Austria experienced declines but this was due to distributors increasing their
stock in anticipation of Brexit at the end of 2020. The mitigation measures
put in place including the European stockholding hub have reduced the impact
of the change in our trading relationship with the EU. Most of our products
and deliveries have been unaffected except where veterinary health
certificates are required for products containing animal products which is
relevant to our omega 3 fish oil supplement, but the recently launched algal
version can be substituted for the same applications.
Our phytogenics and acid-based eubiotics products grew by 20% and 5%
respectively benefiting from feed hygiene and gut health applications as
customers look to use more environmentally safer and sustainable solutions.
From June 2022 the European Union is due to prohibit the use of therapeutic
doses of zinc oxide (ZnO) in animal feeds to control post weaning diarrhoea in
piglets. Orego-Stim®, pHorce® and Genex® have proven in trials not only to
be natural replacements for zinc oxide but have also improved animal
performance thereby bringing significant financial benefits to the producer.
There is further opportunity in the US where producers are also looking to
reduce zinc oxide use.
We have reviewed our distribution relationships in the North-West Europe
region and made changes which will increase our presence and capability in the
German market supported by our European stockholding. The Group's organic
approved products offer an opportunity to increase our market share in this
growing segment, which we intend to expand across a number of countries
following product registration.
Anpario Direct, our online platform experienced some strong sales months
towards the end of the period and has been significantly growing month on
month, albeit from a low base in comparison to the rest of the business. We
have recently recruited additional UK sales people to target customers where
the online proposition would be most suited to their order profile to help
them transition to an online ordering relationship.
Innovation and development
The recent granting of the UK patent for Orego-Stim® follows a combined and
successful research programme with the University of Reading. This research
shows that the natural oregano oil composition reduces the proportion of
bacteria in the gut that show antimicrobial resistance, when added to the
diets of young cattle. Research and development such as this is ongoing within
the Group on our products where we work to address the challenges producers
are experiencing. Orego-stim® is a 100% natural product comprising many
additional essential oil compounds which have added benefits and is the reason
why Orego-Stim® can have a beneficial effect under different challenges
experienced by the producer. As such, we have an ongoing trial programme to
demonstrate the capability of our products for applications across numerous
challenges affecting the industry.
As mentioned earlier the EU ban on zinc oxide use at pharmacological levels in
piglet diets comes into effect in June 2022. We have been undertaking trials
to demonstrate that both our phytogenic and acid-based eubiotic technology is
not only an effective natural replacement for zinc oxide but provides
additional commercial benefits. Trials with Orego-Stim® fed to both the sow
and progeny were very successful with a huge increase in weaning weights of
0.5kg and an almost doubling of piglet creep feed intake. Piglets from the
Orego-Stim® litters had improved liveability pre-weaning and sows had a
similar body condition score (BCS) compared to the control sows and lost
approximately 10kg less in body weight over the lactation period.
During the period, we launched Optomega® Algae a new, micro-algae derived,
omega-3 supplement for use in all species including aquaculture, targeted at
breeding animals and producers supplying enriched meat, milk and eggs
containing higher levels of omega-3 fatty acids. The product is 100% natural,
from a sustainable source and has been well received in the pet sector market.
Furthermore, preliminary data from an in vitro study at the University of
Reading suggests that feeding dairy cows Optomega® Algae can lower methane
output by at least 7% in just a 24-hour period. It is well known that feeding
a source of Docosahexaenoic acid (DHA) to dairy cows supports the
establishment of pregnancy, which in itself helps to lower a farm's greenhouse
gas (GHG) emissions.
Sustainability and ESG
Anpario is one of the leading companies helping global livestock producers to
meet environmental and sustainability challenges and contributing to the
research and development progress that the agricultural livestock industry is
achieving in improving its carbon footprint and lowering GHG emissions.
Anpario prides itself on being a low carbon manufacturer of animal feed
additives, with two thirds of sales from products which can be described as
being from sustainable sources and from non-carbon derived raw materials.
These products are also the Group's fastest growing. Furthermore, our products
help producers to be more efficient in the resources they use by improving
animal feed conversion rates through natural gut health improvement making the
animal more efficient in nutrient utilisation.
Our products replace harmful applications such as formaldehyde and zinc oxide
used for antimicrobial control in the feed and help reduce antibiotic use in
animal production thus improving and safeguarding both animal and human
health. The patent attained for Orego-Stim® in reducing the proportion of
bacteria and antimicrobial resistance, when added to the diets of young
cattle, is just one example of how Anpario is providing environmentally safe
and sustainable solutions for the world's population.
In aquaculture, Anpario has proven trials and customers benefiting from
improved liveability and biomass in production, enabling regions around the
world to return land and water resources to their natural habitat.
Anpario has signed up to '365 Vision', which is the new 10-year plan for the
International Egg Commission (IEC) and supported by the United Nations. Eggs
are an affordable, nutritious, and low impact food source and the plan aims to
develop the nutritional reputation of the egg on an international scale and to
accelerate global average egg consumption per capita to 365 eggs per annum
from 165 today.
Growth Strategy
Our organic growth strategy is focused on expanding and strengthening our
global sales channels through recruitment of local sales and technical teams
and setting up wholly owned subsidiaries with stockholding to support direct
sales to the larger end users. This structure also supports our partner
distributors where appropriate. We are encouraged by the development of our
online proposition supported by our UK field sales team to help drive target
customers to the Anpario Direct website. Growth in our customer base and
volumes will enable us to broaden the product range expand to other suitable
geographic markets.
New products such as Optomega® Algae will facilitate future sales growth
across all species sectors and build on our entry into the pet market . Our
existing products have historically been focused on monogastrics, pig and
poultry, but our technical development work enables us to cross-sell these
technologies into the aquaculture and ruminant sectors for example.
Aquaculture will play an increasingly important role in delivering growth as
our products bring proven advantages to both shrimp and fin fish species and
we look to launch these products across the Asia Pacific region.
We have attained several organic accreditations across the portfolio including
for best-selling products Orego-stim®, Salkil®, Salgard® and Anpro®. This
has enabled us to gain new customers focused on high quality protein
production.
The recent investment in bulk storage and warehousing will support profitable
growth across the Group, along with our continued search for acquisitions to
complement the current product range and enhance sales channels.
We continue to identify and pursue potential acquisition targets to capitalise
on potential operational synergies and for complimentary products.
Richard Edwards
Chief Executive Officer
16 March 2022
Key performance indicators
Financial
2021 2020
Note £000 £000 change % change
Revenue 3 33,367 30,522 +2,845 +9%
Gross profit 16,261 15,852 +409 +3%
Gross margin 48.7% 51.9% -3.2%
Adjusted EBITDA 6 6,977 6,567 +410 +6%
Profit before tax 5,701 5,350 +351 +7%
Basic earnings per share 12 22.92p 20.63p +2.29p +11%
Diluted adjusted earnings per share 12 23.01p 20.98p +2.03p +10%
Total dividend for the year 11 10.00p(1) 9.00p +1.00p +11%
Cash and cash equivalents 15,545 15,820 -275 -2%
Net assets 40,302 37,505 +2,797 +7%
1 - Includes both the interim dividend paid during the year and the proposed
final dividend which is subject to approval by the shareholders at the AGM.
Non-financial
2021 2020 change % change
GHG emissions(1) (tCO(2e)) 129 156 -27 -17%
Carbon intensity(1) (tCO(2e) per £m sales) 3.8 5.1 -1.3 -24%
Major accidents reportable to the Board nil nil
1 - Scope 1 and 2 Carbon emissions and defined by the GHG protocol, for more
information see the environment and social report.
Anpario have begun to monitor and report on Scope 1 and 2 carbon emissions as
part of its goal to achieve net-zero carbon emissions by 2030. As such we are
introducing two new related performance indicators, total carbon emissions and
carbon intensity. Anpario is a growth company and as such total carbon
emissions may increase, as such our carbon intensity, defined as carbon
emissions divided by sales, will be a key measure in tracking our progress
towards our net-zero goals.
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.
Financial review
Revenue and gross profits
The Group has delivered another year of progress, on a constant exchange rate
basis, revenue for the period grew by 13% to £34.5m (2020: £30.5m), at
actual exchange rates the increase was 9% to £33.4m. Through the first six
months we were able to match a strong comparative prior year performance.
Sales in the second half of the year accelerated to £17.4m, a 21% increase
over the same Covid-19 impacted period last year of £14.3m.
Growth was seen across all of the Group's four operating segments, in
particular MEA and the Americas with growth of 31% and 13% respectively. China
continued to benefit from a move towards feed-additive products such as
Orego-Stim® following the ban on antibiotic growth promoters. The performance
in the UK was also strong with a sales increase of 13%. Though the US market
was behind sales expectations and the Asia Pacific region continued to suffer
from the impacts of continued lockdowns. Detailed commentary on the
performance of the operating segments is available in the Chief Executive
Officer's Statement.
On a constant exchange rate basis, gross profit for the year grew by 8% to
£17.1m (2020: £15.9m), and gross margins were 49.6% (2020: 51.9%). At actual
exchange rates there was a 3% increase in gross profit to £16.3m and gross
margins fell to 48.7%. The higher constant currency results for both sales and
gross profits primarily relate to the increase in GBP/USD exchange rate to a
weighted average of 1.373 (2020: 1.279).
A fall in gross margins had been anticipated at the outset of the year however
a number of factors contributed to higher-than-expected decline in margins. As
highlighted in the half-year results, in addition to the currency impact, part
of this is related to the significant increase in logistics costs that has
been seen over the past year. The costs are largely passed on to our customers
through increased freight selling charges and so the impact on profitability
is small, however the gross margin calculation is affected.
In terms of raw material costs then as with most businesses in the current
environment we have seen higher than normal inflationary pressures. In
addition, across some specific material inputs we have seen significantly
reduced availability and acute price increases. We have utilised our strong
balance sheet to invest in working capital in terms of both raw material and
finished goods in our subsidiary entities to ensure continuity of supply to
our customers during these availability and logistics related challenges.
Further, we have implemented a number of price rises in the past 12 months to
offset these general and specific cost increases in absolute terms. We have
absorbed some of the margin pressures from the acute price rises on several
inputs as described above and we continue to closely monitor raw material
costs and margins. The expectation is that these prices will start to fall
back closer to previous levels, though if these become normalised then we will
pass on the full extent of these margin pressures through further price rises.
Administrative expenses
Administrative expenses in the period have been flat at £10.6m for both the
current and prior year. As with most expense types, employment costs including
bonuses have been flat year on year.
Travel and marketing expenditure have started to increase slightly as Covid-19
restrictions have eased, though the year-on-year comparison is flat as Q1 2020
spend prior to Covid-19 was at normal levels. As Covid-19 restrictions ease
further we will see increases in these costs, as face to face customer contact
is important in our industry. However, as previously indicated, in the
long-run we do expect to see these costs normalise at a rate below their
previous norms.
The Board continues to actively seek out and evaluate potential acquisition
targets. Through 2020 there have been several opportunities, some closed and
some on-going, that have involved more in-depth work and analysis. Activities
take place internally as well as through external professional advisors and we
have also incurred fees of £0.1m during the year.
There was a reduction in overall legal and professional costs of £0.3m in the
year, though this was offset by higher foreign exchange losses.
Profitability and earnings per share
For this reporting period the Board have taken the decision to reduce the
number of adjustments made to statutory profit for our alternative performance
measures ("APM's") in line with best practice guidelines. It was decided
during the time following the decision to leave the EU that it was necessary
to adjust for foreign exchange profits and losses. During this volatile period
for exchange rates the statutory measures saw large variances year on year due
to largely unrealised foreign exchange gains and losses. It is management's
view that currency fluctuations now represent more normalised patterns and as
such the impact of these should no longer be adjusted for. The prior year
APM's have been restated to reflect this change and more detail can be found
in note 6 of the financial statements.
Adjusted EBITDA(1) for the year increased by 6% to £7.0m (2020: £6.6m) and
diluted adjusted earnings per share increased by 10% to 23.01p per share
(2020: 20.98p).
Profit before tax growth was slightly higher than Adjusted EBITDA with an
increase of 7% to £5.7m (2020: £5.4m). Basic earnings per share grew 11% to
22.92p (2020: 20.63p).
Taxation
Changes to UK corporation tax rates occurred firstly in the prior year with
planned reductions to 17% being scrapped, then in the current year on 3 March
2021 the UK government announced an increase to 25%, from 19%, from April
2023. Deferred taxes have been remeasured at these revised rates in both
periods and resulted in an exceptional deferred tax charge of £0.5m (2020:
£0.2m).
Another factor affecting the tax charge for the year, though in this instance
positively, was the successful granting of our first patent for our market
leading phytogenic product Orego-Stim®. As highlighted in the announcement in
December it was anticipated that this would provide a tax benefit to the Group
via the UK Patent Box scheme which allows companies to apply a lower rate of
corporation tax to profits attributable to qualifying patents.
IFRS accounting standards require tax to be recognised on the most likely
outcome, but as with all tax items, Her Majesty's Revenue and Customs (HMRC)
reserves the right to query the Company's calculations. Work has continued
with our tax and patent advisors on the matter and discussions have taken
place with HMRC about the principles of the UK Patent Box Legislation. The
directors consider the acceptance of our Patent Box tax computations to be
more likely than not and as such we expect a material reduction in UK
Corporation Tax because of the Patent Box application.
This benefit can be backdated to the date of patent application which was in
April 2020 and as such there is a related prior year tax reduction of £0.1m.
For 2021 the reduction in our tax charge is higher at £0.4m, this is as a
result of a full year of eligibility for the reduction as well as an increase
in profits associated with Orego-Stim®. The benefit for the Group moving
forward will depend on a number of factors, including the number of sales
attributable to the patent in any given year and the prevailing tax rates at
the time.
The effective tax rate for the year was 17.9% (2020: 21.4%). However,
excluding both the exceptional deferred tax charge and the prior year tax
benefit from Patent Box the underlying effective tax rate for the year was
significantly lower at 10.8% (2020: 18.4%).
Cash generation
Operating cash flows before changes in working capital were £7.5m (2020:
£6.1m). However, due to the significant logistics challenges and reduced
availability of some input materials then we utilised our strong cash position
to ensure vital continuity of supply to our customers. This led to an
absorption of £3.3m of cash into working capital, with most of this occurring
through the first half of the year. Following this absorption of cash and
after income tax payments of £1.0m (2020: £0.9m), net cash from operating
activities fell to £3.1m (2020: £5.8m).
Net cash used in investing activities increased slightly in the period to
£1.4m (2020: £1.2m). This increase primarily relates to increased investment
in plant and machinery during the period on projects related to production
efficiency and continuity of supply. This includes expansion and upgrade of
on-site raw material storage, automation of some packaging processes and the
conclusion of the automated pallet delivery system. Other projects include the
investment in solar panels (£0.3m) to reduce carbon emissions. This project
alongside a number of others are ongoing and there were capital commitments at
31 December 2021 of £0.6m (2020: £0.1m).
Net cash used in financing activities was £2.0m (2020: £2.5m). This was
lower than the prior period which saw a £1.0m share buyback programme
purchasing 297,346 ordinary shares at a volume weighted average price of
336.31p per share.
Overall, cash and cash equivalents decreased by £0.3m in the period to a
balance of £15.5m (Dec 2020: £15.8m). The primary purpose of holding these
resources is to fund future acquisitions and we continue to explore suitable
opportunities.
Dividends
The Board is recommending a final dividend of 7.00 pence per share (2020:
6.25 pence) payable on 29 July to shareholders on the register on 15 July. In
addition to the interim dividend already paid, this represents an increase to
the total dividend for the year of 11% to 10.0 pence per share (2020: 9.0
pence).
Marc Wilson
Group Finance Director
16 March 2022
Our business model and strategy
Business model
Anpario is an independent manufacturer of natural sustainable animal feed
additives for health, nutrition and biosecurity. 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 utilising 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.
Anpario acknowledges the challenges facing livestock producers in meeting
environment and sustainability targets. Anpario is contributing to the
research and development progress that the agricultural livestock industry is
achieving in improving its carbon footprint and GHG emissions. Anpario prides
itself on being a low carbon manufacturer of animal feed additives, with two
thirds of sales from products which can be described as from sustainable
sources and from non-carbon derived raw materials.
Our business model is based on:
- Products - high quality efficacious products presented well;
- Story - powerful value add proposition demonstrating the
financial and performance benefits of our product solutions;
- Sustainability - our natural products help our customers to
reduce their carbon footprint by improving the animal feed conversion rates;
- 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;
- Efficiency - efficient automated production with high
operational gearing; and
- Channel - control the sales channel to ensure we develop strong
technical and commercial relationships with the end users of Anpario products.
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 2021:
- sales growth achieved in all geographic operating segments;
- including continued sales growth in China and a recovery of
sales in the Middle-East and Africa segment;
- continued growth of direct sales channel;
- geographic and product expansion of e-commerce sales through
Anpario Direct; and
- first local sales in New Zealand and preparations to start local
trade in Mexico.
Future plans:
- continued expansion of Anpario Direct to other suitable
territories;
- establishment of new subsidiaries for better access and support
to local markets; 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 2021:
- received our first patent for our market leading phytogenic
product, Orego-Stim®;
- launch and expansion of products available to the aquaculture
market;
- further work on our natural solution to replace Zinc Oxide use
which is being banned in the EU; and
- launch of Optomega® Algae a new, micro-algae derived, omega-3
supplement for use in all species including aquaculture, targeted at breeding
animals and producers supplying enriched meat, milk and eggs containing higher
levels of omega-3 fatty acids.
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 2021:
- through the year there have been several opportunities, some
closed and some on-going; and
- we have engaged a number of external professional advisors to
assist in these activities.
Future plans:
- continue active search for acquisition opportunities within
defined criteria.
Operations
High quality, consistent and efficient manufacturing.
Delivered through:
- further automation of production facilities;
- key industry quality accreditations; and
- quality supply partners.
Actions in 2021:
- increased automation of processes including projects on
packaging and palletisation of products; and
- increased on-site storage of liquid materials to ensure supply
of key materials.
Future plans:
- evaluating further production investment opportunities;
- expansion of on-site warehouse storage for powdered products;
and
- developing enhanced production contingency plans.
Environmental, Social and Governance
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically and environmentally responsible manner engaging with all
our key stakeholders, including the communities in which we operate.
Delivered through:
- our three-pillar framework, 'our People, our Planet and our
Promise';
- robust governance structures appropriate for our business size;
and
- engagement with our stakeholders.
Actions in 2021:
- specific resource allocated including establishing a new role of
Corporate Responsibility Director and also an internal working group;
- developed and launched our three-pillar framework;
- identification and launch of a number of R&D activities
linked to reducing green house gas emissions through the use of our products;
- establishment of net-zero carbon target by 2030; and
- investment in solar panels at our production site to reduce
Carbon emissions.
Future plans:
- continued evaluation of ways to reduce our carbon emissions;
- linking of performance appraisals and Long-Term Incentive Plan
(LTIP) awards to ESG objectives; and
- continued engagement with our stakeholders, especially with our
local community through the launch of staff volunteering days and our work
with our Charity of the year Weston Park Cancer Charity.
Section 172 Statement
Introduction
As a Board, collectively and as individual Directors, we recognise our
obligations and our duties as Directors. Section 172 of the Companies Act 2006
requires a director of a company to act in the way they consider, in good
faith, would be most likely to promote the success of the company for the
benefit of its members as a whole. In doing so, each Director has regard,
amongst other matters to:
- the likely consequences of any decision in the long term;
- the interests of the Company's employees;
- the need to foster the Company's business relationships with
suppliers, customers and others;
- the impact of the Company's operation on the community and the
environment;
- the desirability of the Company maintaining a reputation for
high standard of business conduct; and
- the need to act fairly as between members of the Company.
How the Board fulfils its Section 172 duties
We ensure that the requirements of section 172 are met and the interest of our
stakeholder groups are considered through, amongst other means, a combination
of the following:
- review of strategic objectives and achievement thereof;
- annual budgets and review of resource allocations;
- results presentations to shareholders and staff;
- audit and risk management processes conducted through the year;
- health and safety reports;
- reviews of employee matters;
- annual performance appraisals for all staff including personal
development reviews;
- consideration of these matters in relation to major decisions
made within the year;
- regular meetings with customers and key suppliers; and
- other ad-hoc engagement with stakeholders.
Stakeholders and their key interests
The table below outlines the key stakeholders the Company has identified,
their key interests and where in this annual report that further details on
matters such as engagement and key decisions made in the year in relation to
each stakeholder group can be found.
Shareholders
Anpario recognises the importance of engaging with existing and potential
investors to understand their views and objectives. This can enhance strategic
and governance decision making processes of the Board. We welcome investor
contact and those wishing to engage with us can email on investor@anpario.com.
Key interests
- Delivering sustainable, profitable growth over the long-term.
- Robust governance and appropriate controls to mitigate risk.
- ESG initiatives and responsible management practices.
Key decisions made in the year
- Increase in dividend per share proposed in light of results (see
Chairman's statement).
- Extensive work conducted by the Remuneration Committee in the year,
including engagement of expert external advisors, to ensure the Group's
remuneration policy reflected good practice and ensured alignment with
shareholder objectives (see Report of the Remuneration Committee).
- Increased focus on ESG matters with a Board Level position
established, Corporate Responsibility Director along with internal working
groups. This has led to an ESG framework being established with specific
targets set and increase related disclosures (see Environment and Social
Responsibility Report).
Customers
Anpario values our customers and has extensive long-term relationships across
the world. Our network of local and regional account management teams are in
place to understand the needs and challenges faced by our customers so that we
as a Group can deliver the product and service solutions that they require.
Key interests
- Innovative, high-quality products that help overcome the challenges of
modern-day farming.
- Reliable logistics networks with good stock availability and timely
delivery.
Key decisions made in the year
- Established a regional logistics hub in Europe in response to Brexit.
This has removed the customs burden that has resulted post-Brexit and led to
faster more efficient deliveries.
- In light of global logistics and raw material availability issues we
have increased finished good holdings across the Group to ensure continuity of
supply during these challenges.
- Extended product ranges and geographic footprint to improve customer
experience (see Risk Management).
Further information
- Our business model and strategy
- Risk Management
- Corporate responsibility report
Employees
Anpario has over 120 employees across the world in a range of different roles.
All staff are key to delivering on the strategic plans and success of the
Group and we continue to develop our HR strategy and policies.
Key interests
- Fair and equitable recruitment and remuneration practices and
policies.
- Safe working environments.
- The opportunity for personal growth and career progression.
Key decisions made in the year
- Continued monitoring and response to Covid-19 to ensure our employees
were safe (see Risk Management).
- The introduction of new flexible working policies to adapt to
longer-term changes to working practices as a result of Covid-19.
- Introduction of a number of new internal training and development
programmes for staff across the Group.
Community and Environment
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically, and environmentally responsible manner. Anpario's team
seek to meet environmental challenges with sustainability at their heart and
progressing on a journey of continuous evolution and progression. Further
information to the below can be found in the Environment and Social
Responsibility Report.
Key interests
- Conducting business in an ethically and environmentally responsible
manner.
Key decisions made in the year
- Increased focus on ESG matters with a Board Level position
established, Corporate Responsibility Director along with internal working
groups.
- New ESG framework established with specific targets set and an
increase in related disclosures.
- The Board continued to believe that it was not appropriate to claim
any form of UK government support for Covid-19.
- Employees vote for the annual charity of the year. For 2021 the
Charity chosen by staff was Macmillan Cancer Support.
https://www.macmillan.org.uk (https://www.macmillan.org.uk)
- Introduction of a new policy that allows each member of staff to take
a paid day off for volunteering in a charity or good cause.
Suppliers
Our external supply chains are critical to the success of the business and
integral in our ability to deliver high-quality and consistent products to our
customers.
Key interests
- Mutually beneficial relationships with fair business practices.
- Supply chain resilience.
- Prompt payment.
Key decisions made in the year
- Engagement with suppliers that may face disruption caused by Brexit.
- Ensuring that in the current difficult economic conditions we have
continued to support our supply chain by making prompt payment for supplies to
ease any working capital pressure on our suppliers.
Risk management
Risk Register and Management Process
We continually examine in detail the key risks facing our business in the
context of our overall business strategy and evaluate their likelihood and
potential impact. The risks we have examined 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 impacts and the recruitment, development
and retention of employees. In considering our risks during the year we have
performed detailed assessments at a global and regional level. We assess the
likelihood of their occurrence and potential impact and implement appropriate
and proportionate risk mitigation measures. We have continued to monitor
Covid-19 and Brexit related risks which have resulted in supply chain
disruption including force majeure being declared by key raw material
suppliers. As part of our continual risk management process we consider new
and emerging risks. These have increasingly focused on sustainability and
climate change related issues which has seen a substantial increase in
consumer and investor focus on climate. In addition we consider global meat
consumption patterns and the potential impact on our operations.
The Group's risk management process through engagement of the Executive
Management team and global management team is conducted on at least an annual
basis and reviewed by the Board, as follows:
1. Identify the risk and likelihood for each function and
regional operation;
2. Analyse and assess the risk, its potential severity and the
impact and priority for the business;
3. Consider risk rating and trends on a low to high scale;
4. Plan to mitigate or treat the risk and identify resources
or investment required;
5. Implement mitigation procedures by obtaining resources and
approvals necessary and put in place necessary actions; and
6. Monitor, measure and control the risk and its likely
impacts which will change and evolve so that you we can respond and react in a
timely efficient manner.
The Risk Framework below shows those 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 approach to effective risk
management can be found in the Corporate Governance section, Principle 4.
Covid-19
From March 2020 Anpario successfully implemented contingency plans with split
production and operations teams, social distancing measures, remote working
and technology to support our global sales teams and customers. Anpario has
also built up higher raw material supplies in the UK and finished goods stocks
in subsidiary warehouses globally to mitigate potential supply chain
disruption.
Brexit
Brexit has remained a continuing risk since the 2016 referendum result with
more certainty of our future trading relationship with Europe now enabling the
planning of our EU supply chains and operations. As part of our response plans
Anpario had established Irish, German and Turkish subsidiaries and we have
subsequently further strengthened this with warehouse facilities in the
Netherlands which directly supplies some EU customers.
What has been successful?
Key successes include:
- implementation of Board Succession plan with a new Chairman and
team of Non-Executive Directors; appointment of a new Finance Director and
Corporate Responsibility Director;
- continuation of effective implementation of our Covid-19
response plans including off-site working and effective global online sales
and training programmes for staff;
- development of remote online sales practices;
- mitigation of Brexit impact through the establishment of new EU
Irish and German subsidiaries along with a warehouse hub in the Netherlands;
- new subsidiary established in Vietnam to enable direct sales to
local customer base;
- launch of new Anpario products and applications including: aqua;
Optomega® Algae;
- successful patent Orego-stim®'s antimicrobial activity in
calves;
- further development of non-animal plant product development and
zero fossil fuel raw materials;
- launch of the 3 Pillars: 'People; Planet; and Promise' as a
platform to communicate our ESG credentials and objectives;
- strengthening of our supplier partnerships with similarly
aligned ethical and sustainable aspiration;
- continued growth Anpario Direct; and
- progressed 144 product registrations worldwide.
What can be improved?
We continually endeavour to improve our key control framework and processes
and improve our risk management capabilities. In response to new or emerging
risks and to any improvements recommended by management, external auditors and
advisors we will implement appropriate measures. For 2022 our key areas of
focus include:
- actioning our Climate Change commitments including Net Zero
target by 2030 and wider communication of our strong ESG credentials to
stakeholders and the wider community;
- progressing R & D initiatives to improving the carbon
footprint and GHG emissions within the meat protein industry;
- completing the installation of solar energy at the Group's plant
in Worksop, UK;
- installation of additional storage facilities including four new
silos and temporary warehouse to increase raw material storage capacity;
- review subsidiary internal controls and audit requirements; and
- further development and coaching for our key managers and staff.
In particular, to update Modern Slavery and anti-bribery and corruption
training and awareness.
Risk framework
1. Market Risk 2. Political and Economic Risk
Risks Risks
- Gaining market entry for products and access to end users. - Brexit consequences.
- Competition from global operators. - Exchange rate fluctuations.
- M & A activity resulting in market consolidation. - Geopolitical risks including political and economic instability.
- Human movement restrictions e.g. Covid-19, SARS. - International and individual targeting sanctions.
- Animal diseases e.g. African Swine Fever, Avian Influenza, PEDV. - Bad debts or trade disputes.
- Global commodity prices affecting both supply of inputs and demand for
our products.
- Climate and environmental changes.
- IP theft e.g. trademark infringements.
Potential impact Potential impact
- Lower sales revenue and profit. - Volatility in markets. Supply chain: delays, additional costs, tariffs
or lack of continuity. Regulatory changes.
- Reduction in customers or target customers.
- Unable to sell or transport finished goods to EU. Unable to import
- Loss of market share. goods from EU.
- Loss of market. - Border delays.
- Reduced revenue, increased costs and lower profitability.
Control and mitigation Control and mitigation
- Establishing a global marketing strategy with clearly defined product - Increased inventory of EU sourced raw materials.
and species related goals for each region.
- Established a warehouse and distribution facility in the EU.
- Regular monitoring of sales budgets and sales prospects by the
management and the Board. - Limiting and hedging of foreign currency exposure.
- Effective disaster planning communicated on a timely basis. - Wide geographic diversity reduces dependency in a single country or
region.
- Regional and species diversity and an extensive range of products with
new product development and launches. - Rigorous customer and supplier due diligence and monitoring of
regional and customer exposures.
- A clear and effective marketing strategy communicating the benefits of
Anpario sustainable solutions. - Use of credit insurance and letters of credit.
- Close customer engagement, relationships to understand and address
their needs.
- Global trademark watches and pre-emptive legal action.
- Ensuring our trademark portfolio supports and is reflective of our
marketing strategy.
Risk rating Trend Risk rating Trend
Likelihood: Medium No change Likelihood: Medium Increasing
Impact: Medium Impact: Medium
3. Product Development Risk 4. Production, Quality and Logistics Risk
Risks Risks
- Failure to deliver new products due to lack of innovation, pipeline - Failure to source supply of raw materials.
delays or products not meeting commercial expectations.
- Inadequate or poor adherence to quality systems allow faulty product
- Failed or aborted trials during development or customer acceptance to reach customer.
stages.
- Sub-standard raw materials.
- Lack of significant financial, R&D and other resources.
- Failure to secure timely shipping of goods to customers.
- Plant closures due to major accident or incident or disaster.
- Defective plant and equipment in our manufacturing facility.
Potential impact Potential impact
- Reduction in competitiveness in the market. Lost opportunities. - Failure or Increased lead-time to supply customers.
- A succession of trial failures could adversely affect our ability to - Loss of production for a significant period e.g., more than one month
deliver shareholder expectations. potentially leading to loss of sales.
- Our market position in key areas could be affected, resulting in - Accidents, fatality leading to possible closure or fine.
reduced revenues and profits.
- Poor product quality or product contamination.
- Where we are unable to develop and launch a product this would result
in impairment of intangible assets. - Damage to customer relationship, reputation and financial loss.
- Valuable resources may be wasted.
Control and mitigation Control and mitigation
- Continual monitoring and review of the lifestyle and potential return - Planned increase in raw material and finished good storage facilities.
from current products. Different regions have markets that are at different
points in development. - Rigorous planning of production runs and shipping container
requirements.
- Potential new development projects are evaluated from a commercial,
financial and technical perspective. The pipeline is reviewed regularly by the - All products can be produced at approved toll manufacturers in the UK.
Board. Business interruption and property insurance policies arranged.
- Each research project or trial is managed by qualified technical - Business Continuity Plan in place.
managers. Projects and trials are monitored to ensure that they are completed
on time, deliver expected outcomes and provide useable data. Final review and - Third party advisor utilised and strict management controls enforced.
evaluation to ensure learning. Employers' liability insurance arranged.
- Multiple studies are conducted to assess the effects of a product on - Supplier accreditation, UFAS and FEMAS certification, HACCP and
target species. Trading Standards compliance. Public and product liability insurance arranged.
- 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: Medium Increasing
Impact: Medium Impact: Medium
5. Climate Change Risk 6. Environmental, Social and Governance (ESG) Risks
Risks Risks
- Lack of Board approved strategy to meet our specific challenges. - Failure to lead the feed additive market in supporting our customers
producing sustainable animal protein production.
- Lack of tangible verifiable measures and target. Failure to achieve
carbon zero targets in line with government and or industry requirements. - Breach of bribery and/or corruption laws or international sanctions.
- Failure to make required disclosures in line with TCFD and regulatory - Failure to adhere to labour laws and standards globally.
bodies.
- Poor ESG ratings leading to failure to attract high quality employees.
- Unsafe, inadequate or non-compliant health and safety issue or
response to environmental, infrastructure or other significant corporate
failures.
Potential impact Potential impact
- Loss of key customers, suppliers, investor base. - Loss of and negative Investor sentiment and withdrawal of support.
- Loss of raw material sources and potential income stream. - Shareholder action and votes against Board re-election.
- Lower sales revenue and profit. - Fines, criminal action against the Company, Directors or employees.
- Failure to attract, recruit and retain high quality and skilled
employees.
Control and mitigation Control and mitigation
- Board approved global sustainability strategy and implementation plan. - Board level role responsibility with the newly appointed Corporate
Development Director to specifically focus on the risks and lead appropriate
- Engagement of all senior management in understanding and implementing action plans.
operational and reporting obligations.
- Creation of 3 Pillars: People, Planet and Promise platform for action
- Executive and management performance related targets in line with plans and communication.
Group strategic objectives.
- Specific ESG targets for all key Executive and group management.
- Investment and research on emissions reduction in animal production.
- Established policies, procedures and training to ensure awareness of
- Collaboration with suppliers and other third parties with common goals obligations and compliance.
relating to climate change challenges.
- High standards of working conditions and market benchmarked pay
- Solar energy installation and other operational improvements to reduce exceeding the living wage.
use of carbon.
- Code of Conduct requiring internal and third-party acceptance.
Risk rating Trend Risk rating Trend
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: High Impact: Medium
7. Systems Risk 8. Legislation, Regulatory and Non-compliance Risk
Risks Risks
- IT or communications failure, due to, accident or sabotage. - Changing market, legislative and regulatory needs.
- Cyber-attack. - Failure to comply with export controls and sanctions.
- Data breach. - 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. - Loss of market presence and or share.
- Criminal attack could be aimed at stealing money, extortion, fraud, - Litigation against Anpario, potential fines and reputational damage.
data theft etc.
- Financial penalties, reputational damage, unable to operate in certain
- GDPR imposes heavy financial penalties, plus reputational damage. 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 provider for storage and system - Vigilance and monitoring of all appropriate notifications to ensure
support. compliance and pre-emptive actions.
- Firewall, regular back up of data, crime and cyber insurance in place. - Clear communicated policies and Code of Conduct issued to all
employees and partners.
- Continual review and strengthening of processes, controls and
security. - Internal training and awareness communications.
- Information Policy, Privacy Policy, Breach Notification Policy and - Support from external experts in all countries in which we operate.
Disaster Recovery Plan in place.
- Reasonable due diligence is carried out on all customers and end
- Staff and partner awareness communication and training. users.
- Sanction checking processes are implemented and documented.
Risk rating Trend Risk rating Trend
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: High Impact: Medium
The strategic report was approved by the board and signed on its behalf by:
Richard Edwards
Chief Executive Officer
16 March 2022
Board of Directors
Non-Executive Directors
Kate Allum, BSc.
Non-Executive Chairman
(A,N,R)
Kate has an extensive track record of senior executive and Non-Executive
leadership roles in the food supply chain and agriculture industries. Her
previous executive roles include Head of European Supply Chain at McDonald's
Restaurants and Chief Executive of First Milk, the British farmer-owned dairy
co-operative.
Kate is currently a Non-Executive Director of Cranswick plc, a leading UK food
producer and Co-Op plc. Until 2022, she also held Non-Executive roles at Stock
Spirit and Origin Enterprises plc, an international agri-services business.
Kate became Non-Executive Chairman in 2021.
Ian Hamilton, BSc (Hons).
Non-Executive Director
(A,N,R)
Ian has an extensive track record of senior-executive and Non-Executive
experience in the animal genetics and specialty feed additive industries. As a
member of the founding management team of Aviagen, he played a pivotal role in
building the business through organic and acquisition growth to become the
world's largest poultry breeding business. Ian has supported several blue-chip
investment houses targeting the Agribusiness and Agtech sector. In addition,
he was a consultant to Anitox Ltd, a formaldehyde pathogen control business
for raw material and animal feed hygiene applications.
Matthew Robinson, MA, ACA.
Non-Executive Director
(A,N,R)
Matthew Robinson was appointed to the Board in January 2021. Matthew has spent
much of his career working with and advising growth companies and is currently
Non-Executive Chairman of AIM listed Goldplat plc. Matthew started his career
as a Chartered Accountant and was previously a Corporate Finance Director at
finnCap and Panmure Gordon.
Executive Directors
Richard 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 £140 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.
Marc Wilson, BA (Hons), ACMA.
Group Finance Director
Marc is a member of the Chartered Institute of Management Accountants and
currently Group Finance Director as part of the Executive Management team for
Anpario. Marc joined Anpario in 2010 and his responsibilities have included
the development and rollout of Anpario's global ERP system along with the
accounting and integration of acquisitions during this time.
Marc Wilson joined the Board as Group Finance Director with effect from 1 July
2021.
Karen Prior, BSc (Hons), FCA.
Corporate Responsibility Director & Company Secretary
Karen joined the board in October 2009, originally as Group Finance Director
until 1 July 2021 when she relinquished the role and became Corporate
Responsibility 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/
(http://www.anpario.com/aim-26/) .
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.
Anpario is committed to conducting business in a socially, ethically and
environmentally responsible manner. We do this by focusing on a 3 Pillars
framework: 'Our People; Our Planet; and Our Promise'.
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 favouring 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/investor/ (http://www.anpario.com/investor/) .
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. Due to Covid-19
restrictions during 2020 and 2021 the AGM's had restricted attendance with
proxy voting and submission of questions encouraged by email. We will be
updating the Company's articles to enable the holding of virtual meetings in
future.
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. Where appropriate on specific matters the
Board or its Committees will conduct shareholder consultations.
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 with social, ethical
and environmental responsibility and engaging with all of its key
stakeholders, including the communities in which the Group operates, its
people and the environment. As noted we have launched the 3 Pillars: 'Our
People, Our Planet and Our Promise' as a framework to focus our behaviours
with respect to sustainability and our ESG objectives. Full details of the
Group's approach to these matters are included in a new Environmental and
Social Responsibility Report later in this annual report and on the website:
www.anpario.com/about/sustainability/.
Principle 4: Effective risk management
Anpario has specific resource and processes in place to proactively identify
and manage risk to protect its 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 Risk management 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 and 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 not felt to be appropriate
for the Group at the current time due to its size and robust internal control
systems but this is 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; and
- 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;
- 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.
Technical standards and 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 four independent Non-Executive Directors and two Executive
Directors.
Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Richard Edwards Chief Executive Officer B Eng (Hons), C Eng, MBA. M
Marc Wilson Group Finance Director BA (Hons), ACMA.
Karen Prior Corporate Responsibility Director BSc (Hons), FCA.
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Kate Allum Non-Executive Chairman BSc. M M M
Matthew Robinson Senior Independent Director MA, ACA. C M C
Ian Hamilton Non-Executive Director BSc (Hons). M C M
Audit = Audit Committee, Nom. = Nomination Committee, Rem. = Remuneration
Committee
C = Chair, M = Member
The Board considers that the Non-Executive Directors are 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, www.anpario.com/aim-26/ (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
Corporate Responsibility 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 during 2021. A list of the
meetings convened during the year is set out below.
Number of meetings convened Full attendance of meeting
Board meetings 5 Yes
Audit Committee meetings 2 Yes
Remuneration Committee meetings 2 Yes
The Chief Executive Officer and Group Finance Director work full time for the
Group. The Corporate Responsibility Director worked two to three days a week
in the year and ensures 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
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 induction.
A copy of our Code of Conduct is available on our website,
www.anpario.com/code-of-conduct/ (http://www.anpario.com/code-of-conduct/) .
Anpario has stated policies on Corporate Social Responsibility, Anti-Bribery
and Corruption and Whistleblowing Policy that are applicable to all our
employees, other workers, 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 Corporate Responsibility 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 www.anpario.com/aim-26/ (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 Ian Hamilton. 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 or other Non-Executive, the committee shall
produce a job specification, including the time commitment expected. A
proposed Non-Executive's other significant commitments should be disclosed to
the Board before appointment and any changes to 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.
Full due diligence is undertaken by the Company and NOMAD.
New appointments made in the year have gone through the processes as described
above and more information can be found in the Board Changes section of the
Chairman's Statement.
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 17 June 2021, full details of which are
included in the 2020 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 Director Passed
4 Re-elect Kate Allum as Director Passed
5 Re-elect Matthew Robinson as Director Passed
6 Re-elect Ian Hamilton as Director Passed
7 Re-appoint BDO LLP as Auditors Passed
8 Authorise the Directors to agree the auditor's remuneration Passed
9 Authorise Issue of Equity with Pre-emptive rights Passed
10 Authorise Issue of Equity without Pre-emptive rights Passed
11 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 www.anpario.com/investor/annual-reports/
(http://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 www.anpario.com/investor/ (http://www.anpario.com/investor/) .
Environment and Social Responsibility Report
Environmental responsibility
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically and environmentally responsible manner engaging with all
our key stakeholders, including the communities in which we operate. The key
issue of climate change has highlighted the critical part played by
agriculture and food production and the necessity for collective action to
achieve a net-zero emissions economy for a world that prioritises the health
of people and our planet.
Anpario's team seek to meet environmental challenges with sustainability at
their heart and pursuing a journey of continuous evolution and progression. We
recognise that it is our responsibility to identify problems faced by
producers globally and find effective sustainable solutions and as we continue
to grow on the strong foundations built over the past four decades. We aim to
be a leading light now and in the future.
We are leaders in the field of speciality feed additives, our products capture
natures ingenuity and work in harmony with the animals' biology to deliver
sustainable and natural solutions. It is through our products that we can have
the greatest positive impact, empowering global animal protein producers to
produce more from less, preserving vital resources, safeguarding food
production and human health, whilst protecting the planet. We promise to seek
new ways of operating that protect valuable resources and remain committed to
high environmental standards and robust health and safety measures.
We believe that through our product innovation, management of our operations
and aligning with stakeholders who share our values and sustainability
objectives, we can help our global customers to achieve their own sustainable
goals faster.
UN Sustainable Development Goals
The UN Sustainable Development Goals (SDG's) provide a globally accepted
roadmap for addressing many of the most urgent global, economic, environmental
and social challenges. Agreed at international level in September 2015, the
achievement of these 17 goals by 2030 requires extensive participation and
creates a key role for businesses in delivering entrepreneurial solutions that
can help meet these challenges. Anpario aligns with several SDG's and the
goals highlighted below are those where we recognise that we can play our part
in creating positive impact for people and the planet, now and into the
future.
SDG 2: Zero hunger - end hunger, achieve food security and improved nutrition and promote sustainable agriculture
Agriculture and fisheries can provide nutritious food for all and generate
decent incomes, while supporting people-centred 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.
SDG 3: Good health and well-being - ensure healthy lives and promote wellbeing for all at all ages
We are leading 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. The misuse of antibiotics in agricultural
production is a significant threat to animal and human health. Anpario
provides products and guidance to support farmers to:
- improve animal gut health;
- defend against mycotoxins;
- reduce and where possible remove the unnecessary use of
antibiotics; and
- safeguard the use of antibiotics for effective treatment of sick
animals.
SDG 12: Responsible consumption and production - ensure sustainable consumption and production patterns
Anpario's phytogenic and organic acid 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.
SDG 13: Climate action: take urgent action to combat climate change and its impacts
Anpario is tackling climate change through establishing energy reduction
initiatives and making renewable energy investments and commitments including
Net Zero Carbon by 2030. Our products help farmers to feed more nutritious
diets with a lower environmental footprint to their animals which reduces
negative environmental impacts such as:
- nutrient loss;
- greenhouse gas and ammonia emissions; and
- degradation of ecosystems.
SDG 14: Life below water - conserve and sustainably use the oceans, seas and marine resources for sustainable development
Anpario works to protect and enhance marine life by working with aquaculture
producers globally to improve production systems, sourcing responsibly and
reducing marine waste. 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 are progressing with aquaculture experts
new formulations for sustainable and antibiotic free fish production.
SDG 17: Partnerships for the Goals: strengthen the means of implementation and revitalise the global partnership for sustainable development
Anpario works collaboratively with other organisations and stakeholders with
the common goal of sustainable food production. To achieve optimal circular
sustainability means educating distribution networks, employees, partners and
working with customers, our supply chain and leading global universities who
share our goals to lead initiatives to replace unsustainable practices. It
means leading by example and actively demonstrating how we apply and achieve
sustainable objectives to our partners to inspire positive change.
Our Commitment and 3 Pillars
Anpario is committed to conducting business in a socially, ethically and
environmentally responsible manner. We will do this by focusing on 3 Pillars:
'Our People; Our Planet; and Our Promise'.
Sustainability is a core focus for Anpario and driven by our people to deliver
leading product innovations, operational excellence and engagement with key
stakeholders. We are building on strong foundations and are committed to
continuous responsible development that will help to safeguard the planet now
and for future generations. Alongside our customers we work responsibly to
identify problems faced by protein producers globally and we collaborate with
leading industry and research partners to find effective sustainable
solutions.
Our People
Anpario is committed to:
- protecting and empowering employees;
- embracing diversity, equality and inclusion of our employees and
their communities; and
- working with our customers, suppliers and other stakeholders for
a better tomorrow.
At Anpario we recognise the importance of nurturing and developing lasting
relationships with customers and suppliers. Building and continually
developing a stable, highly motivated and skilled workforce is key to our
approach. 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. Together we drive a
positive culture with employee well-being prioritised and setting high
standards to ensure we effectively manage risk and health, safety and ensuring
a safe working environment. Our employees embody Anpario's key values of
"Integrity, Teamwork, Innovation and Leadership".
It is Anpario's policy to involve colleagues in the business and to ensure
that matters of concern to them, our aims, objectives and financial
performance are communicated in an open way. Where appropriate and permitted,
employees are offered the opportunity to become shareholders to promote active
participation and commitment to our success.
The Employee handbook 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.
Gender and diversity
124 employees work for Anpario in the UK and its global operations. Employees
are recruited from local communities which has helped us build a very
ethnically diverse team of which we are very proud. The team includes 13
nationalities speaking 22 languages with 43% of positions of manager and above
being held by non-white. Females represent 3 out of 7 the Executive Management
team and 2 out of 6 of the Board are women including the role of Chairman.
Specific training is given to all employees in respect of key policies
including online training videos and in person equal opportunities and
diversity and health and safety training. An analysis of Directors, managers
and other employees by gender as at 31 December 2021 is as follows:
Male Female
Directors 4 2
Group Management 18 12
Production 28 2
Administration 5 11
Sales and Technical 23 19
Total 78 46
Equal opportunities
Anpario is committed to equality of opportunity for all of its current and
prospective employees, and we ensure that we treat people in a fair and
equitable manner.
The Group considers applications for employment from disabled persons equally
with those of other applicants having regard to their ability, experience, and
the requirements of the job. Where existing employees become disabled,
appropriate efforts are made to provide them with continuing suitable work
within the Group and to provide retraining if necessary.
Training and development
Anpario support a motivated and highly skilled workforce, where talent is
nurtured, and opportunities created for all. Our belief in solving problems
from new perspectives using science, experience and technology continues to
drive positive change to our ways of working.
We recognise the importance of developing talent within our business through
continuous learning and development. This is a key part of our succession
planning and preparing our business for the future to ensure that we retain
key individuals, develop high potential and future business leaders. We aim to
develop and promote from within where possible and three members of our
Executive team commenced at Anpario straight from school or university.
Employees are encouraged to further develop their skills and we provide
appropriate training to support our people and grow our organisational
capabilities. Anpario currently:
- 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;
- provides financial and study leave for professional and work
related qualifications; and
- has several apprentice places.
We value long service and retaining staff is fundamental to our success and
the creation of a strong, robust business. Anpario has a wealth of long
serving employees across its global operation, these key staff continue to
advance and develop within the business and play a major part in nurturing
future Anpario talent.
Percentage of Employees with Extended Length of Service:
5 years + 35%
10 years + 17%
15 years + 6%
Community Engagement
We believe in contributing and enriching the communities in the which we
operate by employing and offering development opportunities to local people.
We encourage active participation by our employees in initiatives that support
our local communities, through social, educational, and charitable
contributions. Anpario supports charities and local communities through
donations and volunteering. We believe it is important to give back and serve
local people and their communities, contributing to positive and measurable
social change. We have launched our 'Give Something Back' volunteer days, to
allow all employees to take a day each year during the working week to
volunteer at their chosen charity within their local area.
Anpario and its staff are proud to have been able to support the local
community over the course of the pandemic, having donated £10,000 to the
Nottingham Hospitals Charity "NHS Heroes Appeal run" and donated £10,000
towards Doncaster and Bassetlaw Teaching Hospitals Rainbow Garden Appeal. The
latter aimed to create a memorial garden in honour of those lost to Covid-19,
providing a place of comfort and contemplation for its visitors. Anpario staff
volunteered their time to work on the Rainbow Garden Memorial during the
build, creating a valuable outdoor space for the friends, family and loved
ones of those who sadly passed away, as well as for staff working within the
hospital.
During the height of the PPE shortages in 2020, Anpario were able to use their
logistics expertise and business contacts to source 50,000 medical grade face
masks. These were donated and distributed, with the help of staff volunteers,
to more than 12 local care homes, hospices and community care providers
surrounding our Manton Wood head office.
In recognition of the community work undertaken Anpario was awarded the
"Giving Back: Community Business Hero Award" at the Sage Impact Awards.
Our charity of the year for 2021 was Macmillan Cancer Charity. Macmillan
provides financial, physical and emotional support to those patients and
families with a cancer diagnosis. They also provide training to specialist
nurses who work within the community to support cancer patients. Macmillan are
also very active in fundraising, from holding coffee mornings and organising
fundraiser sports events, to providing help lines and a free will writing
service. Anpario worked with Macmillan throughout 2021 to raise awareness and
funds for the cause. This included a company raffle and a bake sale.
Our staff have voted to support Weston Park Cancer Charity in 2022. This local
charity provides financial, physical, and emotional support to patients and
families facing a cancer diagnosis and an experimental cancer research centre
which conducts vital research and clinical trials run by exceptional medical
experts every year. The results are shared, helping to influence cancer
treatments both nationally and globally.
The Anpario Green Team
Our staff are key to advancing processes and initiatives that improve our ways
of working and protect the planet. Through our "Green Team" activities we
encourage participation and raise awareness across our entire workforce to
initiate more sustainable ways of working throughout the business. Through
ongoing commitment of our team and cross functional projects we aim to improve
our sustainable practice with current objectives including: production
efficiency improvements, identify new "Ways of Working" to reduce waste in
manufacturing our products and office wastage reduction.
Working Together During the Covid-19 Pandemic
Throughout the pandemic, our people have demonstrated great commitment,
collaboration and resilience to help each other, serve customers and support
their local communities. This has been facilitated by our focus on health and
safety, flexible and remote working, and use of digital technologies. Our
priority is the well-being of employees, their families and our customers. We
have monitored and followed local public health guidance in every country
where we operate, while local teams have supported each other working split
shift working patterns and covering different roles when colleagues have been
self-isolating. Our procurement and customer service teams have been proactive
in finding creative ways of continuing shipments to customers, despite the
challenges and complexities created by Covid-19 and also Brexit and other
logistics and supply chain difficulties.
Our Planet
In aligning with UN SDG's Anpario is committed to:
- Driving global protein production and support our customers to
build strong sustainable businesses, without negatively impacting future
generations.
- Minimise impact of our global operations on the environment.
- Continuous product innovation.
- Improving our supply chain's environmental, social and ethical
practices.
Anpario seeks to optimise animal protein production by using sustainable
natural resources for the benefit of animals, our customers and human health.
Our ongoing commitment is to support, influence, and assist farmers and food
chain producers to switch to healthier more sustainable feed ingredients,
which will deliver greater global food security and a reduction in feed
poverty. We partner with government, industry and leading research bodies
globally. Together we advance product innovation and create long-term
sustainable solutions, helping to maintain animal health and optimise
nutrition throughout the supply chain. Combatting diseases that can destroy
animals, impact welfare and livelihoods, without negatively impacting the
environment, is key to our approach.
Our innovative products work in harmony with the animals' biology to promote
healthy growth and demonstrate value to the animals fed directly throughout
all life stages and indirectly to their progeny; and ultimately within the
human food chain. This contributes to the more efficient use of feed
ingredients, reduces environmental impact and supports responsibly produced
food.
Underpinning our Planet objectives is a core strategy "Anpario's 4R's" a
programme to reduce antibiotic use in animal production through "Review,
Reduce, Replace, Responsibly" which supports our customers to reduce reliance
on antibiotics, whilst maintaining efficient production using natural
sustainable solutions. Our products replace harmful applications such as
formaldehyde and zinc oxide used for antimicrobial control in the feed, and
help reduce antibiotic use in animal production thus improving and
safeguarding both animal and human health. The patent attained for
Orego-Stim® in reducing the proportion of bacteria and antimicrobial
resistance, when added to the diets of young cattle, is just one example of
how Anpario is providing environmentally safe and sustainable solutions for
the world's population.
Helping Customers to Reduce Carbon Footprint
Anpario is one of the leading companies helping global livestock producers to
meet environmental and sustainability challenges and contributing to the
research and development progress that the agricultural livestock industry is
achieving in improving its carbon footprint and greenhouse gas emissions
(GHG's). Anpario prides itself on being a low carbon manufacturer of animal
feed additives, with two thirds of sales from products which can be described
as from sustainable sources and from non-carbon derived raw materials. These
products are also the Group's fastest growing. Furthermore, our products help
producers to be more efficient in the resources they use by improving animal
feed conversion rates through natural gut health improvement making the animal
more efficient in nutrient utilisation.
Anpario's 100% natural oregano essential oil product, Orego-Stim, can help to
support greener egg production by improving liveability and feed efficiency,
naturally optimising hen performance and helping to produce more eggs per hen.
The recently launched Optomega® Algae is a new, micro-algae derived, omega-3
supplement for use in all species including aquaculture, targeted at breeding
animals and producers supplying enriched meat, milk and eggs containing higher
levels of omega-3 fatty acids. The product is 100% natural, from a sustainable
source. Furthermore, preliminary data from an in vitro study at the University
of Reading suggests that dairy cows fed Optomega® Algae can lower methane
output by at least 7% in just a 24-hour period. It is well known that feeding
a source of Docosahexaenoic acid to dairy cows supports the establishment of
pregnancy, which in itself helps to lower a farm's GHG's.
In aquaculture, Anpario has proven trials and customers benefiting from
improved liveability and biomass in production, enabling regions around the
world to return land and water resources to their natural habitat.
Partnerships and Accreditations
Anpario partners with organisations that work to inspire and enable cutting
edge science and sustainable farming that is prosperous, enriches the
environment and engages communities. These partnerships help to assist with
our goals and work with our customers to achieve optimum animal performance
through sustainable, natural solutions.
We hold organic farming approvals in numerous global territories, required by
regional certifying bodies to permit the use of several of our key products in
organic production systems.
Anpario has signed up to 365 Vision, which is the new 10-year plan for the
International Egg Commission (IEC) and supported by the United Nations and
aligned with SDG's. Eggs are an affordable, nutritious, and low impact food
source and the plan aims to develop the nutritional reputation of the egg on
an international scale and to accelerate global average egg consumption per
capita to 365 eggs per annum from 165 today.
We work with suppliers who share our aspiration to deliver high quality,
economic products without exploiting or damaging the environment. Our key
partners share the same ethos and commitment to natural based farming
solutions, including circularity in production with no use of external
resources except rainwater, green energy and zero use of chemical pesticides.
Anpario's ambition is to cease to consume finite materials that cannot be
renewed or replenished, using only raw materials from common minerals and
plants with plentiful natural resources. For example:
- Oregano oil used in the production of Orego-Stim® is derived
from cultivars of Origanum vulgare spp. hirtum that are specific to Anpario
and grown using organic, pesticide-free principles;
- Microalgae used in the production of Optomega® Algae is grown
using sustainable principles from natural waste of existing sugarcane
production processes. The waste sugarcane is also used to produce energy to
power the factory; and
- Fish and marine oils used are sourced from farmed fish produced
for the human food chain or sourced from suppliers certified for sustainable
fishing.
Anpario will only engage with suppliers operating within international
regulations who are capable of meeting our high specification and operate
rigorous quality standards quality standards. Due diligence is undertaken for
assurance that all applicable ethical labour, trade laws and regulations are
complied with including the requirements of the UK Bribery and Modern Slavery
Acts. Anpario's employees and partners are contractually bound by its Code of
Conduct.
Operational Impact
We are focused on minimising the impact of our operations on the Planet and
aim to reduce our own carbon emissions, whilst also helping our stakeholders
to do the same. Working with the UK Government and the Environment Agency our
industry trade association, Agricultural Industries Confederation (AIC), has
set out a road map for a sustainable food chain and an open partnership across
the industry to achieve the transition to Net Zero Carbon (NZC) by 2050.
Anpario's ambition is even more ambitious to achieve NZC by 2030* and have
started to implement plans to achieve this.
Operational practices are kept under continuous review to drive further
improvements in efficiency, to eliminate waste, reduce energy consumption and
our carbon footprint. Examples include:
- The installation and commissioning of solar panels generating
electricity for use at our plant in Nottinghamshire reducing our reliance upon
fossil fuels;
- almost all of our carrier materials are supplied in bulk and
directly added from silos to minimise packaging waste;
- liquid ingredients are stored in bunded storage silos;
- pre-used reconditioned and cleaned intermediate bulk containers
(IBC's) used for packaging and supply of bulk liquids;
- product and material waste is collected by a waste contractor
and environmentally recycled;
- our bottling plant produces liquids in 100% recyclable plastic
bottles;
- packaging design is constantly reviewed resulting in
improvements such as a recent reduction box size;
- dust extraction system minimises dust in the production area and
prevents emission into the environment;
- automated palleting system has reduced forklift movements; and
- investment in additional warehousing on site to reduce packaged
raw material movements in and out of third party storage.
We are dedicated to driving continuous improvement and targeting operational
efficiency though our production facility and committed to developing and
monitoring carbon reducing measures throughout our operations, benchmarking to
reduce waste, and emissions to land, air and water. Positive environmental
impact assessments are expected for any new operational investments submitted
for approval and alignment with our clear goals and ESG strategy which is
focused on:
- Net Zero Operations by 2030*;
- 100% Sustainable Products;
- Zero Finite Material; and
- Zero Waste.
*Scopes 1 and 2 plus Scope 3 relating to group business travel & waste.
This is our first full year of monitoring carbon emissions, water usage and
waste and Anpario is already delivering on our promise to reduce our impact on
the planet. Overall reductions in 2021 compared to 2020 were:
- Electricity consumption down 9.7%
- Gas consumption down 2.6%
- Fresh water loss down 47%
- Waste produced down 3.5%
As overall tonnage produced increased by 10.2% in 2021, the reductions per ton
achieved over the year were:
- Electricity consumption per ton down 18.1%
- Gas consumption per ton down 11.6%
- Fresh water loss per ton down 55.4%
- Waste produced down 12.6%
Energy Consumption & Carbon Emissions
This was the first year in which consolidated data for the Group's use of
energy, waste and water was collated. The exercise has helped to identify key
areas of focus and is assisting the Group in drafting an action plan to reduce
our impact. Measurement of energy consumption & carbon emissions by
businesses is made universal by categorising into 3 areas:
Scope 1 - This relates to emissions relating to: stationary consumption i.e.
fuel consumption used in our operations (to produce electricity, steam, heat
or power) and mobile consumption by our own vehicles, and emissions to the
air.
Scope 2 - These are the emissions we create indirectly - like the electricity
or energy use for heating and cooling buildings, being produced on our behalf
by energy suppliers.
Scope 3 - In this category go all the emissions associated, not within the
business itself, but those emissions for which the organisation is indirectly
responsible in its supply chain. e.g., associated with the products from our
suppliers and to the use of our products by our customers. This is an area in
which we are in the process of gathering data and setting targets in
collaboration with our stakeholders.
cumulative
2019 2020 change % change 2021 change % change
Scope 1 15 11 (1) (7%) 10 (5) (38%)
Scope 2 164 145 (26) (18%) 119 (45) (27%)
GHG emissions in tCO(2)e 179 156 (27) (17%) 129 (50) (28%)
Group sales £m 29.0 30.5 2.9 9% 33.4 4.4 15%
Intensity (t tCO(2)e: per £m sales) 6.2 5.1 (1.3) (24%) 3.8 (2.4) (38%)
Energy use in kWh:
Natural Gas 51,433 41,670 (1,068) (3%) 40,602 (10,831) (21%)
Electricity 641,366 620,134 (60,551) (10%) 559,583 (81,783) (13%)
Business Travel
Whilst we have always sought to minimise travel and flights to essential
multi-purpose trips, Covid-19 restrictions have taught us valuable lessons in
how much more we can do to reduce our carbon footprint by adapting our ways of
working through homeworking, e-conferencing, internet based training, a
significant reduction in physical visits and movements, and a paperless office
becoming our new normal.
Waste and packaging
Our aim is to maximise the value of the resources we use and rely on, reduce
all waste being generated across the Group and divert waste away from
landfill. We place specific emphasis on the type of packaging used to protect
our products and ensure as far as possible the use of recyclable materials.
The Group continues to invest in infrastructure and management systems to
reduce waste and packaging.
Water
Our water consumption is low compared to manufacturing industries due to the
nature of our formulations and production systems. With increasing pressure on
this shared resource, we are mindful of the importance of protecting water
sources and are committed to using water as efficiently as possible. We
exercise extreme care to ensure that all waste water complies with relevant
legislation and the Group continues to invest in infrastructure and management
systems to minimise potential spillages or other forms of water contamination.
We continuously look for ways to conserve and re-use our water volumes and are
currently investigating initiatives to further reduce our reliance on water
resources.
Delivery and Freight
Anpario's products are delivered through distribution channels and direct to
customer's using third party haulage and global freight services. We note that
there are carbon emissions associated with the delivery of our products,
however, this is offset by the feed efficiency and improved liveability gains
that our products make for our customers.
Our Promise
Anpario is committed to:
- Honest, ethical, and responsible practice.
- Positive engagement and partnerships.
- Best practice, governance and stewardship.
- Helping customers build strong and sustainable businesses.
Anpario recognises the importance of corporate social responsibility. It is
essential to our reputation that our team offer honest and open advice,
matched by the integrity and provenance of our products. Anpario's positive
culture ensures honesty, ethical practice and responsibility is instilled into
all activity across the business. "Do the Right Thing" is a fundamental
message that creates a sound base to communicate our cultural guidance and
code of conduct throughout the entire group. Our Code of Conduct represents
our commitment to our values, to doing the right thing, personally and
professionally, and outlines the expected standards by which Anpario leaders
and employees should work in the delivery of their duties, across all job
functions, departments, and global locations in which we operate.
Policies and guidance are provided to all staff on expected behaviours at the
point of induction and fortified through training and appraisal procedures.
Compliance to the Anpario Code of Conduct is required from all employees and
businesses partners alike with a zero-tolerance policy to transgressions
whilst also facilitating whistleblowing internally and externally.
Anpario assures safety of its products, absolute transparency and traceability
of raw materials, and compliance with international regulations through
rigorous internal control processes and quality standards. We retain key
industry quality accreditations in particular, UFAS and FEMAS certifications.
Leadership
Anpario promises to lead by example and consistently promote a culture of
integrity by making ethical decisions and acting responsibly and honestly in
everything we do whilst striving for excellence in our business objectives.
Our leaders understand the importance of our ethics framework to safeguard
best practice and excellence in governance and stewardship. The following
measures help to ensure compliance:
- the Board sets overall business strategy and plans which include
key ESG initiatives;
- the Board identifies key risks and opportunities which are
regularly reviewed and updated;
- Anpario's Board structure is in line with best practice and
Corporate Governance Codes, including independent Chair and Senior Independent
Director;
- the Board has clear and transparent division of roles;
- performance related incentives are dependent on achievement of
strategic business and ESG objectives; and
- business continuity and emergency response plans are in place
and regularly reviewed by the Board to ensure effective action and
communications.
Shareholder Delivery and Stewardship
We maintain strong relationships with shareholders, ensuring they understand
our strategy, progress and performance and that we understand their views and
address any concerns. Anpario's Promise to our shareholders is to consistently
strive to increase corporate value via best business practices and to produce
healthy returns and profit growth and ensure:
- regular informative communication through investor roadshows,
meetings and presentations;
- regular news flow on key developments in the business;
- engagement with investors regarding executive remuneration,
sustainability issues and Board changes;
- adherence to Aim Rules for Companies and compliance with Quoted
Companies Alliance Corporate Governance Code;
- appointment of external auditors who are tendered on a periodic
basis and report to the Audit Committee;
- Anpario's Board and its committees are chaired by independent
non-executive directors; and
- regular Board training on AIM Rules and Market Abuse Regulation.
Group Policies
Anti-Bribery and Corruption policy
We are transparent and compliant with all applicable laws and we ensure that
our employees and our external business partners are aware of their
responsibilities. We expect each individual acting on Anpario's behalf to be
responsible for maintaining our reputation by conducting business honestly,
transparently, professionally and ethically. Our Anti-Bribery and Corruption
policy and training outlines our zero tolerance and articulates that no
employee or representative of any Group business is to offer or accept any
bribe, including facilitation payments, or engage in any form of corrupt
practice.
Human Rights
We are committed to respecting human rights and labour practices in our
operations and supply chains and recognise the importance of operating in an
ethical and responsible manner. The Group has procedures including a
requirement for suppliers to accept our stance in relation to preventing
Modern Slavery. Employees are given awareness training as part of their
induction programme with updates provided to all employees as appropriate. We
do not tolerate the use of forced or child labour, in any operations connected
with the Group.
Whistle-blower facilitation
It is our policy to encourage colleagues or external business partners to
speak up if they have any concerns about wrongdoing in the workplace. Any
employee who raises their concerns in good faith will be supported for doing
so and will be protected from retaliation. We have a number of reporting
channels through which concerns can be confidentially raised both informally
or formally through our grievance procedure and to our In-house Counsel, Human
Resources Team or any Board member. In the event of a concern being raised we
promise to take it extremely seriously and carry out an independent
investigation as appropriate to validate the complaint, following which the
relevant process is implemented, with oversight and reporting through to the
case being resolved or closed.
Anpario plc has had no formal whistleblowing cases reported during the year.
In addition to the Code of Conduct the Group's Policies which are available on
the website and internal server include:
- Sustainability Policy
- Anti-bribery and Anti-Corruption Policy &
- Modern Slavery Policy
- Whistleblowing Policy
- Supplier Selection and Procurement Policy
- Health and Safety Policy
- Equal Opportunity and Dignity at Work
- Dealing with Claims of Unlawful Discrimination Policy
Directors' report
The Directors present their Annual Report and audited consolidated financial
statements for the year ended 31 December 2021.
The Directors believe that some of the requisite components of this report are
set out elsewhere in the Annual Report and/or on the Company's website,
https://www.anpario.com/ (https://www.anpario.com/) . The detail below sets
out where the necessary disclosures can be found.
Incorporation
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, 03345857. The Company's registered office
is Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS, England.
Principal activity
Anpario plc ("the Company") and its Subsidiaries (together "the Group")
produce and distribute natural feed additives for animal health, hygiene and
nutrition. A review of the performance and future development of the Group's
business is contained in the Chairman's Statement, Chief-Executive Officer's
Statement and Financial Review set out earlier in this Annual Report.
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group has adequate resources
to continue in operation for the foreseeable future. The Group is profitable
and expects to continue to be so, with a significant level of cash resources.
Accordingly, the financial statements have been prepared on a going concern
basis, more detail can be found in note 2.1 of the Group financial statements.
Results and dividends
The financial results for the year ended 31 December 2021 are set out in the
consolidated financial statements later in this Annual Report and summarised
in the Financial Review earlier in the Annual Report. The profit for the year
after tax was £4.7m (2020: £4.2m).
The Directors propose a final dividend of 7.00p per share (2020: 6.25p) making
a total of 10.00p per share for the year (2020: 9.00p), amounting to a total
dividend of £2.1m (2020: £2.0m). More information can be found in note 11 to
the financial statements.
Group research and development activities
The Group is continually researching 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.
Directors
The Directors during the year under review were:
Non-Executive Directors
Peter Lawrence Non-Executive Chairman (resigned 17 June 2021)
Richard Wood Senior Independent Director (resigned 31 January 2021)
Kate Allum Non-Executive Chairman (appointed 1 February 2021)
Matthew Robinson Non-Executive Director (appointed 11 January 2021)
Ian Hamilton Non-Executive Director (appointed 1 April 2021)
Executive Directors
Richard Edwards Chief Executive Officer
Karen Prior Corporate Responsibility Director and Company Secretary*
Marc Wilson Group Finance Director (appointed 1 July 2021)
*Karen Prior was succeeded as Group Finance Director by Marc Wilson on 1 July
2021.
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.
Employees
Details of how the Directors have engaged with employees are set out in the
Section 172 report. The Group's policies in relation to equal opportunities
are explained in the people section of the Environment and Social
Responsibility Report.
Stakeholder engagement
Details of how the Directors have engaged with it's stakeholder groups are set
out in the Section 172 report.
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.
Share capital
During the year 35,048 (2020: 137,918) Ordinary shares of 23p each were issued
pursuant to the exercise of share options. During the year the Company issued
50,000 (2020: 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 the AGM to renew the Directors'
limited authority last granted in 2021 to make market purchases of Ordinary
shares in the capital of the Company.
As at 31 December 2021, the Company holds 440,388 (2020: 440,388) Ordinary
shares of 23p in treasury.
Substantial shareholdings
At 28 February 2022, analysis of the share register showed the following
holdings of 3 per cent or more of its issued share capital:
Ordinary Shares (000) % held
JTC plc 2,800 12.1
Investec Wealth & Investment 2,419 10.4
Unicorn Asset Management 2,258 9.7
Gresham House Asset Management 1,399 6.0
Interactive Investor 1,137 4.9
BlackRock Investment Management 1,025 4.4
Hargreaves Lansdown Asset Management 991 4.3
Downing 925 4.0
BMO Global Asset Management 904 3.9
BGF 811 3.5
Independent auditor
The auditor, BDO LLP, has indicated its willingness to continue in office and
a resolution seeking to re-appoint BDO LLP as the Group's auditor will be
proposed at the AGM.
Stockbrokers
Peel Hunt LLP are the Company's stockbroker and nominated adviser.
The closing share price on 31 December 2021 was 616p per share (2020: 480p per
share).
Financial risk management
Details of the Company's financial risk management policy are set out in note
2.21 of the financial statements.
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 year. Under that law the Directors have elected to prepare the Group
financial statements in accordance with UK adopted International Accounting
Standards and the Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. The Directors are also required
to prepare financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
In preparing these 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;
- for the Group financial statements, state whether they have been
prepared in accordance with international accounting standards in conformity
with UK adopted IFRS, subject to any material departures disclosed and
explained in the financial statements;
- for the Parent Company financial statements, 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.
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
requirements of 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.
Website publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
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.
The Directors' report was approved by the Board of Directors on 16 March 2022
and is signed by order of the board:
Karen Prior
Company Secretary
16 March 2022
Report of the Remuneration Committee
Foreword
On behalf of the Board, I am pleased to present the Remuneration Committee's
report for the year ended 31 December 2021.
The Committee continuously seeks to ensure alignment of the strategy and
values of the Company and the interests of all shareholders. This includes the
need to recruit, retain and appropriately incentivise high calibre directors
and managers to deliver the Group's strategy.
During the year the Committee has undertaken several key activities, including
shareholder engagement, with a view to ensuring our remuneration practices
reflect what our shareholders consider good practice and to provide
transparency in reporting to ensure that our approach is clear to all our
stakeholders.
In particular I would like to highlight the following changes that will come
into effect for the coming year:
- the adoption a new dilution limit policy that is more aligned
with current market practice.
- the approval of a new long-term incentive plan ("LTIP")
structure to take affect for the 2022 financial year, including the
introduction of a Performance Share Plan ("PSP").
Membership and attendance in the year
The Committee comprises solely of independent Non-Executive Directors.
Executive Directors and external advisors are invited to attend meetings as
required if thought advantageous for consideration of a particular agenda
item.
The Committee is chaired by Matthew Robinson, Non-Executive Director, who took
over this role on 19 April 2021 from Peter Lawrence. The other Committee
members are Kate Allum, Non-Executive Chairman, and Ian Hamilton,
Non-Executive Director who each joined the Committee on appointment as
directors. Richard Wood resigned from the Board and this Committee on the 31
January 2021.
The Remuneration Committee meets as necessary to fulfil its objectives but as
a minimum, at least once a year. The Committee met twice during the year ended
31 December 2021 with full attendance by the Committee members. In addition
the Committee chose to consult with shareholders on changes to Remuneration
Policy to ensure alignment with their interest as well as Group strategy
Key responsibilities
The 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 www.anpario.com/aim-26/ (http://www.anpario.com/aim-26/) .
Key activities in the year
During the course of the year, the main activities of the Committee were:
- evaluation of Directors' remuneration, particularly inline with
Board changes that occurred in the year;
- review of remuneration packages of management across the Group,
including a number of changes to ensure competitiveness and alignment with
shareholder objectives;
- comprehensive review of the Group remuneration policy for
implementation in 2022;
- review of compliance with good practice in terms of remuneration
structures and disclosures;
- engaged with external consultants including FIT Remuneration
Consultants on a number of policy matters; and
- approved awards under the existing LTIP structures for new
Executive Board members.
Changes for the coming year
Further to the above, there were a number of activities that were concluded in
the period after 31 December 2021 that relate to policy matters for the coming
year. The Committee engaged with several shareholders in January 2022 on the
implementation of changes to the Group's remuneration policy. The changes are
set out below.
Dilution limit policy
The current policy, which was set out in Anpario's announcement of 16
September 2016, had no rolling time horizon when looking back at the dilutive
effect of option awards and so introduced a permanent finite limit (of 16.3%)
that had been reached. This in turn meant there was no capacity to implement
incentive plans to create shareholder alignment and incentivisation to members
of the Executive Board, Management Team and other employees who will take the
business forward in the coming years.
Following advice from FIT Consulting and a consultation process with
shareholders, Anpario plans to introduce a new policy on dilution limits in
which, whilst it will initially increase the potential dilution limit
(including all awards made since Jan 2015) to 18%, will by 2025 reduce the
potential dilution from shares awarded under all incentive plans to below 15%
of the ordinary share capital of the Company viewed over a 10-year rolling
period.
Long-term incentive structure
Anpario plans to introduce a new long-term incentive structure that will apply
to Executive Directors and Senior Management. Following a review of current
market practices and considering the merits of different awards structures,
Anpario will introduce a Performance Share Plan ("PSP") Scheme to work
alongside the existing Joint Share Ownership Plan (JSOP) Share scheme.
It is felt that the two schemes will complement each other and both award
beneficiaries and benefit shareholders. The JSOP plan works better for the
beneficiary over a longer-time frame than PSP awards. By combining them, the
goal is to create a mix of medium (PSP) and longer-term (JSOP) motivation for
the beneficiary to achieve shareholder goals. We also believe this approach
will achieve an expected longer term retention benefit to ensure we retain the
best talent.
The JSOP plan will operate as previously, with the specific purpose of
incentivising longer-term share-price appreciation. It is the intention to
issue new awards to the Executive Management team, critical to Anpario's
future growth, under this plan in the near term. Richard Edwards and Karen
Prior will not participate at the present time and will continue to be aligned
with shareholders and motivated by virtue of their previous JSOP awards
received in 2015 and 2016.
The Anpario PSP award will create a maximum opportunity for Executive
Directors equivalent to 100% of salary, Executive Management 40% of salary and
other key management 20% of salary.
Vesting will be based on two performance measures and weighted as follows:
- 75% weighted on achievement of diluted adjusted earnings per
share targets.
- 25% weighted on achievement of range of ESG related targets,
including progress towards net-zero goals.
These will be subject to a three-year vesting period and subject to malus and
clawback provisions.
Other minor policy changes:
- In-employment shareholding requirements:
The Executive Directors are expected to build and maintain a holding of shares
to the value of 100% of salary. Executive Directors are expected to retain all
of the net of tax number of shares they receive through share incentive plans
until the 100% of salary shareholding requirement has been met.
- Post-employment shareholding requirements:
For the first 12 months following cessation of employment, an Executive
Director must retain shares equal to 100% of the in-employment guideline and
in the following 12 months, retain shares equal to 50% of the in-employment
guideline.
- Employee Share Trust Award recycling:
Anpario operates an Employee Share Trust. When awards issued under the Trust
are exercised then any shares retained by the trustee shall not be included
for dilution purposes if re-issued for further awards. This is because they
have already been included for dilution purposes at the date of initial grant.
Remuneration policy for the year in review
Changes outlined above will come into effect for the 2022 year, and the
Remuneration policy for the year ended 31 December 2021 is set out below.
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.
Executive Directors
Element and purpose Operation
Base Salary
To provide a competitive base salary to attract and retain Executive Directors Base salaries are usually reviewed on an annual basis and consider:
of a suitable calibre to deliver the Group's growth strategy.
- individual experience and skills;
- development in the role;
- changes in responsibilities or the size or complexity of the business;
and
- competitive salary levels and market forces.
Benefits
To provide a competitive benefits package as part of total remuneration. Executive Directors receive private medical insurance, critical life and death
in service insurance and a company car allowance. Other benefits may be
provided based on individual circumstances as considered appropriate by the
Committee.
Pension
To provide a competitive retirement benefit. Executive Directors are entitled to receive contributions towards defined
contribution pension plans of up to 10% of their base salary. It may be
permitted to take the benefit as cash in lieu of pension contributions where
appropriate.
The Company will also pass on part of the Employers' National Insurance
savings made that result from any pension salary sacrifice's made by Executive
Directors, in the form of increased pension contributions.
Annual bonus
The incentivise and reward based on the achievement of annual financial Executive Directors' annual bonuses are based on financial performance targets
objectives. which are set by the committee. The target for the year in review was to
achieve a minimum of consensus market adjusted EBITDA targets (after the
provision of the cost of bonus payments), which gives an award equivalent to
40% of their base salary. Performance above this target gives rise to higher
awards up to a maximum of 100% of base salary. In-line with that structure and
award calculation the Committee has approved a bonus of 60% of base salary for
2021.
The Committee has discretion over the amounts awarded and may make
consideration to other corporate activities such as acquisitions and disposals
aligned with shareholder returns.
Share awards
To incentivise and reward achievement of sustained and long-term business The Executive Directors currently receive LTIP awards under the following
performance and create alignment with shareholders. incentive plans: Enterprise Management Scheme ("EMI" which is now closed;
Joint Share Ownership Plan ("JSOP"); and Save As You Earn Scheme ("SAYE").
These award structures all have a three-year vesting period and are market
value option plans and as such reward growth in the share price from the date
of the award. In the case of the JSOP scheme the final exercise price is
equivalent to share price on the date of grant plus an additional carrying
cost, equivalent to simple interest, of 4.5 per cent per annum. As such this
scheme only rewards growth in excess of expected equity market returns.
Non-Executive Directors
The table below sets out the elements of Non-Executive Directors' remuneration
as well as the purpose and operation.
Element and purpose Operation
Fees
To attract and retain Non-Executive Directors of a suitable calibre with the Remuneration of the Non-Executive directors is determined by the Chairman and
required skills and experience. 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.
Fees are reviewed on an annual basis and consider:
- individual experience and skills;
- changes in responsibilities or the size or complexity of the business;
and
- competitive salary levels and market forces.
Reimbursements are made for business related expenses.
Remuneration in the year
Executive Directors
The remuneration of each Director for the year ended 31 December 2021 and the
prior year is set out in the table below.
R Edwards K Prior(1) M Wilson(2)
2021 2020 2021 2020 2021 2020
£000 £000 £000 £000 £000 £000
Base salary 250 250 81 155 70 -
Taxable benefits 10 42 8 24 5 -
Pension 25 25 8 15 9 -
Annual bonus 150 250 49 155 65 -
Share-based payment 2 1 2 12 5 -
Total remuneration 437 568 148 361 154 -
Of which:
Fixed remuneration 285 317 97 194 84 -
Variable remuneration 152 251 51 167 70 -
1 K Prior worked four days a week through to 1 July 2021, after which, upon
taking on her new role as Corporate Responsibility Director this reduced to
two days per week
2 Remuneration shown for M Wilson relates to amounts since the date of
appointment as a Director on 1 July 2021
Non-Executive Directors
The remuneration of each Non-Executive Director for the year ended 31 December
2021 and the prior year is set out in the table below.
Fees
2021 2020
£000 £000
P Lawrence(1) 19 40
R Wood(2) 9 35
K Allum(3) 32 -
M Robinson(4) 34 -
I Hamilton(5) 26 -
(1) resigned 17 June 2021
(2) resigned 31 January 2021
(3) appointed 1 February 2021
(4) appointed 11 January 2021
(5) appointed 1 April 2021
Ad hoc payments
There were no ad hoc payments to any Directors for the year ended 31 December
2021.
Payments to past Directors
There were no payments to past Directors for the year ended 31 December 2021.
Loss of office
There were no loss of office payments made for the year ended 31 December
2021.
Director's share interests and awards
Share interests
The interests of the Directors who served during the period, as at 31 December
2021, in the Ordinary shares of 23p each in the Company were as follows: -
31 Dec Interests Interests disposed 31 Dec Shareholding guidelines Guidelines
2020 acquired in the year
2021 met
Number in the year
Number
P Lawrence(1) 57,950 - (57,950) - - -
R Edwards 210,702 2,694 (125,000) 88,396 100% Yes
K Prior 74,751 2,694 - 77,445 100% Yes
M Wilson(2) 6,826 2,850 - 9,676 100% No
(1) P Lawrence retired from the Board on 17 June 2021
(2) M Wilson was appointed on 1(st) July 2021 and had a beneficial holding at
that date of 9,676 shares
There have been no changes in Directors' interests between 31 December 2021
and 16 March 2022.
Share awards
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").
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" over the vesting period
(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.
Awards granted in the year are as follows.
Director Award plan Date of grant Normal Option price Carrying cost
vesting period (pence per share)
M Wilson JSOP 11 October 2021 3 years 620.00 4.5% simple interest on the option price for the vesting period
Under the Company's long-term incentive plans the following Directors have the
right to acquire Ordinary shares of 23p each as follows.
Director Award plan Option price (pence 31 Dec Options exercised Options forfeited Options granted 31 Dec
per share)
2020 in year in year in year
2021
Number(1)
Number
R Edwards EMI 158.50 80,000 - - - 80,000
EMI 290.00 42,400 - - - 42,400
JSOP(2) 290.00 609,781 - - - 609,781
JSOP(2) 245.00 740,219 - - - 740,219
SAYE 334.00 2,694 (2,694) - - -
SAYE 322.72 5,577 - - - 5,577
K Prior JSOP(3) 79.00 86,956 - - - 86,956
EMI 158.50 80,000 - - - 80,000
EMI 290.00 42,400 - - - 42,400
JSOP(2) 290.00 347,825 - - - 347,825
JSOP(2) 245.00 590,219 - - - 590,219
JSOP(2) 375.00 175,000 - - - 175,000
SAYE 334.00 2,694 (2,694) - - -
SAYE 322.72 5,577 - - - 5,577
M Wilson JSOP(2) 330.00 20,000 - - - 20,000
SAYE 322.72 5,577 - - - 5,577
( ) JSOP(2) 620.00 - - - 50,000 50,000
(1) Awards for M Wilson are shown from the date of appointment as a Director
on 1(st) July 2021
(2) The exercise price also includes a carrying cost equivalent to simple
interest at 4.5% per annum on the option price for three years
(3) The exercise price also includes a carrying cost equivalent to simple
interest at 4.5% per annum on the option price until exercised
Directors' service contracts
The Executive Directors are employed under service contracts with the Group,
these are available to view at the Company's Registered Office. The key terms
of the services contracts are set out below.
Notice period
Executive Director Position Contract Date From Company From Director
R Edwards Chief Executive Officer 5 November 2006 12 months 6 months
K Prior Corporate Responsibility Director 1 October 2009 12 months 6 months
M Wilson Group Finance Director 1 July 2021 12 months 6 months
Non-Executive Directors' terms of appointment
Each of the Chairman and Non-Executive Director have a letter of appointment
stating their annual fee and termination terms.
The appointments are terminable on three months written notice at any time by
either the Company or the Non-Executive Director.
Notice period
Executive Director Date of current appointment From Company From Director
K Allum 1 February 2021 3 months 3 months
M Robinson 11 January 2021 3 months 3 months
I Hamilton 1 April 2021 3 months 3 months
Matthew Robinson
Remuneration Committee Chairman
16 March 2022
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 Matthew Robinson. Meetings
are also attended, by invitation, by the Group Finance Director, external
auditors and other management as appropriate.
The auditor, BDO LLP, has indicated its willingness to continue in office and
a resolution seeking to reappoint BDO LLP as the Group's auditor will be
proposed at the AGM.
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 2021 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 to
assist the Board in ensuring that the financial statements and any formal
announcements relating to financial performance, when taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy. Ensuring that reviews are undertaken on the significant
financial reporting judgments contained in financial statement 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:
- keep under review the requirement for an internal audit
function; 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, BDO LLP on an
annual basis. It receives a detailed audit plan, from BDO 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 BDO LLP.
Judgements and significant risks considered in respect to the Annual Report
Management override of controls
The Committee considered the inherent risk of management override of internal
controls as defined by auditing standards. In doing so the Committee continue
to review the overall robustness of the control environment, including
consideration of the Group's whistleblowing arrangements and the review by the
external auditor.
Recognition and measurement of product development
The Group holds assets on the statement of financial position in relation to
both current research and development projects and developed products that
have resulted in commercial launches. These assets are subject to judgements
such as whether costs are eligible for capitalisation, the amortisation
periods and impairment reviews. The Committee was satisfied with the
accounting policy in force and with the estimates and judgements applied by
management in employing this policy.
Revenue recognition
The Committee considered the inherent risk of fraud in revenue recognition as
defined by auditing standards and was satisfied that there no issues arising.
Matthew Robinson
Audit Committee Chairman
16 March 2022
Independent auditors' report
Opinion on the financial statements
In our opinion:
- the financial statements give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 31 December 2021 and
of the Group's profit for the year then ended;
- the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Anpario Plc (the 'Parent Company')
and its subsidiaries (the 'Group') for the year ended 31 December 2021 which
comprise the Consolidated statement of comprehensive income, the Consolidated
statement of financial position, the Consolidated statement of changes in
equity, the Consolidated statement of cash flows, the Company statement of
financial position and Company statement of changes in equity and notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of
the Group financial statements is applicable law and UK adopted international
accounting standards. 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 Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
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 believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We remain 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 FRC's Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group and the Parent Company's ability to continue to adopt
the going concern basis of accounting included:
- Obtaining an understanding of how the Directors undertook the
going concern assessment process to determine if we considered it to be
appropriate for the circumstances;
- Obtaining the Directors' trading forecasts underlying the going
concern assessment and challenging management on the key estimates and
assumptions within the forecasts around the forecast levels of revenue, gross
profit and working capital cycles, through analysis and comparison of
forecasts with prior year actuals;
- Performing data verification and logic checks to confirm the
mathematical accuracy of the forecast model;
- Reviewing 'stress tested' sensitivity analysis to assess the
quantum of adverse variance against forecast that could be sustained without
creating material uncertainties over the going concern assessment;
- Analysing post year end trading results compared to forecast and
current year to evaluate the accuracy and achievability of forecasts
- Evaluating the adequacy of disclosures in relation to going
concern.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Key audit matters Existence and valuation of brands and developed products intangible assets and 2021 2020
development cost intangible asset.
Yes Yes
Materiality Group financial statements as a whole
£28
5,0
00
(20
19:
£23
5,0
00)
bas
ed
on
5%
(20
19:
5%)
of
Pro
fit
bef
ore
tax
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
We determined that the Parent Company was the only significant component
within the group and a full scope audit was performed by the Group engagement
team.
The remaining 15 components were not individually financially significant
enough to require a full scope audit for Group purposes, but did present
specific individual risks that needed to be addressed in accordance with the
Group audit approach. The 15 components act as sales offices and all purchases
are made from the Parent Company, therefore, through specific risk-focussed
audit procedures over inventories and cash, along with analytical review
procedures relating to we had the evidence needed to form our opinion on the
financial statements as a whole. All work was conducted by the Group
engagement team, with the exception of year-end inventory count attendance
procedures at locations in Brazil, China, Indonesia the Netherlands, Thailand
and the United States of America. Overseas inventory count procedures were
performed by other BDO network firms, operating in accordance with
instructions issued by the Group engagement team.
Key audit matters
Key audit matter How the scope of our audit addressed the key audit matter
Existence and valuation of Brands and developed products intangible assets and The Group has material balances for brands acquired in business combinations We have tested, on a sample basis, that costs capitalised in the year were
development cost intangible asset. and costs capitalised for internally developed products of £3.6m (2020 - valid business expenses related to the development of the relevant product and
£3.7m). Included within this balance is £1.5m in relation to the acquired that they met the eligibility criteria in IAS 38 to be capitalised by
Optivite brand, which has an indefinite useful life. corroborating the costs to supporting evidence. We also made enquiries of
staff involved in the development of the products outside of the finance
function including the technical director to gain an understanding of the
development process. As part of this testing we checked that products
(See accounting policies and Note 13 intangible assets) In addition the Group has capitalised development costs of £0.8m (2020 - classified in development costs were still in the development phase and should
£0.6m) for products in development at the year-end date. not be amortised and fully developed products generating revenue had been
correctly transferred to the Brands and developed products category and
amortised.
Under accounting standards to capitalise development costs management is
required to make certain judgements, including the stage of development, the
technical feasibility of completing the product development and the commercial We have analysed the level of revenue and gross profits generated historically
viability of the products by developed products through review of trading results including those
subject to audit procedures in the year and compared to the carrying value of
the relevant intangible asset, in order to identify evidence of a fall in
demand or other indicators of impairment. This process allowed us to challenge
For developed products and acquired brands an assessment is required of the management's assessment of the expected future returns and the anticipated
future cash flows generated by the assets and over what period of time the life of the products. We substantiated the continued investment in new
assets will generate returns. products relating to the acquired brand through our detailed review of new
product development to support the assessment of an indefinite useful life.
These judgements determine whether development costs are eligible for
capitalisation and the period of time over which assets will be amortised. We assessed the reasonableness of forecast future trading assumptions by
They also form the basis of the forecasts used in impairment reviews of the reference to current year results and budgets and considered the sensitivity
intangible assets. of the estimates of future performance to material changes in the net
realisable value of each of the developed products. We ensured that the
anticipated performance of the developed products was consistent with the
overall group forecasts prepared for the basis of going concern.
There is also a risk of fraud through manipulation in respect of the
assessment made by management of which costs are eligible for capitalisation
We reviewed the impairment assessment models against the requirements set out
within the relevant accounting standard and tested the integrity of the
Owing to the magnitude of the brand and product development intangibles, and mathematical calculations in the model.
the level of estimation and judgement involved in determining both the
eligibility of costs for capitalisation and recoverable amount, we determined
the existence and valuation of brand and developed products and the
development costs intangible assets to be a key audit matter. We consulted with our valuation experts on the appropriateness of the models
for assessing the value in use for the nature of the intangible assets and the
reasonableness of the discount rate applied through benchmarking.
Key observations:
We found the estimates and judgements made by management in valuing the brand
and development intangibles were reasonable and costs had been capitalised
appropriately.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial statements
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Materiality 285 235 257 212
Basis for determining materiality 5% of pre-tax profit 5% of pre-tax profit Capped at 90% of Group materiality given the assessment of aggregation risk Capped at 90% of Group materiality given the assessment of aggregation risk
(4.5% of Parent Company pre-tax profit) (3.4% of Parent Company pre-tax profit)
Rationale for the benchmark applied
Profit before tax remains the key driver of the business' value and is the
underlying driver for management's key measure of performance
Performance materiality 199 141 180 127
Set at 70% of materiality Set at 60% of materiality Set at 70% of materiality Set at 60% of materiality
Basis for determining performance materiality
We concluded that it was appropriate to set performance materiality at 70% of
materiality in recognition that 2021 was the second year that we had audited
the Group. We considered a number of factors including the expected total
value of known and likely misstatements, our risk assessment and knowledge of
the group's internal controls and management's attitude towards proposed
adjustments
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £5.7k (2020:£4.7k). We also agreed to report
differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
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. 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 course of 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 this gives rise to a
material misstatement in the financial statements themselves. 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 this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic report and Directors' report 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 Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors'
report.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
- 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; or
- certain disclosures of Directors' remuneration specified by law are
not made; or
- we have not received all the information and explanations we require
for our audit.
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.
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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to
the Group and the industry in which it operates and considered the risk of
acts by the Group which were contrary to applicable laws and regulations,
including fraud. These included, but were not limited to compliance with the
Companies Act 2006, the AIM listing rules Animal Feed product regulatory
requirements, the principles of the Quoted Companies Alliance Corporate
Governance Code and accounting standards.
We focused on areas that could give rise to a material misstatement in the
Group financial statements which, alongside the key audit matter, included a
fraud risk in relation to revenue recognition and the risk of management
override of controls. Our testing included, but was not limited to:
- enquiries of management of non compliance with laws and
regulations or fraud in the period and other unusual transactions. We
corroborated our enquires through a review of minutes of Board meetings
throughout the year;
- obtaining an understanding of the control environment in
monitoring compliance with laws and regulations;
- challenge of key estimates and judgements, including those
applied to key audit matters by management in the financial statements to
check that they are free from management bias;
- identifying and testing a sample of journal entries for the
following journal types:
- any journals outside of the normal course of business or
indicative of manipulation of the financial statements;
- all journals posted to revenue to ascertain if any unusual
transactions exist which are outside the normal course of business; and
- any manual or late journals posted at a consolidated level
- performing the following revenue tests:
- review the revenue nominal accounts for any unusual
transactions;
- testing a sample of transactions posted to the nominal ledger in
December 2021 to check that revenue had been recorded in the correct period;
- review of the elimination of intra-group revenue and associated
unrealised profit within inventories at consolidation level; and
- review of transfer prices applied on a sample of intra-group
revenue transactions to verify that arm's length prices had been applied.
- Verification, on a sample basis, of costs capitalised as product
development to ensure that the relevant recognition criteria had been met and
costs were not being capitalised to manipulate reported earnings;
- consideration of management's assessment of related parties and
any other unusual transactions and evaluating the process for identifying and
monitoring any such transactions, and
- consideration of the total unadjusted audit differences for
indications of bias or deliberate misstatement.
We communicated relevant identified laws and regulations and potential fraud
risks to all engagement team members and remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Gareth Singleton (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK
16 March 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Consolidated statement of comprehensive income
for the year ended 31 December 2021
2021 2020
Note £000 £000
Revenue 3 33,367 30,522
Cost of sales (17,106) (14,670)
Gross profit 16,261 15,852
Administrative expenses (10,610) (10,585)
Operating profit 4 5,651 5,267
Depreciation and amortisation 4 1,273 1,233
Adjusting items 6 53 67
Adjusted EBITDA 6 6,977 6,567
Net finance income 9 50 83
Profit before tax 5,701 5,350
Income tax 10 (1,018) (1,145)
Profit for the year 4,683 4,205
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translating foreign operations (12) (65)
Cashflow hedge movements (net of deferred tax) 19 (124) 68
Total comprehensive income for the year 4,547 4,208
Basic earnings per share 12 22.92p 20.63p
Diluted earnings per share 12 21.16p 19.89p
Adjusted earnings per share 12 24.92p 21.75p
Diluted adjusted earnings per share 12 23.01p 20.98p
Consolidated statement of financial position
as at 31 December 2021
2021 2020
Note £000 £000
Intangible assets 13 11,295 11,522
Property, plant and equipment 14 4,603 4,142
Right-of-use assets 15 81 85
Deferred tax assets 16 1,352 987
Derivative financial instruments 19 108 641
Non-current assets 17,439 17,377
Inventories 17 7,578 4,902
Trade and other receivables 18 6,873 6,053
Derivative financial instruments 19 335 327
Current income tax assets 214 -
Cash and cash equivalents 20 15,545 15,820
Current assets 30,545 27,102
Total assets 47,984 44,479
Lease liabilities 21 (17) (7)
Derivative financial instruments 19 (157) -
Deferred tax liabilities 16 (2,264) (1,662)
Non-current liabilities (2,438) (1,669)
Trade and other payables 22 (5,172) (5,007)
Lease liabilities 21 (68) (83)
Derivative financial instruments 19 (4) -
Current income tax liabilities - (215)
Current liabilities (5,244) (5,305)
Total liabilities (7,682) (6,974)
Net assets 40,302 37,505
Called up share capital 23 5,446 5,426
Share premium 23 11,547 11,148
Other reserves 24 (6,788) (6,506)
Retained earnings 25 30,097 27,437
Total equity 40,302 37,505
The financial statements were approved by the Board and authorised for issue
on 16 March 2022.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share Share Other Retained earnings Total
capital
premium
reserves
equity
Note £000 £000 £000 £000 £000
Balance at 1 Jan 2020 5,394 10,849 (5,650) 24,961 35,554
Profit for the period - - - 4,205 4,205
Currency translation differences - - (65) - (65)
Cash flow hedge reserve 19 - - 68 - 68
Total comprehensive income for the year - - 3 4,205 4,208
Issue of share capital 23 32 299 - - 331
Purchase of treasury shares 23 - - (1,004) - (1,004)
Share-based payment adjustments 26 - - 46 - 46
Deferred tax regarding share-based payments - - 99 - 99
Final dividend relating to 2019 - - - (1,144) (1,144)
Interim dividend relating to 2020 11 - - - (585) (585)
Transactions with owners 32 299 (859) (1,729) (2,257)
Balance at 31 Dec 2020 5,426 11,148 (6,506) 27,437 37,505
Profit for the period - - - 4,683 4,683
Currency translation differences - - (12) - (12)
Cash flow hedge reserve 19 - - (124) - (124)
Total comprehensive income for the year - - (136) 4,683 4,547
Issue of share capital 23 20 399 - - 419
Joint-share ownership plan 26 - - (310) - (310)
Share-based payment adjustments 26 - - 36 - 36
Deferred tax regarding share-based payments - - 128 - 128
Final dividend relating to 2020 11 - - - (1,372) (1,372)
Interim dividend relating to 2021 11 - - - (651) (651)
Transactions with owners 20 399 (146) (2,023) (1,750)
Balance at 31 Dec 2021 5,446 11,547 (6,788) 30,097 40,302
Consolidated statement of cash flows
for the year ended 31 December 2021
2021 2020
Note £000 £000
Operating profit for the year 5,651 5,267
Depreciation, amortisation and impairment 4 1,273 1,233
Loss on disposal of property, plant and equipment 14 (2) 3
Share-based payments 7 36 46
Fair value adjustment to derivatives 533 (406)
Operating cash flows before changes in working capital 7,491 6,143
Increase in inventories (2,759) (1,000)
Increase in trade and other receivables (915) (636)
Increase in trade and other payables 375 2,233
(Increase)/decrease in working capital (3,299) 597
Cash generated by operations 4,192 6,740
Income tax paid (1,047) (910)
Net cash from operating activities 3,145 5,830
Purchases of property, plant and equipment 14 (917) (593)
Proceeds from disposal of property, plant and equipment 6 -
Payments to acquire intangible assets 13 (506) (663)
Interest received 9 54 88
Net cash used in investing activities (1,363) (1,168)
Purchase of treasury shares - (1,004)
Joint share ownership plan 26 (310) -
Proceeds from issuance of shares 419 331
Cash payments in relation to lease liabilities (89) (117)
Lease interest paid (4) (5)
Dividend paid to Company's shareholders (2,023) (1,729)
Net cash used in financing activities (2,007) (2,524)
Net (decrease)/increase in cash and cash equivalents (225) 2,138
Effect of exchange rate changes (50) (160)
Cash and cash equivalents at the beginning of the year 15,820 13,842
Cash and cash equivalents at the end of the year 15,545 15,820
Notes to the financial statements
for the year ended 31 December 2021
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 UK adopted
International Financial Reporting Standards ("IFRSs").
The financial statements have been prepared on the historical cost basis,
except for financial instruments that are measured at 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. More information is available in note 2.22.
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.
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group has adequate resources
to continue in operation for the foreseeable future.
The Group has a strong balance sheet, with no debt and a strong cash position
and has traded profitably and cash generatively through the financial year.
The Group's forecasts and projections, taking into account reasonable estimate
of a possible downturn in trading performance arising from the ongoing and
potential impact of Covid-19, show that the Group has sufficient financial
resources, both from the Group's robust balance sheet and its expected cash
flow generation, sufficient for the going concern period. Accordingly, the
Directors have adopted the going concern basis in preparing these consolidated
financial statements.
The Directors also note the current crisis in Ukraine and we have clarified
more on the impact of this to Anpario in the Chairman's statement. The Group
will cease trade with Belarus and has no active trade in Russia. Revenues to
Belarus represented less than 1% of sales in 2021 and as such it is expected
that stopping supply to this country will not have a material impact on the
performance of the Group or it's going concern. The inflationary impact on
commodity prices such as wheat, gas and oil will be monitored and any
potential impacts on the business managed, however, the directors are
satisfied that even potential extreme scenarios do not create uncertainties in
relation to going concern in light of the resources of the Group.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its Subsidiaries drawn up to 31 December 2021.
Subsidiaries are all 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
remeasurement 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 IFRS 9 in profit or loss. Contingent
consideration that is classified as equity is not remeasured 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
The Group applies IFRS 15 'Revenue from Contracts with Customers'. 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 and discounts and after eliminating
sales within the Group. Revenue is derived principally from the sales of
goods.
The amount of revenue recognised reflects the consideration to which the Group
is or expects to be entitled to in exchange for those goods or services.
Revenue is recognised when the performance obligations have been satisfied,
which is once control of the goods has transferred from Anpario to the buyer.
In most instances, control passes and sales revenue is recognised at the point
in time when the product is delivered to the vessel or vehicle on which it
will be transported once loaded, the destination port or the customer's
premises.
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. 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 Group'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.
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 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 is reclassified to the Developed Products intangible asset category
and is amortised over a period of 10 years.
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. 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. 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.
2.9. 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.
2.10. Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for impairment. A provision for
impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. The provision is recognised in the
income statement as an administrative expense.
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 ECL for trade receivables.
The measurement of ECL 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 ECL 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.
2.11. Trade and other payables
Trade and other payables are initially recognised at fair value and are
subsequently measured at amortised cost. Trade and other 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.
2.12. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits that
are readily convertible into cash.
2.13. 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.
Financial instruments, excluding derivatives, are held at amortised cost.
Derivative financial instruments are detailed in note 2.14.
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).
2.14. Derivative financial instruments
The Group applies IFRS 9 'Financial Instruments'. Where qualifying for hedge
accounting, derivative financial instruments are held at fair value through
other comprehensive income, non-qualifying derivatives are held at fair value
through profit or loss.
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 removed 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. 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).
2.15. 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.
2.16. 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.
2.17. Employee benefits
Share-based payments
The Group issues equity-settled share-based payments and shares under the
Joint Share Ownership Plan ("JSOP"), Company Share Option Plan ("CSOP") and
Unapproved schemes 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.
2.18. Equity and reserves
Share capital
Share capital is determined using the nominal value of Ordinary shares that
have been issued.
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 consideration paid, including any directly
attributable incremental costs, to acquire shares held by the Company in
Anpario plc.
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 investment in the Company's shares is deducted
from equity as if they were treasury shares.
Merger reserve
The premium arising on the issue of consideration shares to acquire a business
is credited to the merger 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.
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere.
2.19. 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.
2.20. 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; or
- 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); or
- 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.
Right-of-use assets relating to the Group's leasing activities are recognised
in the consolidated statement of financial position at an amount equal to the
lease liability on initial measurement and any subsequent adjustments such as
modifications to lease terms. Right-of-use assets are depreciated over the
shorter period of lease term and useful life of the underlying asset.
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 without 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 2020.
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. 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:
Critical accounting judgements
Indefinite useful life Brand
One Brand asset held by the Group has been determined as having an indefinite
useful life since there is no foreseeable limit to the period over which it is
expected to generate net cash inflows not least because the brand has existed
for decades. Indefinite life assets are not amortised, but subject to an
impairment review at least once a year per the Group's accounting policy note
2.7 and is subject to the same judgements as part of this process as other
intangible assets as outlined below. Goodwill is presented in note 13.
Capitalisation of development costs
Development costs are capitalised as per the Group accounting policy outlined
in note 2.6, which identifies several criteria to be met in order for
capitalisation to occur in accordance with IAS 38. Inherently due to the
nature of developing new products and applications there is uncertainty as to
the outcome and judgements are required to make a determination as to the
suitability of costs for capitalisation.
Key sources of estimation uncertainty
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
£11.3m 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. The sensitivity analysis in respect of the recoverable
amount of goodwill is presented in note 13.
Deferred tax recognition
Deferred tax is provided in full on temporary differences under the liability
method using substantively enacted rates to the extent that they are expected
to reverse. Provision is made in full where the temporary differences result
in liabilities, but deferred tax assets are only recognised where the
Directors believe it is probable that the assets will be recovered. Judgement
is required to determine the likelihood of reversal of temporary differences
in establishing whether an asset should be recognised.
Patent Box Scheme
The UK Patent Box scheme allows companies to apply a lower rate of corporation
tax to profits attributable to qualifying patents. IFRS accounting standards
require tax to be recognised on the most likely outcome, but as with all tax
items, HMRC reserves the right to query the Company's calculations. We have
consulted with our tax and patent advisors and discussions have taken place
with Her Majesty's Revenue and Customs (HMRC) about the principles of the UK
Patent Box Legislation. The directors consider the acceptance of our Patent
Box tax computations to be more likely than not and as such we expect a
material reduction in UK Corporation Tax because of the Patent Box
application.
2.23. Impact of accounting standards and interpretations
New standards impacting the Group that have been adopted in the annual
financial statements for the year ended 31 December 2021, none of which had
any significant impact, and those which are relevant to these financial
statements are listed below:
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.
for the year ended 31 Dec 2021 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 8,264 12,074 20,523 3,521 - 44,382
Inter-segment revenue - - (11,015) - - (11,015)
Revenue from external customers 8,264 12,074 9,508 3,521 - 33,367
Depreciation and amortisation (3) (57) (11) (3) (1,199) (1,273)
Net finance income - 6 (1) - 45 50
Profit/(loss) before income tax 3,149 3,406 3,838 1,212 (5,904) 5,701
for the year ended 31 Dec 2020 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 7,384 11,664 16,567 2,668 - 38,283
Inter-segment revenue - - (7,761) - - (7,761)
Revenue from external customers 7,384 11,664 8,806 2,668 - 30,522
Depreciation and amortisation (3) (63) (3) (4) (1,160) (1,233)
Net finance income - (1) - 1 83 83
Profit/(loss) before income tax 1,473 4,100 3,906 828 (4,957) 5,350
Included in the Europe category above is revenue from the UK of £5,931,000
(2020: £5,239,000). Revenue derived from other individual countries is not
significant in the context of the group revenue and therefore has been grouped
by geographic region. No customer accounts for more than 10% of revenue.
Management review and control the Net and Total assets of the Group, however,
these are not monitored by Operating Segment and as such they are not
presented as such above.
4. Operating profit
Operating profit for the year has been arrived at after charging/(crediting)
the following items:
2021 2020
Note £000 £000
Cost of inventories recognised as an expense 11,508 10,267
Employment costs 7 7,277 7,278
Share-based payment charges 6 53 67
Amortisation of intangible assets 13 733 655
Depreciation of property, plant and equipment 14 451 459
Depreciation of right-of-use assets 15 89 119
(Gain)/loss on disposal of tangible and intangible assets (2) 3
Research and development expenditure 42 43
Our specialist technical team includes experts in poultry, swine, ruminant
& aquaculture species. During the year we have capitalised internal costs
of £223,000 (2020: £213,000) and expended a further £137,000 (2020:
£247,000) 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:
2021 2020
£000 £000
Fees payable to Company's auditor for the audit of Parent Company and 92 89
consolidated financial statements
Fees payable to Company's auditor for other services:
Other non-audit services - 5
The audit of Company Subsidiaries 5 5
Total fees payable to Company's auditor 97 99
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 level of volatility. EBITDA is often used as a proxy for cash flows
and accordingly the Group adjusts for share-based payment charges which are a
non-cash measure.
For this reporting period the Board have taken the decision to reduce the
number of adjustments made to statutory profit for our alternative performance
measures ("APM's") in line with best practice guidelines. It was decided
during the time following the decision to leave the EU that it was necessary
to adjust for foreign exchange profits and losses. During this volatile period
for exchange rates the statutory measures saw large variances year on year due
to largely unrealised foreign exchange gains and losses. It is management's
view that currency fluctuations now represent more normalised patterns and as
such the impact of these should no longer be adjusted for. The prior year
APM's have been restated to reflect this change.
2021 2020
£000 £000
Operating profit 5,651 5,267
Share-based payments 53 67
Total adjustments 53 67
Adjusted operating profit 5,704 5,334
Depreciation and amortisation 1,273 1,233
Adjusted EBITDA 6,977 6,567
2021 2020
£000 £000
Adjusted operating profit 5,704 5,334
Income tax expense (1,018) (1,145)
Impact of changes in tax rates on deferred tax 540 158
Impact of prior year Patent Box tax reduction (137) -
Income tax impact of adjustments 3 88
Adjusted profit after tax 5,092 4,435
7. Employment costs
2021 2020
Note £000 £000
Wages and salaries 6,204 6,354
Social security costs 734 695
Other pension costs 339 229
Share-based payment charges 26 53 67
Employment costs 7,330 7,345
The key management of the Group is deemed to be the Board of Directors who
have authority and responsibility for planning and controlling all significant
activities of the Group.
Director's remuneration is shown below and more information can be found in
the Remuneration Committee Report.
2021 2020
£000 £000
Directors' emoluments 808 951
Company contributions to defined contribution pension schemes 42 40
Share-based payment charges 9 13
During the year retirement benefits were accruing to 3 Directors (2020 - 2) in
respect of defined contribution pension schemes.
The highest paid Director received remuneration as outlined below.
2021 2020
£000 £000
Directors' emoluments 410 542
Company contributions to defined contribution pension schemes 25 25
Share-based payment charges 2 1
8. Number of employees
The average monthly number of employees, including Directors, during the year
was:
2021 2020
Number Number
Directors 5 4
Production 32 29
Administration 23 23
Sales and Technical 61 64
Average headcount 121 120
In addition to employees, sales and technical specialists are engaged on a
consultancy basis in several countries.
9. Net finance income
2021 2020
£000 £000
Interest receivable on short-term bank deposits 54 88
Finance income 54 88
Lease interest paid (4) (5)
Finance costs (4) (5)
Net finance income 50 83
10. Income tax
2021 2020
Note £000 £000
Current tax on profits for the year 591 1,026
Adjustment for prior years 48 29
Current tax 639 1,055
Origination and reversal of temporary differences (165) 101
Effect of change in deferred tax rate 540 158
Adjustment for prior years 4 (169)
Deferred tax 16 379 90
Income tax expense charged to the income statement 1,018 1,145
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:
2021 2020
£000 £000
Profit before tax 5,701 5,350
Tax at the UK domestic rate 19% (2020: 19%) 1,083 1,017
Prior year tax adjustments 189 18
Patent Box reductions - Prior year (137) -
Patent Box reductions - Current year - -
Non-deductible expenses (372) 109
Losses not recognised for deferred tax 64 156
Research and development tax credits (172) (191)
Tax credit recognised directly in equity 158 83
Effect of change in deferred tax rate 540 158
Difference in overseas tax rates (175) (113)
Deferred tax impact of share options (108) (90)
Other tax adjustments (52) (2)
Tax adjustments (65) 128
Income tax expense charged to the income statement 1,018 1,145
Corporation tax is calculated at 19% (2020: 19%) of the estimated assessable
profit for the year. The UK government announced on 3 March 2021 that the
government are intending to increase the corporation tax rate from 19% to 25%
from April 2023. Deferred taxes at the balance sheet date have been measured
using these enacted rates and reflected in these financial statements which
has resulted in a deferred tax charge of £540,000 in the current year.
In addition to the amount charged to the income statement, the following
amounts relating to tax have been recognised in other comprehensive income.
2021 2020
Note £000 £000
Current tax on profits for the year (19) (12)
Current tax (19) (12)
Origination and reversal of temporary differences (139) (70)
Deferred tax 16 (139) (70)
Income tax recognised in other comprehensive income (158) (82)
11. Dividends
Amounts recognised as distributions to equity holders for the year ended 31
December:
2021 2021 2020 2020
per share total per share total
pence £000 pence £000
Interim dividend - Paid 3.00p 651 2.75p 585
Final dividend - Paid - - 6.25p 1,372
Final dividend - Proposed 7.00p 1,456 - -
Final dividend 7.00p 1,456 6.25p 1,372
Total dividend 10.00p 2,107 9.00p 1,957
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.
The total amount of dividend paid to shareholders in the year was £2,023,000
(2020: £1,729,000), being the final dividend for the year prior and the
interim dividend for current year.
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 Group presents basic and diluted earnings per share ("EPS") data, both
adjusted and non-adjusted for its ordinary shares. Basic EPS is calculated by
dividing profit attributable to ordinary shareholders by the weighted average
number of ordinary shares fully outstanding during the period. Potential
ordinary shares and shares held in the Joint Share Ownership Plan ("JSOP") are
only treated as dilutive when their conversion to ordinary shares would
decrease EPS.
The calculation of the basic and diluted earnings per share is based on the
following data:
2021 2020
£000 £000
Profit for the year attributable to owners of the Parent (£000's) 4,683 4,205
Weighted average number of shares in issue 20,429,730 20,387,477
Number of dilutive shares 1,697,602 755,047
Weighted average number for diluted earnings per share 22,127,332 21,142,524
Basic earnings per share 22.92p 20.63p
Diluted earnings per share 21.16p 19.89p
The calculation of the adjusted and diluted adjusted earnings per share is
based on the following data:
2021 2020
Note £000 £000
Adjusted profit attributable to owners of the Parent (£000's) 6 5,092 4,435
Weighted average number of shares in issue 20,429,730 20,387,477
Number of dilutive shares 1,697,602 755,047
Weighted average number for diluted earnings per share 22,127,332 21,142,524
Adjusted earnings per share 24.92p 21.75p
Diluted adjusted earnings per share 23.01p 20.98p
13. Intangible assets
Goodwill Brands and Customer relationships Patents, trademarks Development costs Software Total
developed and registrations and Licenses
products
£000 £000 £000 £000 £000 £000 £000
Cost
As at 1 January 2020 5,960 3,673 786 1,786 866 708 13,779
Additions - - - 127 460 76 663
Reclassifications - 767 - - (767) - -
Disposals - - - (137) - - (137)
Foreign exchange - - - (3) - - (3)
As at 31 December 2020 5,960 4,440 786 1,773 559 784 14,302
Additions - - - 133 360 13 506
Reclassifications - 113 - - (113) - -
Disposals - - - (99) - - (99)
As at 31 December 2021 5,960 4,553 786 1,807 806 797 14,709
Accumulated amortisation
As at 1 January 2020 - 549 600 744 - 369 2,262
Charge for the year - 182 61 283 - 129 655
Disposals - - - (137) - - (137)
As at 31 December 2020 - 731 661 890 - 498 2,780
Charge for the year - 261 61 277 - 134 733
Disposals - - - (99) - - (99)
As at 31 December 2021 - 992 722 1,068 - 632 3,414
Net book value
As at 1 January 2020 5,960 3,124 186 1,042 866 339 11,517
As at 31 December 2020 5,960 3,709 125 883 559 286 11,522
As at 31 December 2021 5,960 3,561 64 739 806 165 11,295
The reclassification to Brands and Developed Products represents newly created
products from Development projects.
Goodwill related to previously acquired operations is reviewed on a global
basis with a further consideration of the sales attributable to each of the
trading brands as identified in the table below.
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 (2020: 2.5%).
The discount rate used of 12% (2020: 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
14.6 percentage points to a negative growth of minus 12.1 percentage points
would cause the carrying value of goodwill to equal its recoverable amount.
Goodwill is allocated as follows:
£000
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 2020 and 31 December 2021 5,960
Brands 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 2021 of
£1,501,000 (2020: £1,501,000). The Meriden brand was acquired in 2012 and
has a net book value at 31 December 2021 of £363,000 (2020: £398,000). 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
Land and Plant and machinery Fixtures, fittings Assets in the course Total
buildings and equipment of construction
£000 £000 £000 £000 £000
Cost
As at 1 January 2020 1,857 3,296 583 - 5,736
Additions - 61 53 479 593
Disposals (3) (2) (1) - (6)
As at 31 December 2020 1,854 3,355 635 479 6,323
Additions 16 119 39 743 917
Transfer of assets in construction 51 327 - (378) -
Disposals - - (148) - (148)
As at 31 December 2021 1,921 3,801 526 844 7,092
Accumulated depreciation
As at 1 January 2020 253 1,135 337 - 1,725
Charge for the year 30 340 89 - 459
Disposals - (2) (1) - (3)
As at 31 December 2020 283 1,473 425 - 2,181
Charge for the year 30 338 83 - 451
Disposals - - (144) - (144)
Foreign exchange - - 1 - 1
As at 31 December 2021 313 1,811 365 - 2,489
Net book value
As at 1 January 2020 1,604 2,161 246 - 4,011
As at 31 December 2020 1,571 1,882 210 479 4,142
As at 31 December 2021 1,608 1,990 161 844 4,603
Held within land and buildings is an amount of £500,000 (2020: £500,000) in
respect of non-depreciable land.
15. Right-of-use assets
Land and Plant and Fixtures, fittings Total
buildings machinery and equipment
£000 £000 £000 £000
Cost
As at 1 January 2020 304 47 28 379
Additions 10 - - 10
Modification to lease terms 7 1 - 8
Disposals - (22) (21) (43)
As at 31 December 2020 321 26 7 354
Additions 28 - - 28
Modification to lease terms 56 - - 56
Disposals (139) (26) (4) (169)
Foreign exchange 4 - - 4
As at 31 December 2021 270 - 3 273
Accumulated depreciation
As at 1 January 2020 134 38 23 195
Charge for the year 107 9 3 119
Modification to lease terms (2) - - (2)
Disposals - (22) (21) (43)
As at 31 December 2020 239 25 5 269
Charge for the year 87 1 1 89
Modification to lease terms - - (5) (5)
Disposals (139) (26) - (165)
Foreign exchange 4 - - 4
As at 31 December 2021 191 - 1 192
Net book value
As at 1 January 2020 170 9 5 184
As at 31 December 2020 82 1 2 85
As at 31 December 2021 79 - 2 81
Land and building right-of-use assets relate to leased offices, other assets
are less material and various in nature that are required for the Group to
conduct its activities.
Further information about the lease liabilities that relate to the
right-of-use assets above are contained in note 21. Details of cash outflow
for those leases are contained in the Consolidated Statement of Cash Flows.
There are no material short-term or low value leases.
16. Deferred tax
2021 2020
Note £000 £000
As at 1 January 675 640
Income statement charge/(credit) 10 379 90
Deferred tax (credited)/charged directly to equity 10 (139) (70)
Foreign exchange (3) 15
As at 31 December 912 675
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances gains hedge differences
Note £000 £000 £000 £000 £000 £000
As at 1 January 2020 805 551 28 (337) (407) 640
Income statement credit 10 142 120 - (161) (11) 90
Deferred tax charge/(credit) directly to equity - - 16 - (86) (70)
Foreign exchange - - - 15 - 15
As at 31 December 2020 947 671 44 (483) (504) 675
Income statement charge 10 497 134 - 53 (305) 379
Deferred tax charged directly to equity - - (29) - (110) (139)
Foreign exchange - - - (3) - (3)
As at 31 December 2021 1,444 805 15 (433) (919) 912
2021 2020
£000 £000
Deferred income tax asset (1,352) (987)
Deferred income tax liability 2,264 1,662
Net deferred income tax liability 912 675
Included in 'Other timing differences' above is £675,000 (2020: £389,000)
that relates to the tax impact of the elimination of intercompany unrealised
profit held in inventory.
The UK government announced on 3 March 2021 that the government are intending
to increase the corporation tax rate from 19% to 25% from April 2023. Deferred
taxes at the balance sheet date have been measured using these enacted rates
and reflected in these financial statements which has resulted in a deferred
tax charge of £540,000 in the current year.
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
2021 2020
£000 £000
Raw materials and consumables 2,366 1,932
Finished goods and goods for resale 5,212 2,970
Inventory 7,578 4,902
18. Trade and other receivables
2021 2020
£000 £000
Trade receivables - gross 6,076 5,398
Less: expected credit losses (237) (157)
Trade receivables - net 5,839 5,241
Taxes 543 198
Other receivables 49 51
Prepayments 442 563
Total trade and other receivables 6,873 6,053
The carrying amount of gross trade receivables are denominated in the
following currencies:
2021 2020
£000 £000
Pounds sterling 1,828 2,100
US dollars 2,740 1,366
Euros 764 744
Other currencies 744 1,188
Trade receivables - gross 6,076 5,398
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 held against outstanding balances.
The Group applies 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 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 2021. The expected loss rates are the same for the Group and
Company.
Not past due 1-60 days past due 61-120 days past due >121 days past due Credit impaired Total
£000 £000 £000 £000 £000 £000
Specifically insured customers 3,977 381 - 26 - 4,384
Uninsured customers 1,351 149 15 5 - 1,520
Credit impaired - - - - 172 172
Trade receivables - gross 5,328 530 15 31 172 6,076
Expected loss rates:
Specifically insured customers 0% 1% 5% 7% - 1%
Uninsured customers 2% 6% 23% 33% - 3%
Credit impaired - - - - 100% 100%
Specifically insured customers 16 5 - 2 - 23
Uninsured customers 28 9 3 2 - 42
Credit impaired - - - - 172 172
Expected credit losses 44 14 3 4 172 237
Trade receivables - net 5,284 516 12 27 - 5,839
The comparative table below shows the Group's provision matrix and individual
assessments as at 31 December 2020.
Not past due 1-60 days past due 61-120 days past due >121 days past due Credit impaired Total
£000 £000 £000 £000 £000 £000
Specifically insured customers 3,604 499 - - - 4,103
Uninsured customers 996 156 13 - - 1,165
Credit impaired - - - - 130 130
Trade receivables - gross 4,600 655 13 - 130 5,398
Expected loss rates:
Specifically insured customers 0% 1% - - - 1%
Uninsured customers 2% 6% 23% - - 3%
Credit impaired - - - - 79% 79%
Specifically insured customers 15 6 - - - 21
Uninsured customers 21 9 3 - - 33
Credit impaired - - - - 103 103
Expected credit losses 36 15 3 - 103 157
Trade receivables - net 4,564 640 10 - 27 5,241
The movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed assessed
£000 £000 £000
As at 1 January 2020 8 103 111
Provisions for receivables created 46 45 91
Amounts written off as unrecoverable - (4) (4)
Amounts recovered during the year - (46) (46)
Foreign exchange gains - 5 5
As at 31 December 2020 54 103 157
Provisions for receivables created 11 115 126
Amounts recovered during the year - (48) (48)
Foreign exchange gains - 2 2
As at 31 December 2021 65 172 237
19. Financial instruments and risk management
Carrying amount of financial instruments
Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
As at 31 December 2021 Note £000 £000 £000 £000
Derivative financial instruments - 108 - 108
Non-current - 108 - 108
Trade and other receivables 18 6,873 - - 6,873
Derivative financial instruments - 206 129 335
Cash and cash equivalents 20 15,545 - - 15,545
Current 22,418 206 129 22,753
Financial assets 22,418 314 129 22,861
Lease liabilities 21 (17) - - (17)
Derivative financial instruments 19 - (93) (64) (157)
Non-current (17) (93) (64) (174)
Trade and other payables 22 (5,172) - - (5,172)
Lease liabilities 21 (68) - - (68)
Derivative financial instruments 19 - - (4) (4)
Current (5,240) - (4) (5,244)
Financial liabilities (5,257) (93) (68) (5,418)
Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
As at 31 December 2020 Note £000 £000 £000 £000
Derivative financial instruments - 305 336 641
Non-current - 305 336 641
Trade and other receivables 18 6,053 - - 6,053
Derivative financial instruments - - 327 327
Cash and cash equivalents 20 15,820 - - 15,820
Current 21,873 - 327 22,200
Financial assets 21,873 305 663 22,841
Lease liabilities 21 (7) - - (7)
Non-current (7) - - (7)
Trade and other payables 22 (5,007) - - (5,007)
Lease liabilities 21 (83) - - (83)
Current (5,090) - - (5,090)
Financial liabilities (5,097) - - (5,097)
Hedge relationships
The Group has elected to adopt the hedge accounting requirements of IFRS 9
Financial Instruments. The Group enters into hedge relationships where the
critical terms of the hedging instrument and the hedged item match, therefore,
for the prospective assessment of effectiveness a qualitative assessment is
performed. Hedge effectiveness is determined at the origination of the hedging
relationship. Quantitative effectiveness tests are performed at each period
end to determine the continuing effectiveness of the relationship. In
instances where changes occur to the hedged item which result in the critical
terms no longer matching, the hypothetical derivative method is used to assess
effectiveness.
Fair values of financial instruments
Financial instruments are measured in accordance with the accounting policy
set out in note 2.13. Derivative financial instruments, consisting of foreign
exchange forward and options contracts, are considered Level 2. There were no
transfers between levels in the period and the valuation technique used to
measure the instruments are forward exchange rates at the reporting date. The
carrying value of the financial instruments is at amortised cost and is deemed
to be approximate to fair value.
Credit risk
Trade receivables and cash are financial instruments deemed subject to credit
risk. Note 18 details credit risk relating to trade receivables. Cash balances
are invested with banks and financial institutions that have a minimum credit
rating to mitigate the credit risk. The Directors do not consider any losses
from non performance of these institutions. The carrying value of the trade
receivables and cash balances represents 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.
The amounts due in more than one year are immaterial.
The derivative financial assets are all net settled; therefore, the maximum
exposure to credit risk at the reporting date is the fair value of the
derivative assets which are included in the consolidated statement of
financial position.
Financial liabilities with a maturity of more than 3 months are immaterial and
comprise of lease liabilities, disclosed in note 21 and derivative financial
liabilities details in the exchange rate section below. For all other
financial liabilities the maturity is less than three months and therefore the
carrying value is the same as the fair value.
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.
2021 2020
£000 £000
Change in value of cash flow hedges (153) 84
Deferred tax asset/(liability) 29 (16)
Cash flow hedge movements (net of deferred tax) (124) 68
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. The maximum exposure to credit risk at the reporting date is the fair
value of the derivative assets in the Consolidated Statement of Financial
Position.
2021 2020
GBP/USD spot rate at 31 December 1.3536 1.3663
Fixed forward contracts
Weighted average forward rate 1.3822 1.3295
Maturing in the next year (Notional amount in US dollars 000's) 270 1,200
Maturing between one and two years (Notional amount in US dollars 000's) 2,370 -
Maturing between two and three years (Notional amount in US dollars 000's) 2,550 -
Notional amount (US Dollars 000's) 5,190 1,200
Participating forward contracts
Weighted average forward rate 1.3145 1.3018
Weighted average barrier rate 1.2128 1.2017
Maturing in the next year (Notional amount in US dollars 000's) 8,674 7,548
Maturing between one and two years (Notional amount in US dollars 000's) 6,600 8,674
Maturing between two and three years (Notional amount in US dollars 000's) 2,500 6,000
Notional amount (US Dollars 000's) 17,774 22,222
The hedged ratio is 1:1.
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.
2021 2020
£000 £000
Cash and cash equivalents 15,545 15,820
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities as follows:
2021 2020
£000 £000
Less than one year 68 83
Current lease liabilities 68 83
Between one and five years 17 7
Non-current lease liabilities 17 7
Lease Liabilities 85 90
22. Trade and other payables
2021 2020
£000 £000
Trade payables 2,604 2,586
Taxes and social security costs 150 229
Other payables 101 75
Accruals 2,317 2,117
Trade and other payables 5,172 5,007
There is no interest payable on trade payables and no security against
outstanding balances.
23. Share capital and share premium
The authorised share capital is made up of:
Number £000
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
The allotted, called up and fully paid share capital is made up of Ordinary
shares of 23p each as follows:
Share capital Share premium Total
Note Number £000 £000 £000
As at 1 January 2020 23,453,215 5,394 10,849 16,243
Exercise of share options 26 137,918 32 299 331
As at 31 December 2020 23,591,133 5,426 11,148 16,574
Exercise of share options 26 35,048 8 101 109
Issue of shares to JSOP 26 50,000 12 298 310
As at 31 December 2021 23,676,181 5,446 11,547 16,993
The company holds shares in treasury as follows:
Number £000
As at 1 January 2020 143,042 185
Purchase of treasury shares 297,346 1,004
As at 31 December 2020 and 31 December 2021 440,388 1,189
The Anpario plc Employees' Share Trust holds shares in relation to the Joint
Share Ownership Plan as follows:
Number
As at 1 January 2020 2,650,000
Purchase of shares 100,000
As at 31 December 2020 2,750,000
Purchase of shares 50,000
As at 31 December 2021 2,800,000
24. Other reserves
Treasury Joint Share Ownership Plan Merger Share-based Cashflow Translation reserve Total
shares reserve payment hedge
reserve reserve
Note £000 £000 £000 £000 £000 £000 £000
As at 1 January 2020 185 7,530 (228) (1,972) (117) 252 5,650
Purchase of treasury shares 23 1,004 - - - - - 1,004
Share-based payment charge 26 - - - (46) - - (46)
Share-based payment tax adjustments - - - (99) - - (99)
Movement in fair value (net of tax) 19 - - - - (68) - (68)
Currency translation differences - - - - - 65 65
As at 31 December 2020 1,189 7,530 (228) (2,117) (185) 317 6,506
Joint-share ownership plan 23 - 310 - - - - 310
Share-based payment charge 26 - - - (36) - - (36)
Share-based payment tax adjustments - - - (128) - - (128)
Movement in fair value (net of tax) 19 - - - - 124 - 124
Currency translation differences - - - - - 12 12
As at 31 December 2021 1,189 7,840 (228) (2,281) (61) 329 6,788
The nature and purpose of other reserves' items are disclosed in note 2.18.
25. Retained earnings
£000
As at 1 January 2020 24,961
Profit for the year 4,205
Dividends (1,729)
As at 31 December 2020 27,437
Profit for the year 4,683
Dividends (2,023)
As at 31 December 2021 30,097
26. Share-based payments
The Group operates, or has operated previously, a number of equity-settled
share based remuneration schemes for employees. Including the following:
Enterprise Management Incentive ("EMI") scheme; Save As You Earn ("SAYE")
scheme; Company Share Option Plan ("CSOP") and an unapproved scheme. All the
schemes are subject to only one vesting condition being that the individual
remains an employee of the Group for a period of either 3 or 5 years.
Movements in the number of share options outstanding are as follows:
Number of options Weighted average exercise price (p) Number of options Weighted average exercise price (p)
2021 2021 2020 2020
Outstanding at 1 January 592,469 254 641,292 241
Granted during the year 10,000 565 91,504 323
Lapsed during the year (4,579) 334 (2,409) 224
Exercised during the year (35,048) 308 (137,918) 240
Outstanding at 31 December 562,842 255 592,469 254
Exercisable at 31 December 441,338 228 383,800 219
Share options outstanding at the end of the year have the following expiry
dates and weighted average exercise prices:
Number of options Weighted average exercise price (p) Number of options Weighted average exercise price (p)
2021 2021 2020 2020
2021 - - 30,165 334
2022 538 334 - -
2023 160,000 159 160,000 159
2024 109,000 245 114,000 245
2025 84,800 290 84,800 290
2026 70,000 240 75,000 240
2027 91,504 323 91,504 323
2028 37,000 403 37,000 403
2031 10,000 565 - -
Total outstanding share options 562,842 255 592,469 254
The range of exercise prices of outstanding share options at the year end was
159p to 565p (2020: 159p to 403p) and their weighted average remaining
contractual life was 4 years (2020: 4 years).
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 the Black-Scholes valuation
model. 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 £53,000 (2020: £67,000) of which a charge of £17,000
(2020: £21,000) relates to professional fees.
During the year options totalling 50,000 were awarded under incentive schemes
listed in the schedule below. For which, the weighted average fair value of
options granted 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 Oct 2021
Number of options granted 50,000
Grant price (p) 620.0
Carrying cost (per annum) 4.5%
Exercise price (p) 703.7
Vesting period (years) 3.0
Option expiry (years) 10.0
Expected volatility of the share price 25.0%
Dividends expected on the shares 1.5%
Risk-free rate 0.5%
Fair value (p) 79.9
27. Related party transactions
The Group considers the Directors to be the key management personnel. There
were no transactions within the year in which the Directors had any interest.
The Remuneration Committee Report contains details of the Board emoluments.
None of the Group's shareholders are deemed to have control or significant
influence and therefore are not classified as related parties for the purposes
of this note.
28. Capital commitments
The Group had authorised capital commitments as at 31 December as follows:
2021 2020
£000 £000
Property, plant and equipment 615 135
Capital commitments 615 135
Company statement of financial position
as at 31 December 2021
2021 2020
Note £000 £000
Intangible assets 33 10,767 10,984
Property, plant and equipment 34 4,592 4,126
Right of use assets 4 27
Investment in subsidiaries 35 12,196 9,586
Deferred tax assets 36 302 192
Derivative financial instruments 19 108 641
Non-current assets 27,969 25,556
Inventories 37 3,219 2,516
Trade and other receivables 38 13,889 12,167
Derivative financial instruments 19 335 327
Current income tax assets 295 -
Cash and cash equivalents 11,657 13,324
Current assets 29,395 28,334
Total assets 57,364 53,890
Lease liabilities (1) (1)
Derivative financial instruments 19 (157) -
Deferred tax liabilities 36 (2,264) (1,662)
Non-current liabilities (2,422) (1,663)
Trade and other payables 39 (8,660) (8,433)
Lease liabilities (4) (27)
Derivative financial instruments 19 (4) -
Current income tax liabilities - (172)
Current liabilities (8,668) (8,632)
Total liabilities (11,090) (10,295)
Net assets 46,274 43,595
Called up share capital 40 5,446 5,426
Share premium 11,547 11,148
Other reserves 41 (4,438) (4,168)
Retained earnings 33,719 31,189
Total equity 46,274 43,595
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 £4,553,000 (2020:
£5,040,000).
The financial statements were approved by the Board and authorised for issue
on 16 March 2022.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Company statement of changes in equity
for the year ended 31 December 2021
Share Share Other Retained earnings Total
capital
premium
reserves
equity
Note £000 £000 £000 £000 £000
Balance at 1 Jan 2020 5,394 10,849 (3,377) 27,878 40,744
Profit for the period - - - 5,040 5,040
Cash flow hedge reserve - - 68 - 68
Total comprehensive income for the year - - 68 5,040 5,108
Issue of share capital 23 32 299 - - 331
Purchase of treasury shares - - (1,004) - (1,004)
Share-based payment adjustments 26 - - 46 - 46
Deferred tax regarding share-based payments - - 99 - 99
Final dividend relating to 2019 - - - (1,144) (1,144)
Interim dividend relating to 2020 11 - - - (585) (585)
Transactions with owners 32 299 (859) (1,729) (2,257)
Balance at 31 Dec 2020 5,426 11,148 (4,168) 31,189 43,595
Profit for the period - - - 4,553 4,553
Cash flow hedge reserve - - (124) - (124)
Total comprehensive income for the year - - (124) 4,553 4,429
Issue of share capital 23 20 399 - - 419
Joint-share ownership plan 26 - - (310) - (310)
Share-based payment adjustments 26 - - 36 - 36
Deferred tax regarding share-based payments - - 128 - 128
Final dividend relating to 2020 11 - - - (1,372) (1,372)
Interim dividend relating to 2021 11 - - - (651) (651)
Transactions with owners 20 399 (146) (2,023) (1,750)
Balance at 31 Dec 2021 5,446 11,547 (4,438) 33,719 46,274
29. 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
note 2 to the Group financial statements except as noted below. These have
been applied consistently throughout the period and the preceding period.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for
impairment.
Receivables from Subsidiary undertakings
The Company holds intercompany receivables with subsidiary undertakings
subject to terms of less than one year. If a significant change in credit risk
occurs following initial recognition then an impairment assessment is carried
out. The Directors assess periodically and at each period end whether there
has been a significant increase in credit risk. Where there has been a
significant increase in credit risk an impairment assessment is carried out.
30. Profit for the period
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.
31. Employment costs
2021 2020
Note £000 £000
Wages and salaries 3,913 4,287
Social security costs 475 365
Other pension costs 218 145
Share-based payment charges 26 53 67
Employment costs 4,659 4,864
The key management of the Group is deemed to be the Board of Directors who
have authority and responsibility for planning and controlling all significant
activities of the Group. Director's remuneration details can be found in the
Remuneration Committee Report.
32. Number of employees
The average monthly number of employees, including Directors, during the year
was:
2021 2020
Number Number
Directors 5 4
Production 32 29
Administration 16 17
Sales and Technical 29 31
Average headcount 82 81
33. Intangible assets
Goodwill Brands and Customer relationships Patents, trademarks Development costs Software Total
developed and registrations and Licenses
products
£000 £000 £000 £000 £000 £000 £000
Cost
As at 31 December 2020 5,490 4,351 559 1,766 559 784 13,509
Additions - - - 133 360 13 506
Reclassifications - 113 - - (113) - -
Disposals - - - (99) - - (99)
As at 31 December 2021 5,490 4,464 559 1,800 806 797 13,916
Accumulated amortisation
As at 31 December 2020 - 642 495 890 - 498 2,525
Charge for the year - 261 51 277 - 134 723
Disposals - - - (99) - - (99)
As at 31 December 2021 - 903 546 1,068 - 632 3,149
Net book value
As at 31 December 2020 5,490 3,709 64 876 559 286 10,984
As at 31 December 2021 5,490 3,561 13 732 806 165 10,767
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.
34. Property, plant and equipment
Land and Plant and machinery Fixtures, fittings Assets in the course Total
buildings and equipment of construction
£000 £000 £000 £000 £000
Cost
As at 31 December 2020 1,854 3,355 588 479 6,276
Additions 16 119 33 743 911
Transfer of assets in construction 51 327 - (378) -
Disposals - - (148) - (148)
As at 31 December 2021 1,921 3,801 473 844 7,039
Accumulated depreciation
As at 31 December 2020 283 1,473 394 - 2,150
Charge for the year 30 338 73 - 441
Disposals - - (144) - (144)
As at 31 December 2021 313 1,811 323 - 2,447
Net book value
As at 1 January 2020 1,571 1,882 194 479 4,126
As at 31 December 2020 1,608 1,990 150 844 4,592
Held within land and buildings is an amount of £500,000 (2020: £500,000) in
respect of non-depreciable land.
35. Investment in subsidiaries
Unlisted investments
£000
Cost
As at 1 January 2020 12,214
Write off of dormant subsidiary investments (12)
As at 31 December 2020 12,202
Investment in Subsidiaries 2,617
Write off of dormant subsidiary investments (7)
As at 31 December 2021 14,812
Provisions for diminution in value
As at 1 January 2020, 31 December 2020 and 31 December 2021 2,616
Net book value
As at 1 January 2020 9,598
As at 31 December 2020 9,586
As at 31 December 2021 12,196
During the year, investment balances in dormant subsidiaries that no longer
feature as part of the Group strategy were written off, these totalled £7,000
(2020: £12,000) and relate to Anpario Turkey Hayvan Sağlığı ve Yem
Katkıları İthalat İhracat Sanayi ve Ticaret Anonim Şirketi.
Total investments in Subsidiaries in the year were £2,617,000 (2020: £nil).
This relates to a debt to equity conversion totalling £2,617,000 related to
the Brazilian Subsidiary, Anpario Saúde e Nutrição Animal Ltda.
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.
Unlisted investments
£000
Directly held
Anpario Pty Ltd
Level 1, 286 High Street, Penrith 2750 Australia
Anpario Saúde e Nutrição Animal Ltda
Rua Brigadeiro Henrique Fontenelle, 745 - room 4, Parque São Domingos, São Brazil
Paulo, 05125-000
Anpario (Shanghai) Biotech Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
Anpario GmbH
c/o Startplatz, IM Mediapark 5, 50670 Cologne Germany
Anpario (Biotech) Limited
6th Floor, South Bank House, Barrow Street, Dublin 4. Ireland
PT. Anpario Biotech Indonesia
Gedung 18 Office Park Iantai Mezz- unit F2, Jl. , TB Simatupang Kav. 18, Indonesia
Jakarta 12520
Anpario Malaysia Sdn. Bhd.
Real Time Corporate Services Sdn. Bhd. Unit C-12-4, Level 12, Block C, Megan Malaysia
Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Anpario Latinoamerica SA de CV
Av. Technologico Sur # 134 cas 4, Colonia Moderna, CP 76030, Queretaro Mexico
Anpario (Thailand) Ltd
65/152 Chamnan Phenjati Building Floor 18, Rama 9 Road, Huaykwang Thailand
Sub-district, Huaykwang District, Bangkok 10310
Anpario Turkey Hayvan Sağlığı ve Yem Katkıları İthalat İhracat Sanayi
ve Ticaret Anonim Şirketi
Barbaros Mahallesi Halk Cad. Palladium Residence, (A Blok) Apt. No: 8 A/3 Turkey
Ataşehir/İstanbul.
Anpario Inc
2 W. Washington Street, Suite 400, Greenville, SC 29601 US
Anpario NZ Limited
Alliott NZ LTD, Level 2, 142 Broadway, Newmarket, Auckland, 1023 New Zealand
Anpario (Vietnam) Company Limited
No.8, Lane 265 Chien Thang Street, Van Quan Residential Area, Van Quan Ward, Vietnam
Ha Dong District, Hanoi
Optivite International Limited - Company Number 02346087*
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, Nottinghamshire, S80 2RS United Kingdom
Indirectly held
Meriden (Shanghai) Animal Health Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
Optivite Latinoamericana SA de CV**
20 Boulevard de la Industria, Cuautitlan-Izcalli, 54716 Mexico
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 2021 in accordance with Section 479A of The Companies Act
2006.
** Dormant companies
36. Deferred tax
2021 2020
£000 £000
As at 1 January 1,470 1,284
Income statement credit 631 256
Deferred tax credited directly to equity (139) (70)
As at 31 December 1,962 1,470
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances gains hedge differences
£000 £000 £000 £000 £000 £000
As at 1 January 2020 805 551 28 - (100) 1,284
Income statement credit 142 120 - - (6) 256
Deferred tax charged/(credited) directly to equity - - 16 - (86) (70)
As at 31 December 2020 947 671 44 - (192) 1,470
Income statement credit 497 134 - - - 631
Deferred tax charged/(credited) directly to equity - - (29) - (110) (139)
As at 31 December 2021 1,444 805 15 - (302) 1,962
2021 2020
£000 £000
Deferred income tax asset (302) (192)
Deferred income tax liability 2,264 1,662
Net deferred income tax liability 1,962 1,470
37. Inventories
2021 2020
£000 £000
Raw materials and consumables 2,366 1,932
Finished goods and goods for resale 853 584
Inventory 3,219 2,516
38. Trade and other receivables
2021 2020
£000 £000
Trade receivables - gross 4,706 3,975
Less: expected credit losses (166) (65)
Trade receivables - net 4,540 3,910
Receivables from Subsidiary undertakings 8,789 7,720
Taxes 125 -
Other receivables 2 12
Prepayments 433 525
Total trade and other receivables 13,889 12,167
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 interest charged on receivables from subsidiary
undertakings and payment is expected within terms of less than one year. There
is no security against outstanding balances.
The Group applies 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. More information about how ECL is
calculated is contained in note 18 to the Group financial statements.
Credit risk related to receivables from subsidiary undertakings are
individually assessed and there was no impairment provision as at 31 Dec 2021
(2020: £nil).
The movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed assessed
£000 £000 £000
As at 1 January 2020 6 11 17
Provisions for receivables created 26 38 64
Amounts written off as unrecoverable - (4) (4)
Amounts recovered during the year - (13) (13)
Foreign exchange (losses) and gains - 1 1
As at 31 December 2020 32 33 65
Provisions for receivables created 13 115 128
Amounts recovered during the year - (27) (27)
As at 31 December 2021 45 121 166
39. Trade and other payables
2021 2020
£000 £000
Trade payables 2,533 2,540
Amounts due to subsidiary undertakings 4,536 4,110
Taxes and social security costs 102 172
Other payables 52 47
Accruals and deferred income 1,437 1,564
Trade and other payables 8,660 8,433
There is no interest payable on trade payables or amounts due to subsidiary
undertakings and no security against outstanding balances.
40. Share capital
The movements in share capital are disclosed in note 23 to the Group financial
statements.
41. Other reserves
2021 2020
£000 £000
Treasury shares 1,189 1,189
Joint Share Ownership Plan 7,840 7,530
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (2,281) (2,117)
Cash flow hedge reserve (61) (185)
Other reserves 4,438 4,168
The nature and purpose of other reserves' items are disclosed in note 2.18.
A reconciliation of each component of other reserves that has a movement is
shown in the note 24.
42. Related party transactions
Transactions between the Company and its subsidiaries are on an arm's length
basis or in accordance with local transfer pricing regulations.
The following amounts were outstanding at the reporting date:
2021 2020
Note £000 £000
Amounts owed by Subsidiaries 38 8,789 7,720
Amounts owed to Subsidiaries 39 4,536 4,110
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.
Enquiries:
Anpario plc
Richard Edwards, CEO +44(0) 777 6417 129
Marc Wilson, Group Finance Director +44(0) 1909 537380
Karen Prior, Corporate Responsibility Director and Company Secretary +44(0) 1909 537380
Peel Hunt LLP (Nomad and broker) +44 (0)20 7418 8900
Adrian Trimmings
Andrew Clark
Lalit Bose
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