REG - Anpario PLC - Final Results
22/03/2023 07:15
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RNS Number : 7850T Anpario PLC 22 March 2023
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Group's obligations under Article 17 of MAR.
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 2022.
Financial highlights
- 1% decrease in revenue to £33.1m (2021: £33.4m).
- 25% decrease in adjusted EBITDA(1) to £5.2m (2021: £7.0m).
- 35% decrease in profit before tax to £3.7m (2021: £5.7m).
- Basic earnings per share down 30% to 16.13p (2021: 22.92p).
- Diluted adjusted earnings(1) per share down 28% to 16.67p (2021:
23.01p).
- Increase of 5% in proposed final dividend of 7.35p (2021: 7.0p)
per share, total dividend for the year 10.5p (2021: 10.0p).
- Cash and bank deposit balances(2) of £13.6m at the year-end
(2021: £15.5m).
Operational highlights
- Sales growth across Asia, Middle East & Africa (MEA) and the
Americas, offset by a decrease in Europe.
- Implementation of sales price increases helped partial recovery in
gross margins through H2.
- Mastercube™ pellet binder grew by 39%, driven by demand for
natural products in aquaculture.
- pHorce® and Orego-Stim® combination presented at the
International Poultry Scientific Forum in Georgia, USA for the prevention and
control of necrotic enteritis.
ESG highlights
- Awarded ISO 14001 certification for Environmental Management
Systems.
- 39% reduction in Carbon Intensity(3), a cumulative reduction since
2019 of 62%.
"The Board reports the Group's operating performance in what has been a
difficult year impacted by supply chain disruption and significant and
immediate raw material and logistics price inflation. This challenging
backdrop has also adversely affected many producers who have experienced input
cost pressures, notably feed and energy, hurting their profitability and in
some cases viability. Some farmers, particularly across the UK and Europe,
decided to forgo unprofitable production which is now leading to specific food
shortages in the retail channels. With less animals being reared the demand
for animal feed and therefore additives is inevitably lower and partly
explains the Group's disappointing performance across Europe.
I am proud of the contribution and support from all our stakeholders,
especially our staff around the world, who have maintained high customer
service levels and at the same time been able to implement sensitive sales
price increases to partially mitigate what has been unprecedented raw material
price inflation. Our margins improved in the second half of the year as a
result of our actions. We also experienced lower volumes in China because of
covid lockdowns, which was a very testing time for our local staff. So, it is
pleasing to see the relaxation of this policy and hopefully a resumption to
more normal economic activity.
Trading in the first couple of months of 2023 has been weak and market
conditions are expected to continue to be challenging through the first half
of the year. Avian influenza which for the first time is evident around the
world at the same time will present its challenges to the industry. However,
Anpario is well diversified geographically and with a broad range of products
also targeting new markets in aquaculture and ruminants we therefore expect
the Group's performance to improve as the year progresses supported by our
strong balance sheet and business development initiatives. Looking beyond the
current trading environment, the Group continues to see significant growth
opportunities for natural and sustainable feed additives."
Kate Allum, Chairman
(1) Adjusted EBITDA is defined in note 6.
(2) Cash and bank deposit balances include amounts shown as short-term
investments in the statement of financial position, these are deposit accounts
with notice periods of more than three but less than six months which can be
accessed instantly at the penalty of lost interest, see note 20.
(3) Carbon intensity represents tCO2e per £m sales for Scope 1 and 2
emissions, more information available in the Environment and Social
Responsibility Report.
Chairman's statement
Overview
Anpario reports its revenue and profit performance for the period during what
has been a very difficult year for the Group. Sales decreased by 1% to £33.1m
and the decline in our gross margins due to significant and immediate raw
material price inflation led to a decrease of 25% in Adjusted EBITDA to
£5.2m. Profit before tax declined 35% to £3.7m (2021: £5.7m). The period
has been characterised by a series of global events, not least the invasion of
Ukraine by Russia, which has affected energy, agricultural commodities and
certain raw materials manufactured in the region. Global supply chains and
logistics continued to be disrupted following the pandemic and China's
zero-covid policy for most of the period.
I am proud of the way the Group planned and reacted to these challenges and,
in particular, being able to implement sensitive sales price increases to
rebuild gross margins, which improved in the second half of the period. We
have continued to invest in our sales channels, storage capacity and energy
saving initiatives such as the solar panels at our head office and
manufacturing site, as well as increase inventory to ensure customer service
levels were maintained during this disruption. Our strong balance sheet and
control on costs enabled us to make these investments and to return cash to
shareholders by way of a 5% increase in the total dividend subject to
shareholder approval at the Annual General Meeting (AGM).
Despite the difficult backdrop, there were positive sales performances in Asia
Pacific, Latin America, United States (US), the Middle East & Africa (MEA)
and North-West Europe. Key products which performed well in these regions
included Mastercube™, pHorce® and our mycotoxin binder range Anpro®. Sales
in the UK declined by 36% primarily due to a large customer reducing their use
of our feed hygiene product following significant increases in the price of
organic acids. The other territories in Europe experiencing declines included
Belarus and Russia, following our decision to suspend trading in these
territories, with sales were down by over £0.2m, and Spain and Italy where
high input costs are making business very difficult for producers.
We set up a wholly owned subsidiary in Vietnam in the prior period and I am
pleased the team delivered a strong sales performance which affirms our
strategy to supply direct to end customers by employing local sales personnel
in key markets. We have developed valuable skills in setting up subsidiaries
around the world which can take longer to implement but prove to be more
durable. During the period we also recruited additional sales resource in
Brazil, Europe, Mexico, the Middle East and the US.
China had a difficult period where sales declined by 6% due to disruption
caused by intermittent covid lockdown periods followed by the rapid spread of
covid after the relaxation of these restrictions at the end of the year. The
opening up of China will bolster its economy and with it, meat protein
consumption, in addition to supporting the wider Asia Pacific economy.
Given the challenges of our global supply chain we increased our stockholding
of both raw materials and finished goods in our subsidiaries by approximately
£2 million during the period, but as supply chains improve our inventory
levels are expected to return to more normal levels.
Our research and development activities continue with several scientific
trials and new product development initiatives. The scientific paper presented
at the 2023 International Poultry Forum in Georgia, USA showed that using a
cost-effective combination of our leading products, pHorce® and Orego-Stim®,
can prevent and control necrotic enteritis in poultry whilst at the same time
maintaining bird performance. In addition, our recently launched 100% natural
omega 3 supplement, branded Optomega® Algae, is now being used in poultry
feed to enrich both eggs and meat to support improved human health.
Dividend
The Board is recommending a final dividend of 7.35 pence per share (2021: 7.0
pence) making a total of 10.5 pence per share for the year (2021: 10.0 pence),
an increase of 5%. This dividend, payable on 28 July to shareholders on the
register on 14 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 29 June 2023, at 11.00am. We
recognise that the AGM is a good opportunity for shareholders to meet and ask
questions of the Board. We will let shareholders know nearer the time the
arrangements for the AGM.
Environmental, Social and Governance (ESG)
Anpario's philosophy is 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 framework: People, Planet and Promise to communicate our sustainable
behaviours and objectives including achievement of net zero carbon emissions
by 2030. We have attained ISO 14001 accredition for our robust Environmental
Management System and are committed to 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
This period has been one of the toughest to navigate for our staff across the
globe. There has been no respite since the pandemic to challenge our staff who
have stepped up ensuring our customers have been supported with products and
services with minimal disruption. I thank them for their unstinting support
and commitment to Anpario. The team has also embraced our environmental,
social and governance strategy, some of whom are members of our internal
'Green Team'. Our operations department is also continually looking at
efficiency initiatives to reduce energy usage and wastage, including being
able to provide carbon footprint data for our packaging.
Outlook
The year has started weaker than anticipated, at similar levels to the final
quarter of 2022, which reflects the current challenges facing the global
agricultural industry. The high input costs, notably feed and energy,
affecting farmers in many parts of the world has impacted their profitability
leading both to a reduction in animals being reared and a focus on reducing
animal production costs. In addition, the strength of the US dollar and a
tightening in liquidity has led some developing countries to implement
currency controls restricting the level of trade we can prudently do with our
customers in these regions. Avian influenza which for the first time is
evident all around the world will inevitably affect feed volumes for a period.
We expect the Group's performance to improve as the year progresses as some of
the challenges dissipate and inflationary pressures alleviate. We have several
business development initiatives including growing our sales in both the
aquaculture and ruminant markets and as recently recruited sales personnel
start to deliver new business. In addition, the investment in production
automation in recent years enables the Group to keep tight cost control when
volumes are subdued.
Anpario's products improve animal feed conversion rates through both natural
gut health improvement making the animal more efficient in nutrient
utilisation and by improving feed quality. We will continue to run our
'Produce More for Less' campaign to remind customers of the efficiency
benefits delivered by our products which are even greater when their input
costs are high.
Our geographic diversity and strong balance sheet afford us to invest in
developing the Group even during challenging periods. We therefore remain
confident in the future profitable development of the Group with the industry
growth drivers still intact and look forward to supplementing our organic
growth initiatives with suitable acquisition opportunities which may arise.
Kate Allum
Chairman
22 March 2023
Chief Executive Officer's statement
Overview of the financial year
Group sales for the year to 31 December 2022 declined by 1% to £33.1m (2021:
£33.4m) with sales growth across Asia, Middle East & Africa (MEA) and the
Americas offset by a significant decrease in Europe. Asia Pacific, excluding
China which declined by 6%, grew sales by 15% and Latin America and the United
States (US) experienced growth of 44% and 19% respectively, helped by a
favourable exchange rate. Latin America's strong performance can be attributed
to sales of our natural pellet binder brand Mastercube™ into aquaculture
markets and demand for our acid-based eubiotics range. The US continued to
benefit from pHorce®, the leading anti-viral feed mitigant product, which is
also successfully being used as a replacement for zinc oxide in piglet diets.
China experienced a 6% decline in sales due to the intermittent covid
lockdowns throughout the year followed by an abrupt end to the restrictions
which led to the rapid spread of the virus at the end of the period. Europe
including the UK inflicted the biggest impact on Group performance with sales
declining 22%. The result included the loss of a significant customer, for
which our feed hygiene product was no longer commercially viable following
significant increases in organic acid prices. This product is more acutely
exposed to organic acid cost increases than others across our range and we
were able to retain other smaller customers. As well as an overall reduction
in animal production levels especially in the pig and egg-layer sectors in the
UK and across Europe, where feed and energy costs forced some farmers to limit
production.
Group product volumes declined by 11% which was offset by an increase in the
weighted-average selling price of 11% due to the actions taken to recover raw
material price inflation. Our strongest product growth came from our natural
pellet binder and mycotoxin binder range, especially in Asia, where any switch
to lower quality grain because of high prices would require an increase in the
use of mycotoxin binders to improve feed quality. Sales of higher value
Orego-Stim® declined by 8% as farmers reduced their production output or
their use of Orego-Stim® to alleviate inflationary pressures in their
operations, despite the consequence of animal performance being compromised.
This change in product mix also affected our overall gross margin.
We are receiving very positive customer feedback on the performance of
Orego-Stim® in ruminants, following our research with the University of
Reading which showed that Orego-Stim® reduced the proportion of bacteria in
the gut that show antimicrobial resistance, when added to the diets of young
cattle. Our recently launched natural and sustainably sourced omega 3
supplement brand Optomega® Algae is being used in dairy feeds for animal
fertility and in poultry for egg and meat enrichment. Our unique carrier and
packaging technology allows us to specify an extended shelf-life compared to
competitor products.
During the period we recently developed and launched a new phytogenic product
in a water-soluble form to add to the Orego-Stim® range. Orego-Stim® Forte
is Anpario's newest phytogenic feed additive for aquaculture, containing 100%
natural oregano essential oils (OEO), saponin and natural astaxanthin. It is
fully water soluble and specifically designed for use in feed or on farm, to
defend against infectious pathogens and support the performance of aquatic
species.
Group gross profit decreased by 13% to £14.1m (2021: £16.3m) for the year to
31 December 2022 due to the significant increases in raw material and
logistics costs and the change in product mix, with gross margins lower at
42.7% (2021: 48.7%) compared to the same period last year. A number of sales
price increases were implemented during the year which helped to improve gross
margins in the second half. Our focus on margin recovery and cost control will
continue during this year.
The investment in automation and storage capacity in our Manton Wood
production plant affords the Group a solid platform from which to grow
profitably as the market improves, taking advantage of our operational
gearing. We are committed to building our sales presence in key markets around
the world through recruitment to support both existing and new customers in
the transition to using natural additives to improve animal health,
productivity, and performance.
Operational review
Asia
Overall, this segment grew sales by 4% with the Asia Pacific region, which
accounted for 56% of Asia's sales, achieving growth of 15% in contrast to
Australasia and China which declined by 7% and 6% respectively. There were
strong performances in the Philippines, Malaysia and Vietnam driven by growth
in demand for mycotoxin binders and acid-based eubiotics. Vietnam is
particularly encouraging given we recently set up a wholly owned subsidiary
and see its combination of agriculture and aquaculture as being an attractive
opportunity for Anpario's broad product range, especially our new aquaculture
product Orego-Stim® Forte.
Bangladesh, Indonesia and South Korea struggled with high energy and imported
feed raw material costs with sales declines of 33%, 25% and 16% respectively.
Orders for Bangladesh were delayed at the end of the period due to central
bank foreign currency restrictions preventing letters of credit being issued
to importers. Any weakening of the US dollar is expected to help improve this
specific issue evident in some developing economies.
China which accounted for 13% of Group sales during the period struggled with
covid lockdowns and the subsequent reversal of government policy at the end of
last year. The relaxation of people movement including tourism and business
activity should bring a welcome resumption of economic activity not just in
China but also the wider region. The small to medium sized pig farmer in China
has all but disappeared following African Swine Fever with the emphasis now on
larger more sophisticated integrators with the feed mill sector becoming more
relevant to the non-integrated sector. Our China team is therefore working to
target feed mills with added value solutions they can offer their customers.
Americas
With better energy security and locally grown raw materials for animal feed
the Americas region experienced less disruption than the rest of the world in
the animal production industry. Overall, the segment grew sales by 11%,
partially helped by a favourable exchange rate, but also strong performances
in Latin America and the United States (US) which grew sales by 44% and 19%
respectively.
All countries except one, Guatemala, in Latin America delivered sales growth
including strong performances from Mexico, Ecuador and Colombia with growth of
55%, 27% and 111% respectively. The region benefited from an increase in sales
of our Mastercube™ pellet binder for aquafeed purposes and acid-based
eubiotic products, especially in Mexico. Sales to our South America region
declined by 19% weighed down by weak performances from Brazil and Chile, which
delivered declines of 14% and 65% respectively. Chile's weak performance is
due to lower sales of Orego-Stim® for sea lice control compared to the prior
period. The region's weak performance was tempered by a strong showing from
both Argentina and Peru.
In the US pHorce® continues to prove its credentials in the swine market as
an anti-viral feed mitigant and is also being used as an effective replacement
for zinc oxide in piglet diets as the industry starts to look for safe
environmentally friendly alternatives. Demand for Orego-Stim® was maintained
by a number of marketing initiatives with key distributors and running
commercial trials in the ruminant market for feeding young cattle. The
territory also experienced an increase in mycotoxin binder demand. We
instigated some management changes at the beginning of the period which
included recruiting account managers which overall helped improve the
profitability of the business unit.
The Middle East, Africa and India
The Middle East delivered sales growth of 9% supported by sales price
increases and a focus on higher value-add products, offsetting a volume
decline of 5%. There were some very strong performances from Egypt and Saudi
Arabia with sales more than doubling and from India and the United Arab
Emirates (UAE) which both delivered growth of more than 60%. The region
experienced declines in Iraq, which performed very strongly last year, and
Pakistan. Sales of our mycotoxin binders, pellet binders and phytogenics
products continued to deliver growth in contrast to demand for our acid-based
eubiotic products which declined due to the significant price inflation of
organic acids.
We expect some parts of this region to be adversely affected by the strength
of the US dollar in 2023, especially those countries which are net importers
of grain and energy.
Europe
Clearly Europe delivered the most disappointing performance with sales
declining 21%, but the region suffered from significant geopolitical events
none more so than Russia's invasion of Ukraine which exacerbated already
chaotic supply chains hungover from the Covid-19 pandemic. Europe's energy
crisis and the impact of high grain prices meant farmers across the region
faced an unprofitable near-term future with some choosing to reduce output as
they were unable to recover inflationary costs from retail channels. The
decline in production has affected the poultry and swine markets across Europe
with, for example, the number of eggs packed in UK packing stations declining
by 12% in quarter four of 2022 compared to the same quarter in 2021 and German
pork production decreased by more than 9% in 2022 and by over 5% across the EU
for the year to October 2022.
Inevitably we delivered a decrease in sales in several countries including
Italy and Spain with a reduction of around 40% each. However, the biggest
impact was the United Kingdom (UK) which declined by 36%, and because of its
importance to the region the amount was more significant and was the result of
losing price sensitive feed hygiene business due to significant cost inflation
of organic acids which more than doubled from their low point before the
pandemic. We also had a reduction in combined sales of £0.2m from Russia and
Belarus following our decision to suspend trading in these territories.
There were some positive performances especially in North West Europe with
sales growth of 69% which includes countries such as Austria, Denmark,
Switzerland and Serbia which is a new territory for the Group. Other good
performances were in Hungary and Israel with sales growth of 89% and 69%
respectively. Product growth in North West Europe predominantly came from
Orego-Stim® and our acid-based eubiotic range. This performance followed the
recent review of our distribution relationships in the region supported by our
European stockholding hub.
Innovation and development
With the expansion of our global sales team, we have taken the decision to
invest in a customer relationship management (CRM) system to improve the
management of the sales process, contact management, customer retention and
marketing campaigns. The nature of our business is that the sales process can
be lengthy, often with multiple decision makers. A CRM system will give senior
management greater visibility of order progress across the Group and identify
buying patterns to help improve customer retention. In addition the sales team
will be able to link global accounts giving better visibility of product usage
in customers' facilities in different parts of the world. The CRM system will
be rolled out on a regional basis in a phased approach during 2023.
During the period we developed and launched a new phytogenic feed additive for
aquaculture, containing 100% natural oregano essential oils (OEO), saponin and
natural astaxanthin. It is fully water soluble and specifically designed for
use in feed or on farm, to defend against infectious pathogens and support the
performance of aquatic species. Trials of Orego-Stim® Forte have shown to
inhibit Vibrio species growth after 48-hours in the absence of antibiotics,
performing as well as Florfenicol, a commonly used antibiotic to mitigate
aquaculture bacterial infections.
Since the development of our Optomega® Algae product, which is gaining
traction in both the dairy and poultry sectors, our research is now
investigating how the product can help reduce greenhouse gas emissions and
farm carbon footprint. Farmers are more likely to adopt products which reduce
their environmental impact if these products bring a productive benefit in
themselves. If we can assign a carbon value to Optomega® Algae, then
eventually this can be used by the farmer to offset his emissions in other
activities on the farm or reduce any future carbon taxes which may be
legislated for by various governments around the world. The New Zealand
government has already announced plans to tax agricultural emissions,
including those related to the burps, urine, and dung of livestock like sheep
and cows.
Growth Strategy
Our organic growth strategy has been focused on expanding and strengthening
our global sales channels by recruiting local sales and technical teams and
setting up wholly owned subsidiaries. We now have a platform on which to build
a greater presence by increasing our sales resource to build critical mass in
key markets. This is the next phase of development in our sales channels and
is supported by the implementation of the CRM system.
Both the Americas, because of their strong position in energy and agricultural
commodities and Asia due to its large population and above average Gross
Domestic Product (GDP) growth are key markets for Anpario currently accounting
for over 65% of Group sales. Changes in regulation which are often initially
introduced in Europe or from consumer pressure are, over time, adopted in
other overseas territories and has enabled Anpario to position itself ahead of
the transition away from harsher chemical treatments used in agriculture
towards sustainable and environmentally friendly products. Key product brands
such as Orego-Stim®, Optomega® Algae, pHorce® and Mastercube™ exemplify
our safe and sustainable product range.
Anpario has historically been focused on the monogastric market with up to 80%
of sales in poultry and swine species. However, in recent years we have
developed the product range and invested in scientific trials to support
business development in the ruminant and aquaculture markets which is starting
to gain momentum as we develop the appropriate sales channels. Diversifying
into broader species segments will help build resilience in our business,
reducing reliance on any one species especially at times when, for example,
the poultry industry is facing challenges from avian influenza or pork
producers are struggling to be viable.
Pursuing suitable acquisition opportunities will remain a priority for the
Group where we can play a role in consolidating a fragmented market to enhance
shareholder returns through operational synergies and expanding the product,
species or geographic portfolio.
Richard Edwards
Chief Executive Officer
22 March 2023
Key performance indicators
Financial
2022 2021
Note £000 £000 change % change
Revenue 3 33,103 33,367 -264 -1%
Gross profit 14,136 16,261 -2,125 -13%
Gross margin 42.7% 48.7% -6.0%
Adjusted EBITDA 6 5,208 6,977 -1,769 -25%
Profit before tax 3,681 5,701 -2,020 -35%
Basic earnings per share 12 16.13p 22.92p -6.79p -30%
Diluted adjusted earnings per share 12 16.67p 23.01p -6.34p -28%
Total dividend for the year 11 10.50p(1) 10.00p +0.50p +5%
Cash balances 20 13,567 15,545 -1,978 -13%
Net assets 41,311 40,302 +1,009 +3%
(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
2022 2021 change % change
GHG emissions(1) (tCO(2e)) 77 129 -52 -40%
Carbon intensity(1) (tCO(2e) per £m sales) 2.3 3.8 -1.5 -39%
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 responsibility 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 expected to grow as a Company and as a result
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
Revenues for the year declined by 1% to £33.1m (2021: £33.4m) as a result of
the difficult market conditions highlighted in the Chief Executive Office
Statement. Three of the four operating segments achieved sales growth, with
the Americas growing the strongest with a £0.9m increase in revenue, followed
by Asia £0.5m and MEA £0.3m. However, this was offset by a large decline in
European sales of £2.1m which suffered due to the significant increase in
organic acid costs which resulted in lost revenues from price sensitive feed
hygiene business. This lost business contributed the majority of an 11%
reduction in overall sales volumes.
Gross profit for the year declined by 13% to £14.1m (2021: £16.3m), and
gross margins were 42.7% (2021: 48.7%). The most significant factor reducing
margins has been the continuation of raw material price inflation pressures
outlined at the end of last year, in particular the significant cost increases
for organic acids products used predominantly in our ABE range. As well as
lower sales of Orego-Stim® which is a lower volume, higher value product than
other ranges and so this product mix change has a larger impact on gross
margins.
We have continued to react as quickly as possible and implement successive
prices rises in response to cost pressures and margins have improved through
the second half of the year. As we enter 2023, there are signs that raw
material prices and availability have stabilised and in some cases there are
we are expecting slight reductions in input costs which, alongside a drive to
increase Orego-Stim® sales, should help gross margins.
Administrative expenses
Administrative expenses were overall unchanged in the year, despite high
levels of inflation, at remained at £10.6m. This includes non-recurring costs
of £0.2m on due diligence fees related to an acquisition opportunity that was
unfortunately unsuccessful.
Employment costs, excluding bonuses and R&D staff capitalisation,
increased by £0.3m (4%) in the year through inflationary rises and also an
increase in the number of sales managers. In light of the financial
performance there was a £0.8m reduction in bonus costs.
Travel and marketing costs increased by £0.3m, now reflecting a full-year
normalised rate following the impact of Covid-19, this new level is materially
down on pre pandemic rates as we operate with new business practices and tools
allowing for more optimised travel and marketing expenditure.
Establishment costs increased by £0.2m as a result of inflationary pressures
and in particular increases in insurance costs, IT expenditure on new risk
management tools and expenditure on the new CRM system currently being
implemented.
Profitability and earnings per share
As a result of the decline in gross profits, Adjusted EBITDA(1) for the year
decreased by 25% to £5.2m (2021: £7.0m) and diluted adjusted earnings per
share fell by 28% to 16.67p per share (2021: 23.01p). These measures exclude
the non-recurring acquisition costs mentioned previously.
Profit before tax fell by 35% to £3.7m (2021: £5.7m). Basic earnings per
share fell by 30% to 16.13p (2021: 22.92p).
Foreign exchange
The Group's primary foreign currency exchange rate risk relates to both sales
and related receivables denominated in US Dollars, for which there has been
significant movement in the year. The average rate experienced for GBP/USD has
reduced from 1.376 in the prior year to 1.237 in the current year, with a rate
at 31 December of 1.210. As such there has been a beneficial impact, both in
terms of USD sales being converted at a more favourable rate, but also through
the revaluation of receivables denominated in that currency.
As previously discussed, we actively take steps to mitigate the downside-risks
related to adverse GBP/USD exchange rate movements through the use of hedging
contracts. These protect a large portion of the forecasted net US Dollar cash
flows over the next three years. The contracts protect cash flows at a higher
rate than those at the end of the period, and as such currently have a net
fair value of a £1.3m liability. Of this amount, £0.2m has been recognised
in the income statement, with £1.1m deferred in equity in accordance with
cash-flow hedge accounting. This accounting treatment means that any potential
charge unwinds at the same time as the future USD cash flows which it
protects, which is over the next three years.
Despite this potential charge, which is dependent on future rates experienced,
lower GBP/USD rates should be net beneficial overall in context of the wider
gains made on USD denominated sales. Our hedging strategy is in place to
mitigate adverse risk and improve certainty about the value of future USD cash
flows to aid in matters such as pricing strategies.
Taxation
The effective tax rate for the year was 10.3% (2021: 17.9%). The prior year
charge including both an exceptional deferred tax charge relating to changes
in Corporation Tax rates from April 2023 and the prior year tax benefit from
Patent Box. Excluding these factors for the prior year the underlying
effective tax rate for the year was similar to last year at 10.3% (2021:
10.8%).
As previously announced following the successful granting of our first patent
for our market leading phytogenic product Orego-Stim®, we expect 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. The scheme was first applied to our 2021 tax return and at the
current reporting date we are still in the window for HMRC to review this
first submission.
Cash flows and balances
Operating cash flows before changes in working capital were £5.4m (2021:
£7.5m). Changes in working capital absorbed £3.6m (2021: £3.3m), this was
mainly due to a £1.7m increase in inventories and a £2.2m decrease in trade
and other payables. The trade and other payables declined in part due to the
completion of outstanding CAPEX projects from the end of the prior year and
lower provision levels.
Higher overall inventory balances are partly the result of price inflation but
also additional factors. Raw material holdings increased over the prior year
as a result of both higher onsite storage to manage supply chain risks and
strategic purchasing decisions at the end of the year. Concerns over both
supply chain risks and logistics delays and constraints have began to ease and
we expect to be able to reduce inventory levels through the coming year.
Finished good levels were flat compared to last year, with a reduction of
£1.6m through the second-half of the year. Finished good levels across most
subsidiaries have started to reduce in the year, however, these reductions
were offset by an increase in USA for certain product lines to support sales
growth and additional stock held to support the recently established Mexican
subsidiary.
Net cash used in investing activities was flat versus the prior year at
£1.4m. Of which, £0.6m related to the capital commitments at the end of the
prior year to conclude a number of projects such as the solar panel
investment. Net cash used in financing activities was also the same as in the
previous year at £2.0m. Cash and cash equivalents decreased by £2.3m in the
period.
Anpario seeks to maximise the interest received on cash held by the Group and
as such utilises a number of notice deposit accounts which give a higher rate
of interest. During the preparation of the financial statements, it was
identified that some balances are held in accounts with a notice period of
greater than three months and less than six months, and as such they should be
classified as short-term investments in accordance with IAS 7. Consequently,
the prior year statement of financial position and cash flow statement have
been restated to show the split between the overall balances into cash and
cash equivalents and short-term investments. More information is available in
note 20.
Including these short-term investments, the overall cash and bank deposit
balances held by the Group at the end of the year was £13.6m (2021: £15.5m).
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 7.35 pence per share (2021:
7.00 pence) payable on 28 July to shareholders on the register on 14 July. In
addition to the interim dividend already paid, this represents an increase to
the total dividend for the year of 5% to 10.5 pence per share (2021: 10.0
pence).
Marc Wilson
Group Finance Director
22 March 2023
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 that meet the needs of our
customers both now and through changes in the regulatory environment.
Story Powerful value add proposition demonstrating the financial, performance and
sustainability benefits of our product solutions;
Quality Quality in both manufacturing processes and through the supply chain to
provide consistent products that perform in a reliable manner;
Branding Build an impeccable Anpario brand which global customers can trust as having
innovative, high quality and effective solutions for customers;
Channel Control the sales channel to ensure we develop strong technical and commercial
relationships with the end users of Anpario products.
Efficiency Efficient automated production and effective operations that can met the
service level requirements of our customers.
Sustainability Our natural products help to reduce our customers carbon footprint by
improving the animal feed conversion rates, and we also have a focus on
reducing our own environmental impact.
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 2022:
- sales growth achieved in all most geographic operating segments,
excluding Europe;
- expansion of sales resource in key target markets;
- continued growth of direct sales channel;
- first local sales by our Mexican subsidiary; and
- establishment of subsidiary and operations in Vietnam.
Future plans:
- We now have operations and personnel in our key markets, and as
such the focus now is on developing a stronger market position through
increased resource and presence in these territories.
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 2022:
- zinc-oxide replacement campaign following banning of their use in
the UK and EU;
- launch of Orego-Stim® Forte to defend against infectious
pathogens and support performance of aquatic species; and
- continued development of new products and applications to drive
future growth, with £0.5m capitalised on these projects in this year.
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 2022:
- further discussed and reviewed the acquisition strategy as part of
our Strategic Review process;
- conducted due diligence and prepared a Sale and Purchase Agreement
for a UK-based high-value add company, however we were unsuccessful with this
opportunity; and
- engaged with and evaluated a number of other acquisition targets
through both formal and informal sale processes.
Future plans:
- continued 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 2022:
- expanded on-site storage for powdered products, reducing
requirements for third-party warehousing; and
- several smaller CAPEX investments to expand the range of
presentations of our product that can be prepared through the production site.
Future plans:
- automated palletiser project approved to reduce manual handling
requirements and increase automation; and
- continued evaluation of further production investment
opportunities;
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, 'People; Planet; and Promise';
- robust governance structures appropriate for our business size;
and
- engagement with our stakeholders.
Actions in 2022:
- launch of our inaugural Sustainability Report;
- achievement of ISO 14001 Certification and accreditation of three
internal auditors;
- 39% reduction in Carbon intensity, representing a cumulative
reduction of 62% since 2019; and
- donation of £25,000 towards the Red Cross Ukraine Humanitarian
Crisis appeal.
Future plans:
- continued evaluation of ways to reduce our carbon emissions;
- continued engagement with our stakeholders, and our work with our
staff chosen Charity of the year, Dementia UK https://www.dementiauk.org/
(https://www.dementiauk.org/) .
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 actions and decisions in the year relevant to this stakeholder group
- Increase in dividend per share proposed in light of results (see
Chairman's statement).
- Launched a new board-evaluation process to ensure effectiveness
and alignment with shareholder values.
- Launched a new strategic review process alongside members of the
Executive Management team to evaluate current strategy and the opportunities
and challenges arising from changes in the industry and our customer base.
- Evaluated a number of acquisition opportunities, making offers on
a select few that met our criteria, albeit these were unfortunately
unsuccessful.
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 actions and decisions in the year relevant to this stakeholder group
- Launched new products to help customers comply with changes in EU
regulation.
- Continued to ensure supply to global customers of our products
during a period of logistical constraints and challenges. Albeit these
pressures have now started to ease.
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 actions and decisions in the year relevant to this stakeholder group
- Welcomed all staff back to working at our UK Headquarters,
following Covid-19 restrictions.
- Continued to evaluate and offer flexible home-working policies
following this return, ensuring a balance between the benefits of both working
from home and alongside colleagues on-site.
- Launched an internal coaching programme, initially supporting six
staff to become qualified coaches, and through a continual programme making
their services available to all staff.
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 actions and decisions in the year relevant to this stakeholder group
- Launched our inaugural Sustainability Report to demonstrate our
commitment to sustainable development of our business operations.
- Awarded ISO 14001 certification which sets out the requirements
for an environmental management system and helps improve environmental
performance, efficient use of resources and the reduction of waste.
- Donated £25,000 to the British Red Cross -Disasters Emergency
Committee (DEC) to help towards the Ukraine Humanitarian Appeal
- Employees vote for the annual charity of the year. For 2022 the
Charity chosen by staff was a local cancer support charity, Weston Park Cancer
Charity, https://www.westonpark.org.uk/ (https://www.westonpark.org.uk/)
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 actions and decisions in the year relevant to this stakeholder group
- 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.
Key decisions affecting multiple stakeholders
The table below outlines the key decision which affect more than one
stakeholder group and outlines the actions taken and the groups considered as
part of the decision-making process.
Updating the strategic plan and priorities
Actions taken
- Held a strategy review meeting including the Board and Executive
Management Team.
- Reviewed market developments and opportunities.
- Evaluated internal processes and resource requirements.
- Updated the strategic plans and focus following these discussions.
Key stakeholder groups considered
- Updating the strategic plan ensures that priorities are aligned
with the business opportunities available and the right resources are in place
to deliver enhanced shareholder value.
- A key part of this process relates to our customers and ensuring
that Anpario's product range and service meets their needs and requirements
both now and into the future.
- This process also highlights areas of internal training and
progression available for employees.
- With the launch of our ESG Three Pillars we can evaluate our
future strategy to ensure alignment between this framework and the growth
opportunities available.
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.
As part of our continual risk management process we consider new and emerging
risks.The Russian invasion of Ukraine and resulting impact on energy costs and
agricultural supply chains has been the most significant across our industry
in 2022. Price inflation and recessionary factors will continue to depress
worldwide economies and agriculture.
We have continued to monitor residual Covid-19 and Brexit related risks which
caused supply chain disruption including force majeure being declared by key
raw material suppliers. These were all successfully managed without serious
detriment to our customers or operations. As part of our continual risk
management process we consider new and emerging risks. We have also continued
our focus 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:
- Identify the risk and likelihood for each function and regional
operation;
- Analyse and assess the risk, its potential severity and the impact
and priority for the business;
- Consider risk rating and trends on a low to high scale;
- Plan to mitigate or treat the risk and identify resources or
investment required;
- Implement mitigation procedures by obtaining resources and
approvals necessary and put in place necessary actions; and
- 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.
What has been successful?
Key successes include:
- conducted an assessment and review of Board risk appetite;
- reviewed IT risk management policies and procedures;
- implemented enhanced IT security systems;
- launch of new products such as aqua product Orego-Stim Forte;
- Zinc Oxide replacement campaign in response to industry regulatory
changes;
- responded to market conditions with 'More for Less' campaign
focused on improved feed efficiency and supporting producers with rising
global feed costs;
- membership of SEDEX (Supplier Ethical Data Exchange) to give
supplier chain transparency on a global platform; and
- internal development training and coaching of key managers across
all disciplines.
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 2023 our key areas of
focus include:
- implement planned changes to internal review and audit of controls
and processes in subsidiary entities; and
- further review and updating of business continuity plans and
procedures.
Risk framework
Market Risk Political and Economic Risk
Risks Risks
- Gaining market entry for products and access to end users. - Russian invasion of Ukraine.
- Competition from global operators. - Interest and Inflationary pressures.
- M & A activity resulting in market consolidation. - Customer pressures to reduce costs.
- Human movement restrictions e.g. Covid-19, SARS. - Residuary Brexit consequences.
- Animal diseases e.g. African Swine Fever, Avian Influenza, PEDV. - Exchange rate fluctuations.
- Global commodity prices affecting both supply of inputs and demand for - Geopolitical risks including political and economic instability.
our products.
- International and individual targeting sanctions.
- Climate and environmental changes.
- Bad debts or trade disputes.
- 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 - Proactive and continual management of pricing.
and species related goals for each region.
- Close communication with customers on key pricing and supply issues.
- Regular monitoring of sales budgets and sales prospects by the
management and the Board. - Increased inventories of EU sourced raw materials.
- Effective disaster planning communicated on a timely basis. - Established a warehouse and distribution facility in the EU.
- Regional and species diversity and an extensive range of products with - Limiting and hedging of foreign currency exposure.
new product development and launches.
- Wide geographic diversity reduces dependency in a single country or
- A clear and effective marketing strategy communicating the benefits of region.
Anpario sustainable solutions.
- Rigorous customer and supplier due diligence and monitoring of
- Close customer engagement, relationships to understand and address regional and customer exposures.
their needs.
- Use of credit insurance and letters of credit.
- 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 Increasing Likelihood: Medium Increasing
Impact: Medium Impact: Medium
Product Development Risk 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 - SEDEX membership increasing transparency of supplier standards and
established and progress against that plan is regularly monitored. ethics.
Risk rating Trend Risk rating Trend
Likelihood: Medium No change Likelihood: Medium Decreasing
Impact: Medium Impact: Medium
Climate Change Risk 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.
- Impact of climate change on suppliers key raw materials, agricultural
commodities and markets. - 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 Corporate Responsibility
Director specifically focused on the risks and leading appropriate action
- Engagement of all senior management in understanding and implementing plans.
operational and reporting obligations.
- Attainment of ISO 14001 accreditation and training internal auditors;
- Executive and management performance related targets in line with
Group strategic objectives. - Roll out of 3 Pillars: People, Planet and Promise platform for action
plans and communication.
- Investment and research on emissions reduction in animal production.
- Specific ESG targets for all key Executive and group management.
- Collaboration with suppliers and other third parties with common goals
relating to climate change challenges. - Established policies, procedures and training to ensure awareness of
obligations and compliance.
- Executive workshops to review key climate change risks and
opportunities. - High standards of working conditions and market benchmarked pay
exceeding the living wage.
- Code of Conduct requiring internal and third-party acceptance and
anti-bribery and anti-corruption guidance issued for business partners.
- SEDEX membership increasing transparency of own and business partners'
standards and ethics.
Risk rating Trend Risk rating Trend
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: High Impact: Medium
Systems Risk 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
- Internal review and implementation of enhanced digital security - Vigilance and monitoring of all appropriate notifications to ensure
measures to detect and prevent possible cyber attacks. compliance and pre-emptive actions.
- Regular back up of data, third party provider for storage and system - Clear communicated policies and Code of Conduct issued to all
support. employees and partners.
- Firewall, regular back up of data, crime and cyber insurance in place. - Internal training and awareness communications.
- Continual review and strengthening of processes, controls and - Support from external experts in all countries in which we operate.
security.
- Reasonable due diligence is carried out on all customers and end
- Information Policy, Privacy Policy, Breach Notification Policy and users.
Disaster Recovery Plan in place.
- Sanction checking processes are implemented and documented.
- Staff and partner awareness communication and training.
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
22 March 2023
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, CEO of First Milk, the British farmer-owned dairy co-operative,
and CEO at Cedo Ltd, a plastic recycler and manufacturer of household
disposables. She is also the Chair of the Court of the University of the West
of Scotland.
Kate is currently a Non-Executive Director of Billington Food Group, Co-Op plc
and Eurocell, the UK's leading manufacturer, distributor and recycler of UPVC
window, door, conservatory and roofline systems. Kate previously held
Non-Executive roles at Cranswick plc, Stock Spirit and Origin Enterprises plc.
Kate became Non-Executive Chair in 2021.
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
Chairman of Inland Homes plc, having previously been 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 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: 'People; Planet; and 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/.
The Annual General Meeting ("AGM") is the main opportunity for all
shareholders to engage with Anpario. Shareholders are notified in advance of
the date and location of the meeting as well as the resolutions that are to be
voted on. At the meeting, the Board and key personnel give a presentation
about the most recent published results and our strategy. They are also
available to answer any questions that shareholders may have. The Company's
articles have been updated 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, management and staff as appropriate 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: 'People,
Planet and 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/
(http://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.
A formal Internal Audit function is not felt to be suitable for the Group at
the current time due to its size, however this is kept under review alongside
an appropriately robust internal control system.
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;
- ISO 14001 Environmental Management Systems accreditation;
- Anti-Bribery and Corruption Policy;
- Modern Slavery 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 C M
Matthew Robinson Senior Independent Director MA, ACA. C M C
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 2022. A list of the
meetings convened during the year is set out below.
Number of meetings convened Full attendance of meeting
Board meetings 6 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 works two 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/ (http://www.anpario.com/investor/aim-26/) .
All the Non-Executive Directors give the appropriate amount of time required
to fulfil their responsibilities to Anpario. During the year, following the
resignation of Ian Hamilton, the number of Non-Executive Directors reduced to
two. The Board is currently evaluating the needs of this role and potential
candidates for the position.
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, Modern Slavery Policy and Whistleblowing Policy that are
applicable to all our employees, other workers, suppliers and those providing
services to our organisation.
The Company has achieved ISO 14001 standard on Environmental Management
Systems accreditation along with a qualified internal audit function.
Anpario published its inaugural Sustainability Report and accompanying video
which is available on the website
https://www.anpario.com/about/sustainability/
(https://www.anpario.com/about/sustainability/) .
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 Kate Allum. 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 16 June 2022, full details of which are
included on 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 Karen Prior as Director Passed
4 Re-elect Marc Wilson as Director Passed
5 Re-appoint BDO LLP as Auditors Passed
6 Authorise the Directors to agree the auditors' remuneration Passed
7 To adopt new Articles of Association Passed
8 Authorise Issue of Equity with Pre-emptive rights Passed
9 Authorise Issue of Equity without Pre-emptive rights Passed
10 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 past 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 and humans.
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:
'People; Planet; and 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.
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. As far as possible, 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, Modern Slavery, 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
128 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 18
nationalities speaking 19 languages with 22 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 5 of the Board are women including the role of Chairperson.
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 2022 is as follows:
Male Female
Directors 3 2
Group Management 17 13
Production 24 2
Administration 5 12
Sales and Technical 26 24
Total 75 53
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;
- sponsorship of prestigious Nuffield training for technical and
sales staff;
- 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 + 48%
10 years + 19%
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.
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 each to the
Nottingham Hospitals Charity "NHS Heroes Appeal run" and towards Doncaster and
Bassetlaw Teaching Hospitals Rainbow Garden Appeal. The latter has now created
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, 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. In
2022 Give Something Back Volunteer Days Scheme was introduced globally, with
all employees entitled to one paid day release a year to volunteer at a
charity of their choice.
Our staff supported Weston Park Cancer Charity in 2022 with several fund
raising events. 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.
Our charity of the year chosen for 2023 is Dementia UK support and provide
life-changing care for families affected by all forms of dementia, including
Alzheimer's disease. Anpario will work to raise awareness and funds for this
cause.
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.
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; and
- 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 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. These products are also the Group's fastest
growing product categories. Furthermore, our products help producers to be
more efficient in the resources they use by improving feed efficiency by
supporting gut health thus optimising nutrient utilisation. Use of
Orego-Stim® in chicken meat production Anpario led trials have shown on
average a 7% improvement in feed conversion efficiency.
Anpario's 100% natural oregano essential oil product, Orego-Stim®, has also
been shown to support greener egg production by improving overall egg
production, hen liveability and feed efficiency. Meta-analysis from global
trials show on average '8 Extra Eggs' per hen improvement (2.2% per hen) when
fed Orego-Stim®. Optomega® Algae is a new, micro-algae derived,
Docosahexaenoic acid (DHA) 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 reduce methane output by 7% in 24-hour period.
It is well known that supplementing dairy rations with DHA supports cow
fertility, reducing replacement frequency in the dairy herd supporting
lifelong milk production and contributing to carbon footprint reduction.
Orego-Stim® Forte a proprietary blend of active ingredients including
Orego-Stim® for use in aquaculture, has been shown to benefit producers of
both shrimp and fish through improvement of gut health and reduction in
pathogens leading to improved liveability and growth performance. Orego-Stim®
Forte is proven to support producers wishing to reduce reliance on antibiotics
in production.
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.
Work is progressing alongside industry bodies and peers to enable us to seek a
recognised measure of product carbon footprint. We are a member of LEAF
(Linking Environment and Farming) seeking circular approaches to farming and
food through integrated solutions.
In 2022 Anpario:
- Achieved ISO14001 internationally recognised standard for
Environmental Management Systems which provides a framework to identify,
manage, monitor and control environmental processes.
- Vecame a member of Supplier Ethical Database (SEDEX) providing a
high level transparency of operational standards, employment practices and
corporate ethics.
- Joined Centre for Innovation Excellence in Livestock (CIEL) a
collaboration of major industry players in livestock production.
Anpario continues to support Vision 365, 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 unique 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.
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 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*;
*Scopes 1 and 2 plus Scope 3 relating to group business travel & waste.
Energy Consumption & Carbon Emissions
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.
baseline year prior year-on-year current year cumulative
year
2019 2021 change % change 2022 change % change
Scope 1 15.3 9.8 (5.3) (54%) 4.5 (10.8) (71%)
Scope 2 163.9 118.8 (46.0) (39%) 72.8 (91.1) (56%)
GHG emissions in tCO(2)e 179.2 128.6 (51.3) (40%) 77.3 (101.9) (57%)
Group sales £m 29.1 33.4 (0.3) (1%) 33.1 4.1 14%
Intensity (t tCO(2)e: per £m sales) 6.2 3.8 (1.5) (39%) 2.3 (3.9) (62%)
Energy use in kWh:
Natural Gas 51,433 40,602 (23,285) (57%) 17,317 (34,116) (66%)
Electricity 641,366 559,583 (182,964) (33%) 376,619 (264,747) (41%)
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.
There was a reduction in the amount of waste produced in the year of 120 Tons
(28%), with a cumulative reduction from the 2019 baseline year of 165 Tons
(34%).
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.
There was a reduction in the amount of water consumed in the year of 408 cubic
metres (27%), with a cumulative reduction from the 2019 baseline year of 877
cubic meters (44%).
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.
Promise
Anpario is committed to:
- honest, ethical, and responsible practice;
- positive engagement and partnerships;
- best practice, governance and stewardship; and
- 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
We establish and communicate our policies to all staff throughout the group
through induction training using video and provide regular updates for all
staff.
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, this includes providing appropriate training and guidance.
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 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 2022.
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, there has been an increase in working
capital through the year to manage supply-chain risks, however these pressures
are now easing and the Group has 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 2022 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 £3.3m (2021: £4.7m).
The Directors propose a final dividend of 7.35p per share (2021: 7.00p) making
a total of 10.50p per share for the year (2021: 10.00p), amounting to a total
dividend of £2.3m (2021: £2.1m). 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. During the year, £528,000
(2021: £360,000) was capitalised as development projects with £98,000 (2021:
£42,000) expensed to the income statement.
Directors
The Directors during the year under review were:
Non-Executive Directors
Kate Allum Non-Executive Chairman
Matthew Robinson Non-Executive Director
Ian Hamilton Non-Executive Director (resigned 18 April 2022)
Executive Directors
Richard Edwards Chief Executive Officer
Karen Prior Corporate Responsibility Director and Company Secretary
Marc Wilson Group Finance Director
The Board regards the Non-Executive Directors as being independent. The
biographies and roles of all Directors and their roles on the Audit,
Remuneration and Nomination Committees are set out earlier in this report.
Details of the Directors' interests in the shares of the Company are provided
in the Directors' remuneration report.
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 177,338 (2021: 35,048) Ordinary shares of 23p each were issued
pursuant to the exercise of share options. During the year the Company issued
600,000 (2021: 50,000) 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 2022 to make market purchases of Ordinary
shares in the capital of the Company.
As at 31 December 2022, the Company holds 440,388 (2021: 440,388) Ordinary
shares of 23p in treasury.
Substantial shareholdings
At 1 March 2023, 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 3,400 14.2
Investec Wealth & Investment 2,539 10.6
Unicorn Asset Management 2,014 8.4
Gresham House Asset Management 1,399 5.8
Interactive Investor 1,212 5.0
Hargreaves Lansdown Asset Management 1,015 4.2
BGF 811 3.4
Columbia Threadneedle Investments 766 3.2
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 2022 was 500p per share (2021: 616p 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 UK adopted international accounting standards,
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 22 March 2023
and is signed by order of the board:
Karen Prior
Company Secretary
22 March 2023
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 2022. 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.
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.
The other Committee member is Kate Allum, Non-Executive Chairman.
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 2022 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:
- implementation of changes outlined in the previous year, in
particular, dilution limits and long-term incentive structures;
- approved awards under the new LTIP policy for new Executive Board
members, Senior Management and other key management;
- review of Director remuneration, following which there were no
changes to base salary or fees; and
- review and evaluation of talent management and succession planning
activities.
Remuneration policy for the year in review
As outlined last year, following a review by the Committee and consultation
with external consultants and shareholders, there have been a number of
changes implemented for this year's remuneration policy. The policy below
reflects the changes made on dilution limits, long-term incentive structures
and a number of other minor policy changes.
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 each year by the committee. For Executive Directors, the maximum
bonus opportunity is up to 100%. 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.
The target for the year in review was to achieve a minimum of 6% growth in
adjusted EBITDA, which would give rise to an award equivalent to 25% of base
salary. Performance above this target would lead to higher awards, increasing
on a straight-line basis, up to a maximum of 100% of base salary for adjusted
EBITDA growth of 16% in the year.
In-line with that structure and award calculation the Committee has determined
that there will be no bonus awarded to Executive Directors for 2022.
LTIP
To incentivise and reward achievement of sustained and long-term business The Executive Directors receive remuneration under the following term
performance and create alignment with shareholders. incentive plans: Enterprise Management Scheme ("EMI" which is now closed;
Joint Share Ownership Plan ("JSOP"); Performance Share Plan ("PSP") and Save
As You Earn Scheme ("SAYE"). All of which have a three-year vesting period.
The EMI, SAYE and JSOP 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.
Under the PSP award, the maximum opportunity is nil-cost options to the value
of 100% of base salary and is subject to malus and clawback provisions.
Performance is assessed against a rolling three-year performance period and
subject to the achievement of performance targets set by the Remuneration
Committee. Currently these are based on diluted adjusted earnings per share
growth and the achievement of a ESG related targets.
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.
Additional Policy Notes
Shareholding requirements
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.
Dilution limit policy
As outlined in the previous year a new policy on dilution limits has been
adopted. 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.
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 in the year
Executive Directors
The remuneration of each Director for the year ended 31 December 2022 and the
prior year is set out in the table below.
Richard Edwards Karen Prior(1) Marc Wilson(2)
2022 2021 2022 2021 2022 2021
£000 £000 £000 £000 £000 £000
Base salary 250 250 60 81 140 70
Taxable benefits 10 10 9 8 9 5
Pension 25 25 6 8 16 9
Annual bonus - 150 - 49 - 65
Share-based payment(3) - 2 - 2 - 5
Share options vested(3) - - - - - -
Total remuneration 285 437 75 148 165 154
Of which:
Fixed remuneration 285 285 75 97 165 84
Variable remuneration - 152 - 51 - 70
(1) Karen 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 Marc Wilson for 2021 relates to amounts between the
date of appointment as a Director on 1 July 2021 and the end of the financial
year.
(3) For 2022 and onwards, the IFRS 2 share-based payment charge disclosure
will be replaced by the value of vested share options in the period. This
change is related to the implementation of the PSP long-term incentive award
structure. The PSP award includes performance based vesting criteria and
therefore subject to estimations on future performance which can lead to
variability in the IFRS 2 charge. Disclosing the vale of share options vested
will be a fairer reflection of the value of share options received by
Directors.
Non-Executive Directors
The remuneration of each Non-Executive Director for the year ended 31 December
2022 and the prior year is set out in the table below.
Fees
2022 2021
£000 £000
Kate Allum(1,2) 58 32
Matthew Robinson(3) 35 34
Ian Hamilton(4) 10 26
Peter Lawrence(5) - 19
Richard Wood(6) - 9
(1) Appointed 1 February 2021.
(2) Remuneration for 2022 includes £8,000 relating to agreed increases in
fees following the appointment as Chair that should have been paid in the
prior year.
(3) Appointed 11 January 2021
(4) Appointed 1 April 2021, resigned 17 April 2022
(5) Resigned 17 June 2021
(6) Resigned 31 January 2021
Ad hoc payments
There were no ad hoc payments to any Directors for the year ended 31 December
2022.
Payments to past Directors
There were no payments to past Directors for the year ended 31 December 2022.
Loss of office
There were no loss of office payments made for the year ended 31 December
2022.
Long-term incentive structure
In March, following advice from FIT Remuneration Consultants LLP and a
consultation process with shareholders, a new long-term incentive structure
was implemented that will apply to Executive Directors and management. As a
result, Anpario has introduced a new Performance Share Plan to work alongside
the existing JSOP share scheme.
PSP
The Anpario PSP award creates a maximum opportunity for the participating
Executive Directors equivalent to 100% of salary, Executive Management 40% of
salary and other key management 20% of salary.
The Awards have been granted in the form of nil-cost share options and will
normally vest after three years, subject to the achievement of performance
conditions. Awards may become exercisable subject to continued employment and
the achievement of three performance conditions, being a financial target
representing 75% of the total award and two further ESG components
representing the remaining 25% as described below.
Diluted adjusted earnings per share:
75% of the PSP award is weighted on the achievement of diluted adjusted
earnings per share growth targets over a three-year period. The minimum growth
required is 6% per annum for a 18.75% vesting of the overall PSP award, on a
pro-rata straight-line basis to a maximum 75% vesting of the overall PSP award
for annual growth of 16%.
Reduction of Carbon Intensity:
The primary objective for ESG based targets is to reduce Carbon Intensity
in-line with our ambitions to achieve net-zero emissions by 2030. 15% of the
PSP award is weighted on the reduction of annual Carbon Intensity cumulatively
since the year ended 31 December 2019. The minimum reduction required is 63%
per annum for a 4.5% vesting of the overall PSP award, on a pro-rata
straight-line basis to a maximum 15% vesting of the overall PSP award for a
cumulative reduction of 70%.
Other ESG Objectives:
The final potential 10% of the PSP Award is based on the achievement of
progress towards other ESG objectives. This will be based on a qualitative
assessment by the Remuneration Committee which will consider a range of
quantitative and qualitative inputs, including but not limited to: diversity,
equality and inclusiveness; training and development of staff; reductions in
waste and water usage; health and safety; and sustainable business operations.
Joint Share Ownership Plan
The Joint Share Ownership Plan ("JSOP") and the Anpario plc Employees Shares
Trust ("the Trust") were established and approved by resolution of the
Non-Executive Directors on 26 September 2011. The JSOP provides for the
acquisition by employees, including Executive Directors, of beneficial
interests as joint owners (with the Trust) of Ordinary Shares in the Company
upon the terms of a Joint Ownership Agreement ("JOA").
The terms of the JOAs provide, inter alia, that if jointly owned shares become
vested and are sold, the proceeds of sale will be divided between the joint
owners so that the participating Director receives an amount equal to any
growth in the market value of the jointly owned Ordinary shares above the
initial market value, less a "carrying cost" 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.
Director's share interests and awards
Share interests
The interests of the Directors who served during the period, as at 31 December
2022, in the Ordinary shares of 23p each in the Company were as follows: -
31 Dec Interests Interests 31 Dec Shareholding guidelines Guidelines
2021
2022
Number acquired disposed
Number met
in the year in the year
Richard Edwards 88,396 80,000 - 168,396 100% Yes
Karen Prior 77,445 80,000 - 157,445 100% Yes
Marc Wilson 9,676 2,000 - 11,676 100% No
Matthew Robinson - 8,600 - 8,600 n/a n/a
There have been no changes in Directors' interests between 31 December 2022
and 22 March 2023.
Share awards
Awards granted in the year are as follows.
Director Award plan Date of grant Normal Awards made Minimum Exercise price
vesting period during the year (pence per share)
Marc Wilson JSOP 23 March 2022 3 years 300,000 545.00
Marc Wilson PSP 23 March 2022 3 years 26,168 nil
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 Exercise price 31 Dec Options exercised Options granted 31 Dec
2021
2022
(pence per share)
Number in year in year
Number
Richard Edwards EMI 158.50 80,000 (80,000) - -
EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 609,781 - - 609,781
JSOP(1) 245.00 740,219 - - 740,219
SAYE 322.72 5,577 - - 5,577
Karen Prior JSOP(2) 79.00 86,956 - - 86,956
EMI 158.50 80,000 (80,000) - -
EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 347,825 - - 347,825
JSOP(1) 245.00 590,219 - - 590,219
JSOP(1) 375.00 175,000 - - 175,000
SAYE 322.72 5,577 - - 5,577
Marc Wilson JSOP(1) 330.00 20,000 - - 20,000
SAYE 322.72 5,577 - - 5,577
( ) JSOP(1) 620.00 50,000 - - 50,000
( ) JSOP(1) 545.00 - - 300,000 300,000
( ) PSP(3) nil - - 26,168 26,168
(1) The exercise price upon vesting will increase by a carrying cost
equivalent to simple interest at 4.5% per annum on the option price for three
years
(2) The exercise price upon vesting will increase by a carrying cost
equivalent to simple interest at 4.5% per annum on the option price until
exercised
(3) Vesting is subject to performance criteria as outlined in the remuneration
policy section above
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
Richard Edwards Chief Executive Officer 5 November 2006 12 months 6 months
Karen Prior Corporate Responsibility Director 1 October 2009 12 months 6 months
Marc 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
Kate Allum 1 February 2021 3 months 3 months
Matthew Robinson 11 January 2021 3 months 3 months
Matthew Robinson
Remuneration Committee Chairman
22 March 2023
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 2022 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
Final audit, 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
22 March 2023
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 2022 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 2022 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 the 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 by way of enquiry with the Directors in
regards to who prepared the assessment and the information and individuals
consulted in the process;
- Obtaining the Directors' trading forecasts which underly the going
concern assessment and challenging them on the key estimates and assumptions
within such with a particular focus onthe forecast levels of revenue, gross
profit predictions and working capital cycles, through analysis and comparison
of the 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;
- Undertaking an analysis of post year end trading results and
comparing to forecast and current year figures in order to evaluate the
accuracy and achievability of forecasts, and
- Performing a review of the disclosures in the financial statements
to to ensure they are adequate, consistent with the Director's assessment.
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, developed product and development costs classified 2022 2021
as intangible assets.
Yes Yes
Materiality Group financial statements as a whole
£24
6,0
00
(20
21:
£28
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00)
bas
ed
on
5%
(20
21:
5%)
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ave
rag
e
pro
fit
bef
ore
tax
(20
21:
ann
ual
pro
fit
bef
ore
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)
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 16 components ('the 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 components act as
sales offices and all purchases are made from the Parent Company, therefore,
through specific risk-focussed audit procedures over inventories, trade
receivables and cash, along with analytical review procedures we gained
sufficient audit assurance 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 developed product and development costs classified as intangible assets. Valuation: Valuation:
(See accounting policies and Note 13 intangible assets)
The Group has a material net book value for internally developed products of We analysed the level of revenue and gross profits generated historically by
£1.7m (2021 - £1.7m) forming part of the Brands and developed products developed products through review of trading results and compared these to the
intangible asset with net book value of £3.4m (2021 - £3.6m) disclosed in carrying value of the relevant intangible asset, in order to identify evidence
Note 13. of a fall in demand or other indicators of impairment. This process allowed us
to challenge management's assessment of the expected future returns and the
anticipated life of the products.
Following consideration of impairment indicators management carried out an
impairment assessment by considering the net present value of future cash
flows generated by the products in comparison to their net book value. We assessed the reasonableness of forecast future trading assumptions by
reference to current year results and budgets and considered the sensitivity
of the estimates of future performance to material changes in the net
realisable value of each of the developed products. We checked that the
Existence: anticipated performance of the developed products was consistent with the
overall Group forecasts prepared for assessing the basis of going concern.
In addition the Group has cummualtive capitalised development costs of £1.2m
(2021 - £0.8m) for products in development at the year end date. We reviewed the impairment assessment models against the requirements set out
within the relevant accounting standard and tested the integrity of the
mathematical calculations in the model.
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 consulted with our internal valuation experts on the reasonableness of the
viability of the products discount rate applied and the basis of the impairment model.
These judgements determine whether development costs are eligible for Existence:
capitalisation and the period of time over which assets will be amortised.
We tested, on a sample basis, that internally generated development costs
There is also a risk of fraud through manipulation in respect of the capitalised in the year of £0.5m (2021 - £0.4m) were valid business
assessment made by management of which costs are eligible for capitalisation expenses, that they related to the development of the relevant product and
further that they met the eligibility criteria in IAS 38 to be capitalised by
corroborating the costs to supporting evidence.
Owing to the magnitude of the product development intangibles, and the level
of estimation and judgement involved in determining both the eligibility of
costs for capitalisation and recoverable amount, we determined the existence For the portfolio of projects under development, including costs capitalised
and valuation of brand, developed products and the development costs in previous years as well as the current year we made enquiries of staff
intangible assets to be a key audit matter. outside of the finance function, including the technical director, who are
involved in the development of the products in order to gain an understanding
of the development process in order to assess if the development costs should
continue to be capitalised.
Key observations:
We found the estimates and judgements made by management in valuing the
developed products and development costs intangibles were reasonable and that
costs that have been capitalised relate to projects that exist have been
appropriately capitalised.
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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Materiality 246 285 226 257
Basis for determining materiality 5% of pre-tax profit, based on a 3 year average 5% of pre-tax profit 5% of Parent Company pre-tax profit Capped at 90% of Group materiality
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. Due to the
variability in the reported profit in the recent years a 3-year average has
been applied in the current year.
Performance materiality 190 199 170 180
Set at 75% of materiality Set at 70% of materiality Set at 75% of materiality Set at 70% of materiality
Basis for determining performance materiality
Our calculation of performance materiality was increased from 70% of financial
statement materiality to 75% in the year. Our rationale for this increase is
that it is the third year of our appointment as auditor and the history of
unadjusted differences over our period of appointment is low. Performance
materiality of 75% of financial statement materiality was considered to give
suitable level to determine the nature of and extent of testing required.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £5k (2021: £5.7k). 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 Statement of Directors' responsibilities, 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 Components of the Group including the industry in which they
operate and considered the risk of acts by the Group and components which were
contrary to applicable laws and regulations, including fraud. Our
understanding was obtained from enquires with the board of Directors and the
management team, our experience of auditing similar business models, and
continuity in the audit team in respect of auditing the entity in previous
years. The most significant matters relevant to the Group 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 and accounting standards.
We focused on areas that could give rise to a material misstatement in the
Group and Company 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;
- challenge of key estimates and judgements, including those applied
to the key audit matter by management in the financial statements to check
that it was 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 of the revenue nominal accounts for any unusual
transactions, including reviewing all postings to revenue in the significant
component of the Group using data analytic techniques to identify outliers
which did not follow the pattern we expected;
- 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.
- 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
22 March 2023
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 2022
2022 2021
Note £000 £000
Revenue 3 33,103 33,367
Cost of sales (18,967) (17,106)
Gross profit 14,136 16,261
Administrative expenses (10,576) (10,610)
Operating profit 4 3,560 5,651
Depreciation and amortisation 4 1,225 1,273
Adjusting items 6 423 53
Adjusted EBITDA 6 5,208 6,977
Net finance income 9 121 50
Profit before tax 3,681 5,701
Income tax 10 (378) (1,018)
Profit for the year 3,303 4,683
Other comprehensive income/(expense):
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translating foreign operations 387 (12)
Cashflow hedge movements (net of deferred tax) 19 (902) (124)
Total comprehensive income for the year 2,788 4,547
Basic earnings per share 12 16.13p 22.92p
Diluted earnings per share 12 15.10p 21.16p
Adjusted earnings per share 12 17.81p 24.92p
Diluted adjusted earnings per share 12 16.67p 23.01p
Consolidated statement of financial position
as at 31 December 2022
restated(1) restated(1)
2022 2021 2020
Note £000 £000 £000
Intangible assets 13 11,375 11,295 11,522
Property, plant and equipment 14 4,864 4,603 4,142
Right-of-use assets 15 50 81 85
Deferred tax assets 16 859 1,352 987
Derivative financial instruments 19 153 108 641
Non-current assets 17,301 17,439 17,377
Inventories 17 9,867 7,578 4,902
Trade and other receivables 18 7,003 6,873 6,053
Derivative financial instruments 19 21 335 327
Current income tax assets 774 214 -
Short-term investments 1,828 1,803 2,348
Cash and cash equivalents 11,739 13,742 13,472
Cash, cash equivalents and short-term investments 20 13,567 15,545 15,820
Current assets 31,232 30,545 27,102
Total assets 48,533 47,984 44,479
Lease liabilities 21 (17) (17) (7)
Derivative financial instruments 19 (825) (157) -
Deferred tax liabilities 16 (1,724) (2,264) (1,662)
Non-current liabilities (2,566) (2,438) (1,669)
Trade and other payables 22 (3,983) (5,172) (5,007)
Lease liabilities 21 (35) (68) (83)
Derivative financial instruments 19 (638) (4) -
Current income tax liabilities - - (215)
Current liabilities (4,656) (5,244) (5,305)
Total liabilities (7,222) (7,682) (6,974)
Net assets 41,311 40,302 37,505
Called up share capital 23 5,624 5,446 5,426
Share premium 23 14,934 11,547 11,148
Other reserves 24 (10,461) (6,788) (6,506)
Retained earnings 25 31,214 30,097 27,437
Total equity 41,311 40,302 37,505
(1) Prior years have been restated to distinguish between cash and cash
equivalents and short-term investments, the later of which relate to deposit
accounts with a notice period of more than three months but less than six
months. These were previously shown as cash and cash equivalents. See note 20.
The financial statements were approved by the Board and authorised for issue
on 22 March 2023.
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 2022
Share Share Other Retained earnings Total
capital
premium
reserves
equity
Note £000 £000 £000 £000 £000
Balance at 1 Jan 2021 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 24 - - (310) - (310)
Share-based payment adjustments 24 - - 36 - 36
Deferred tax regarding share-based payments - - 128 - 128
Final dividend relating to 2020 - - - (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
Profit for the period - - - 3,303 3,303
Currency translation differences - - 387 - 387
Cash flow hedge reserve 19 - - (902) - (902)
Total comprehensive income for the year - - (515) 3,303 2,788
Issue of share capital 23 178 3,387 - - 3,565
Joint-share ownership plan 24 - - (3,270) - (3,270)
Share-based payment adjustments 24 - - 183 - 183
Deferred tax regarding share-based payments - - (71) - (71)
Final dividend relating to 2021 11 - - - (1,512) (1,512)
Interim dividend relating to 2022 11 - - - (674) (674)
Transactions with owners 178 3,387 (3,158) (2,186) (1,779)
Balance at 31 Dec 2022 5,624 14,934 (10,461) 31,214 41,311
Consolidated statement of cash flows
for the year ended 31 December 2022
restated(1)
2022 2021
Note £000 £000
Operating profit for the year 3,560 5,651
Depreciation, amortisation and impairment 4 1,225 1,273
Loss on disposal of intangible assets 13 45 -
Loss/(gain) on disposal of property, plant and equipment 14 1 (2)
Share-based payments 24 183 36
Fair value adjustment to derivatives 395 533
Operating cash flows before changes in working capital 5,409 7,491
Increase in inventories (1,661) (2,759)
Decrease/(increase) in trade and other receivables 254 (915)
(Decrease)/increase in trade and other payables (2,171) 375
Increase in working capital (3,578) (3,299)
Cash generated from operations 1,831 4,192
Income tax paid (744) (1,047)
Net cash from operating activities 1,087 3,145
Purchases of property, plant and equipment 14 (809) (917)
Proceeds from disposal of property, plant and equipment - 6
Payments to acquire intangible assets 13 (731) (506)
Interest received 9 124 54
Movement in short-term investments 20 (25) 545
Net cash used in investing activities (1,441) (818)
Joint share ownership plan 24 (3,270) (310)
Proceeds from issuance of shares 3,565 419
Cash payments in relation to lease liabilities (70) (89)
Lease interest paid (3) (4)
Dividend paid to Company's shareholders (2,186) (2,023)
Net cash used in financing activities (1,964) (2,007)
Net (decrease)/increase in cash and cash equivalents (2,318) 320
Effect of exchange rate changes 315 (50)
Cash and cash equivalents at the beginning of the year 13,742 13,472
Cash and cash equivalents at the end of the year 11,739 13,742
(1) Prior years have been restated to distinguish between cash and cash
equivalents and short-term investments, the later of which relate to deposit
accounts with a notice period of more than three months but less than six
months. These were previously shown as cash and cash equivalents and therefore
included in the statement of cash flows, however now only the movement in
short-term investments is shown. See note 20.
Notes to the financial statements
for the year ended 31 December 2022
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 Accounting Standards.
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 and has been specifically
assessed to the period ending March 2024.
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 market
and geo-political uncertainty, 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.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its Subsidiaries drawn up to 31 December 2022.
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 a period of 20 to 30 years on a straight-line
basis and included in administrative expenses in the income statement. The
Optivite Brand has already existed for over 30 years and is expected to
continue to have a useful life into the foreseeable future, however management
felt it appropriate to assign a finite life rather than an indefinite one and
as such assigned a life of 30 year's to this asset. This change was made in
the current year and amortisation has commenced on this basis. Brands 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, cash equivalents and short-term investments
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits that
are readily convertible into cash with a notice period of less than three
months.
Short-term investments
Short-term investments comprise short-term deposits that are readily
convertible into cash with a notice period more than three months and less
than a year.
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 no 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 2021.
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
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
£11.4m 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. The scheme
was first applied to our 2021 tax return and at the current reporting date we
are still in the window for HMRC to review this first submission. 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. Adoption of new and revised accounting standards
New standards, interpretations and amendments effective from 1 January 2022
During the year, the Group has adopted the following new and revised standards
and interpretations. Their adoption has not had any significant impact on the
accounts or disclosures in these financial statements:
- Annual Improvements to IFRSs (2018-2020 Cycle): IFRS 1; IFRS 9;
IAS 41 and the illustrative examples accompanying IFRS 16;
- Conceptual Framework for Financial Reporting (Amendments to IFRS
3);
- IAS 37 Provisions, Contingent Liabilities and Contingent Assets
(Amendment - Onerous Contracts - Cost of Fulfilling a Contract); and
- IAS 16 Property, Plant and Equipment (Amendment - Proceeds before
Intended Use).
New standards, interpretations and amendments not yet effective
The Group has not early adopted the following new standards, amendments or
interpretations that have been issued but are not yet effective:
- IFRS 17 Insurance Contracts;
- Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS
Practice Statement 2);
- Definition of Accounting Estimates (Amendment to IAS 8); and
- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
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 2022 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 9,149 12,617 16,071 3,848 - 41,685
Inter-segment revenue - - (8,582) - - (8,582)
Revenue from external customers 9,149 12,617 7,489 3,848 - 33,103
Depreciation and amortisation (3) (55) (13) (4) (1,150) (1,225)
Net finance income - 1 - - 120 121
Profit/(loss) before income tax 3,301 3,530 2,641 972 (6,763) 3,681
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
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:
2022 2021
Notes £000 £000
Cost of inventories recognised as an expense 12,449 11,508
Employment costs 7 6,539 7,277
Share-based payment charges 6 213 53
Amortisation of intangible assets 13 646 733
Depreciation of property, plant and equipment 14 509 451
Depreciation of right-of-use assets 15 70 89
Loss/(gain) on disposal of tangible and intangible assets 46 (2)
Research and development expenditure 98 42
Our specialist technical team includes experts in poultry, swine, ruminant
& aquaculture species. During the year we have capitalised internal costs
of £447,000 (2021: £223,000) and expended a further £81,000 (2021:
£137,000) 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:
2022 2021
£000 £000
Fees payable to Company's auditor for the audit of Parent Company and 111 92
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 121 97
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.
During the year the Group incurred legal and professional costs in relation to
specific acquisition opportunities that did not proceed. Due to the
exceptional and non-recurring nature of these costs, they have been excluded
from our APMs.
2022 2021
£000 £000
Operating profit 3,560 5,651
Non-recurring acquisition costs 210 -
Share-based payments 213 53
Total adjustments 423 53
Adjusted operating profit 3,983 5,704
Depreciation and amortisation 1,225 1,273
Adjusted EBITDA 5,208 6,977
2022 2021
£000 £000
Adjusted operating profit 3,983 5,704
Income tax expense (378) (1,018)
Income tax impact of adjustments 42 3
Impact of changes in tax rates on deferred tax - 540
Impact of prior year Patent Box tax reduction - (137)
Adjusted profit after tax 3,647 5,092
7. Employment costs
2022 2021
Notes £000 £000
Wages and salaries 5,522 6,204
Social security costs 692 734
Other pension costs 325 339
Share-based payment charges 26 213 53
Employment costs 6,752 7,330
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.
Wages and salaries includes an adjustment for capitalised internal costs of
£447,000 (2021: £223,000) in respect of current development projects, see
note 13.
Director's remuneration details can be found in the Remuneration Committee
Report.
2022 2021
£000 £000
Directors' emoluments 581 808
Company contributions to defined contribution pension schemes 47 42
Share-based payment charges 80 9
During the year retirement benefits were accruing to 3 Directors (2021: 3) in
respect of defined contribution pension schemes.
The highest paid Director received remuneration as outlined below.
2022 2021
£000 £000
Directors' emoluments 260 410
Company contributions to defined contribution pension schemes 25 25
Share-based payment charges 2 2
8. Number of employees
The average monthly number of employees, including Directors, during the year
was:
2022 2021
£000 £000
Directors 5 5
Production 33 32
Administration 23 23
Sales and Technical 63 61
Average headcount 124 121
In addition to employees, sales and technical specialists are engaged on a
consultancy basis in several countries.
9. Net finance income
2022 2021
£000 £000
Interest receivable on short-term bank deposits 124 54
Finance income 124 54
Lease interest paid (3) (4)
Finance costs (3) (4)
Net finance income 121 50
10. Income tax
2022 2021
Notes £000 £000
Current tax on profits for the year 263 591
Adjustment for prior years (89) 48
Current tax 174 639
Origination and reversal of temporary differences 226 (165)
Effect of change in deferred tax rate - 540
Adjustment for prior years (22) 4
Deferred tax 16 204 379
Income tax expense charged to the income statement 378 1,018
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:
2022 2021
£000 £000
Profit before tax 3,681 5,701
Tax at the UK domestic rate 19% (2021: 19%) 699 1,083
Prior year tax adjustments (111) 189
Patent Box reductions - Prior year - (137)
Patent Box reductions - Current year (163) (359)
Non-deductible expenses 4 (13)
Losses not recognised for deferred tax 22 64
Research and development tax credits (152) (172)
Tax charge recognised directly in equity 202 158
Effect of change in deferred tax rate - 540
Difference in overseas tax rates 70 (175)
Deferred tax impact of share options (193) (160)
Tax adjustments (321) (65)
Income tax expense charged to the income statement 378 1,018
Corporation tax is calculated at 19% (2021: 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 prior year.
In addition to the amount charged to the income statement, the following
amounts relating to tax have been recognised in other comprehensive income.
2022 2021
Note £000 £000
Current tax on profits for the year - (19)
Current tax - (19)
Origination and reversal of temporary differences (202) (139)
Deferred tax 16 (202) (139)
Income tax recognised in other comprehensive income (202) (158)
11. Dividends
Amounts recognised as distributions to equity holders for the year ended 31
December:
2022 2022 2021 2021
per share total per share total
pence £000 pence £000
Interim dividend - Paid 3.15p 674 3.00p 651
Final dividend - Paid - - 7.00p 1,512
Final dividend - Proposed 7.35p 1,562 - -
Final dividend 7.35p 1,562 7.00p 1,512
Total dividend 10.50p 2,236 10.00p 2,163
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 £2,186,000
(2021: £2,023,000), 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:
2022 2021
Profit for the year attributable to owners of the Parent (£000's) 3,303 4,683
Weighted average number of shares in issue 20,481,713 20,429,730
Number of dilutive shares 1,392,327 1,697,602
Weighted average number for diluted earnings per share 21,874,040 22,127,332
Basic earnings per share 16.13p 22.92p
Diluted earnings per share 15.10p 21.16p
The calculation of the adjusted and diluted adjusted earnings per share is
based on the following data:
Note 2022 2021
Adjusted profit attributable to owners of the Parent (£000's) 6 3,647 5,092
Weighted average number of shares in issue 20,481,713 20,429,730
Number of dilutive shares 1,392,327 1,697,602
Weighted average number for diluted earnings per share 21,874,040 22,127,332
Adjusted earnings per share 17.81p 24.92p
Diluted adjusted earnings per share 16.67p 23.01p
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 2021 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
Additions - 78 - 115 528 10 731
Reclassifications - 135 - - (135) 136 136
Disposals - - - - (45) - (45)
Foreign exchange - - - 2 - - 2
As at 31 December 2022 5,960 4,766 786 1,924 1,154 943 15,533
Accumulated amortisation
As at 1 January 2021 - 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
Charge for the year - 326 23 195 - 102 646
Reclassifications - - - - - 98 98
As at 31 December 2022 - 1,318 745 1,263 - 832 4,158
Net book value
As at 1 January 2021 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
As at 31 December 2022 5,960 3,448 41 661 1,154 111 11,375
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 2022 of
£1,451,000 (2021: £1,501,000). The Meriden brand was acquired in 2012 and
has a net book value at 31 December 2022 of £328,000 (2021: £363,000). These
are deemed to have a useful economic life between 20 and 30 years due to the
inherent intellectual property contained in the products, the longevity of the
product lives and global market opportunities.
The reclassification to Brands and Developed Products if £135,000 represents
newly created products from Development projects. The reclassification to
Software and Licenses of £136,000 cost and £98,000 amortisation, represents
website costs previously included as a tangible asset, see also note 14.
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.
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 2021 and 31 December 2022 5,960
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 (2021: 2.5%).
The discount rate used of 14% (2021: 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
6.2 percentage points to a negative growth of minus 3.7 percentage points
would cause the carrying value of goodwill to equal its recoverable amount.
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 2021 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
Additions 29 38 35 707 809
Transfer of assets in construction 303 1,203 (3) (1,503) -
Reclassification - - (136) - (136)
Disposals (2) (25) (29) - (56)
Foreign exchange - - 2 - 2
As at 31 December 2022 2,251 5,017 395 48 7,711
Accumulated depreciation
As at 1 January 2021 283 1,473 425 - 2,181
Charge for the year 30 338 83 - 451
Transfer of assets in construction - - - - -
Disposals - - (144) - (144)
Foreign exchange - - 1 - 1
As at 31 December 2021 313 1,811 365 - 2,489
Charge for the year 47 391 71 - 509
Transfer of assets in construction (8) 9 - - 1
Reclassification - - (98) - (98)
Disposals (2) (24) (29) - (55)
Foreign exchange - - 1 - 1
As at 31 December 2022 350 2,187 310 - 2,847
Net book value
As at 1 January 2021 1,571 1,882 210 479 4,142
As at 31 December 2021 1,608 1,990 161 844 4,603
As at 31 December 2022 1,901 2,830 85 48 4,864
Held within land and buildings is an amount of £500,000 (2021: £500,000) in
respect of non-depreciable land.
The reclassification out of Fixtures, fittings and equipment of £136,000 cost
and £98,000 amortisation, represents website costs are now included as a
intangible asset, see also note 13.
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 2021 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
Additions - 23 - 23
Modification to lease terms 12 - - 12
Foreign exchange 14 - - 14
As at 31 December 2022 296 23 3 322
Accumulated depreciation
As at 1 January 2021 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
Charge for the year 68 1 1 70
Foreign exchange 10 - - 10
As at 31 December 2022 269 1 2 272
Net book value
As at 1 January 2021 82 1 2 85
As at 31 December 2021 79 - 2 81
As at 31 December 2022 27 22 1 50
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
2022 2021
Notes £000 £000
As at 1 January 912 675
Income statement charge 10 204 379
Deferred tax credited directly to equity 10 (202) (139)
Foreign exchange (49) (3)
As at 31 December 865 912
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances
gains
hedge
differences
Notes £000 £000 £000 £000 £000 £000
As at 1 January 2021 947 671 44 (483) (504) 675
Income statement credit 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
Income statement charge 10 135 (25) - (54) 148 204
Deferred tax charged directly to equity - - (273) (94) 165 (202)
Foreign exchange - - - (49) - (49)
As at 31 December 2022 1,579 780 (258) (630) (606) 865
2022 2021
£000 £000
Deferred income tax asset (859) (1,352)
Deferred income tax liability 1,724 2,264
Net deferred income tax liability 865 912
Included in 'Other timing differences' above is £529,000 (2021: £675,000)
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 prior year.
A deferred tax asset has been recognised for tax losses in the UK and US,
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
2022 2021
£000 £000
Raw materials and consumables 4,664 2,366
Finished goods and goods for resale 5,203 5,212
Inventory 9,867 7,578
18. Trade and other receivables
2022 2021
£000 £000
Trade receivables - gross 6,198 6,076
Less: expected credit losses (231) (237)
Trade receivables - net 5,967 5,839
Taxes 450 543
Other receivables 56 49
Prepayments 530 442
Total trade and other receivables 7,003 6,873
The carrying amount of gross trade receivables are denominated in the
following currencies:
2022 2021
£000 £000
Pounds sterling 1,724 1,828
US dollars 2,460 2,740
Euros 924 764
Other currencies 1,090 744
Trade receivables - gross 6,198 6,076
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 indvidual assessments as
at 31 December 2022. The expected loss rates are the same for the Group and
Company.
Not 1-60 days 61-120 days >121 days Credit Total
past due
past due
past due
past due
impaired
£000 £000 £000 £000 £000 £000
Specifically insured customers 3,884 969 107 - - 4,960
Uninsured customers 670 151 31 6 - 858
Credit impaired 136 101 80 63 - 380
Trade receivables - gross 4,690 1,221 218 69 - 6,198
Expected loss rates:
Specifically insured customers 0% 1% 6% 7% - 1%
Uninsured customers 2% 6% 28% 35% - 4%
Credit impaired 28% 34% 36% 100% - 43%
Specifically insured customers 16 11 6 - - 33
Uninsured customers 14 9 9 2 - 34
Credit impaired 38 34 29 63 - 164
Expected credit losses 68 54 44 65 - 231
Trade receivables - net 4,622 1,167 174 4 - 5,967
The comparative table below shows the Group's provision matrix and individual
assessments as at 31 December 2021.
Not 1-60 days 61-120 days >121 days Credit Total
past due
past due
past due
past due
impaired
£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 movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed
assessed
£000 £000 £000
As at 1 January 2021 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
Provisions for receivables created 2 117 119
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (96) (96)
Foreign exchange gains - 2 2
As at 31 December 2022 67 164 231
19. Financial instruments and risk management
Carrying amount of financial instruments
As at 31 December 2022 Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
Note £000 £000 £000 £000
Derivative financial instruments - - 153 153
Non-current - - 153 153
Trade and other receivables 18 7,003 - - 7,003
Derivative financial instruments - 1 20 21
Short-term investments 20 1,828 - - 1,828
Cash and cash equivalents 20 11,739 - - 11,739
Current 20,570 1 20 20,591
Financial assets 20,570 1 173 20,744
Lease liabilities 21 (17) - - (17)
Derivative financial instruments 19 - (417) (408) (825)
Non-current (17) (417) (408) (842)
Trade and other payables 22 (3,983) - - (3,983)
Lease liabilities 21 (35) - - (35)
Derivative financial instruments 19 - (533) (105) (638)
Current (4,018) (533) (105) (4,656)
Financial liabilities (4,035) (950) (513) (5,498)
As at 31 December 2021 Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
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
Short-term investments 20 1,803 - - 1,803
Cash and cash equivalents 20 13,742 - - 13,742
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)
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, cash balances and short-term investments 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.
2022 2021
£000 £000
Change in value of cash flow hedges (1,175) (153)
Deferred tax asset 273 29
Cash flow hedge movements (net of deferred tax) (902) (124)
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.
2022 2021
GBP/USD spot rate at 31 December 1.2102 1.3536
Fixed forward contracts
Weighted average forward rate 1.3049 1.3822
Maturing in the next year (Notional amount in US dollars 000's) 2,370 270
Maturing between one and two years (Notional amount in US dollars 000's) 4,200 2,370
Maturing between two and three years (Notional amount in US dollars 000's) 3,000 2,550
Notional amount (US Dollars 000's) 9,570 5,190
Participating forward contracts
Weighted average forward rate 1.3130 1.3145
Weighted average barrier rate 1.2142 1.2128
Maturing in the next year (Notional amount in US dollars 000's) 7,050 8,674
Maturing between one and two years (Notional amount in US dollars 000's) 5,800 6,600
Maturing between two and three years (Notional amount in US dollars 000's) 1,900 2,500
Notional amount (US Dollars 000's) 14,750 17,774
20. Cash, cash equivalents and short-term investments
Cash and cash equivalents comprise cash and short-term deposits held by Group
companies. Short-term investments comprise of bank deposits, held with major
UK financial institutions, with notice periods greater than three months but
less than six months. The carrying amount of these assets approximates to
their fair value.
restated restated
2022 2021 2020
£000 £000 £000
Short-term investments 1,828 1,803 2,348
Cash and cash equivalents 11,739 13,742 13,472
Cash, cash equivalents and short-term investments 13,567 15,545 15,820
During the preparation of financial statements, it was identified that certain
deposits did not met the definition of cash and cash equivalents due to having
a notice period greater than three months. All amounts are held in accounts
with periods of less than six months. This was also the case for prior periods
and as such they have been restated. These amounts held in deposit accounts
with a notice period of over three months and less than six months have now
been presented as short-term investments. There is no impact on the net assets
or income statement for any of the periods, the only change is within the
presentation of the current assets.
As a result of this change the consolidated statement of cash flows has been
restated. The short term investments have been removed from cash and cash
equivalents and the movement on the investments have been shown in investing
activities. The total net cash used in investing activities for the year ended
31 December 2021 has reduced from £1,363,000 as previously stated to
£818,000.
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities as follows:
2022 2021
£000 £000
Less than one year 35 68
Current lease liabilities 35 68
Between one and five years 17 17
Non-current lease liabilities 17 17
Lease Liabilities 52 85
22. Trade and other payables
2022 2021
£000 £000
Trade payables 2,698 2,604
Taxes and social security costs 169 150
Other payables 112 101
Accruals 1,004 2,317
Trade and other payables 3,983 5,172
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 2021 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
Exercise of share options 26 177,338 40 255 295
Issue of shares to JSOP 26 600,000 138 3,132 3,270
As at 31 December 2022 24,453,519 5,624 14,934 20,558
The company holds shares in treasury as follows:
Number £000
As at 1 January 2021, 31 December 2021 and 31 December 2022 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 2021 2,750,000
Purchase of shares 50,000
As at 31 December 2021 2,800,000
Purchase of shares 600,000
As at 31 December 2022 3,400,000
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 2021 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
Joint-share ownership plan 23 - 3,270 - - - - 3,270
Share-based payment charge 26 - - - (183) - - (183)
Share-based payment tax adjustments - - - 71 - - 71
Movement in fair value (net of tax) 19 - - - - 902 - 902
Currency translation differences - - - - - (387) (387)
As at 31 December 2022 1,189 11,110 (228) (2,393) 841 (58) 10,461
The nature and purpose of other reserves' items are disclosed in note 2.18.
25. Retained earnings
£000
As at 1 January 2021 27,437
Profit for the year 4,683
Dividends (2,023)
As at 31 December 2021 30,097
Profit for the year 3,303
Dividends (2,186)
As at 31 December 2022 31,214
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. These
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.
PSP
Under the PSP scheme awards have been granted in the form of nil-cost share
options and will normally vest after three years, subject to the achievement
of performance conditions. Awards may become exercisable subject to continued
employment and the achievement of three performance conditions, being a
financial target representing 75% of the total award and two further ESG
components representing the remaining 25% as described below.
Diluted adjusted earnings per share:
75% of the PSP award is weighted on the achievement of diluted adjusted
earnings per share growth targets over a three-year period. The minimum growth
required is 6% per annum for a 18.75% vesting of the overall PSP award, on a
pro-rata straight-line basis to a maximum 75% vesting of the overall PSP award
for annual growth of 16%.
Reduction of Carbon Intensity:
The primary objective for ESG based targets is to reduce Carbon Intensity
in-line with our ambitions to achieve net-zero emissions by 2030. 15% of the
PSP award is weighted on the reduction of annual Carbon Intensity cumulatively
since the year ended 31 December 2019. The minimum reduction required is 63%
per annum for a 4.5% vesting of the overall PSP award, on a pro-rata
straight-line basis to a maximum 15% vesting of the overall PSP award for a
cumulative reduction of 70%.
Other ESG Objectives:
The final potential 10% of the PSP Award is based on the achievement of
progress towards other ESG objectives. This will be based on a qualitative
assessment by the Remuneration Committee which will consider a range of
quantitative and qualitative inputs, including but not limited to: diversity,
equality and inclusiveness; training and development of staff; reductions in
waste and water usage; health and safety; and sustainable business operations.
Movements in the number of share options outstanding are as follows:
Number Weighted average Number Weighted average
of options
exercise price (p)
of options
exercise price (p)
2022 2022 2021 2021
Outstanding at 1 January 562,842 255 592,469 254
Granted during the year 84,514 535 10,000 565
Lapsed during the year - - (4,579) 334
Exercised during the year (177,338) 167 (35,048) 308
Outstanding at 31 December 470,018 339 562,842 255
Exercisable at 31 December 264,000 269 441,338 228
Share options outstanding at the end of the year have the following expiry
dates and weighted average exercise prices:
Number Weighted average Number Weighted average
of options
exercise price (p)
of options
exercise price (p)
2022 2022 2021 2021
2022 - - 538 334
2023 - - 160,000 159
2024 100,000 245 109,000 245
2025 84,800 290 84,800 290
2026 62,200 239 70,000 240
2027 91,504 323 91,504 323
2028 47,000 438 47,000 438
2032 84,514 535 - -
Total outstanding share options 470,018 339 562,842 255
The range of exercise prices of outstanding share options at the year end was
238p to 565p (2021: 159p to 565p) and their weighted average remaining
contractual life was 4 years (2021: 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 £213,000 (2021: £53,000) of which a charge of £30,000
(2021: £17,000) relates to professional fees.
During the year options totalling 684,514 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 PSP JSOP
Grant date 23 Mar 2022 23 Mar 2022
Number of options granted 84,514 600,000
Grant price (p) 535.0 545.0
Carrying cost (per annum) - 4.5%
Exercise price (p) - 618.6
Vesting period (years) 3.0 3.0
Option expiry (years) 10.0 10.0
Expected volatility of the share price 25.0% 25.0%
Dividends expected on the shares 1.9% 1.8%
Risk-free rate 1.4% 1.4%
Fair value (p) 496.5 72.8
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:
2022 2021
£000 £000
Property, plant and equipment 140 615
Capital commitments 140 615
Company statement of financial position
As at 31 December 2022
restated(1)
2022 2021
Note £000 £000
Intangible assets 33 10,855 10,767
Property, plant and equipment 34 4,854 4,592
Right of use assets 26 4
Investment in subsidiaries 35 11,353 12,196
Deferred tax assets 36 - 302
Derivative financial instruments 19 153 108
Non-current assets 27,241 27,969
Inventories 37 5,315 3,219
Trade and other receivables 38 10,845 13,889
Derivative financial instruments 19 21 335
Current income tax assets 971 295
Short-term investments 1,828 1,803
Cash and cash equivalents 8,790 9,854
Cash, cash equivalents and short-term investments 10,618 11,657
Current assets 27,770 29,395
Total assets 55,011 57,364
Lease liabilities 1 (1)
Derivative financial instruments 19 (825) (157)
Deferred tax liabilities 36 (1,724) (2,264)
Non-current liabilities (2,548) (2,422)
Trade and other payables 39 (7,496) (8,660)
Lease liabilities (27) (4)
Derivative financial instruments 19 (638) (4)
Current income tax liabilities - -
Current liabilities (8,161) (8,668)
Total liabilities (10,709) (11,090)
Net assets 44,302 46,274
Called up share capital 40 5,624 5,446
Share premium 14,934 11,547
Other reserves 41 (8,498) (4,438)
Retained earnings 32,242 33,719
Total equity 44,302 46,274
1 Prior year have been restated to distinguish between cash and cash
equivalents and short-term investments, the later of which relate to deposit
accounts with a notice period of more than three months but less than six
months. These were previously shown as cash and cash equivalents. See note 20.
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 £709,000 (2021: £4,553,000).
The financial statements were approved by the Board and authorised for issue
on 23 March 2023.
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 2022
Share Share Other Retained earnings Total
capital
premium
reserves
equity
Note £000 £000 £000 £000 £000
Balance at 1 Jan 2021 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 - - - (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
Profit for the period - - - 709 709
Cash flow hedge reserve - - (902) - (902)
Total comprehensive income for the year - - (902) 709 (193)
Issue of share capital 23 178 3,387 - - 3,565
Joint-share ownership plan 26 - - (3,270) - (3,270)
Share-based payment adjustments 26 - - 183 - 183
Deferred tax regarding share-based payments - - (71) - (71)
Final dividend relating to 2021 11 - - - (1,512) (1,512)
Interim dividend relating to 2022 11 - - - (674) (674)
Transactions with owners 178 3,387 (3,158) (2,186) (1,779)
Balance at 31 Dec 2022 5,624 14,934 (8,498) 32,242 44,302
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
2022 2021
Notes £000 £000
Wages and salaries 3,292 3,913
Social security costs 419 475
Other pension costs 265 218
Share-based payment charges 26 213 53
Employment costs 4,189 4,659
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:
2022 2021
£000 £000
Directors 5 5
Production 33 32
Administration 16 16
Sales and Technical 32 29
Average headcount 86 82
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 2021 5,490 4,464 559 1,800 806 797 13,916
Additions - 78 - 115 528 10 731
Reclassifications - 135 - - (135) 136 136
Disposals - - - - (45) - (45)
As at 31 December 2022 5,490 4,677 559 1,915 1,154 943 14,738
Accumulated amortisation
As at 31 December 2021 - 903 546 1,068 - 632 3,149
Charge for the year - 326 13 195 - 102 636
Reclassifications - - - - - 98 98
As at 31 December 2022 - 1,229 559 1,263 - 832 3,883
Net book value
As at 31 December 2021 5,490 3,561 13 732 806 165 10,767
As at 31 December 2022 5,490 3,448 - 652 1,154 111 10,855
The reclassification to Brands and Developed Products if £135,000 represents
newly created products from Development projects. The reclassification to
Software and Licenses of £136,000 cost and £98,000 amortisation, represents
website costs previously included as a tangible asset, see also note 34.
More information about Goodwill can be found in note 13 to the financial
statements.
34. Property, plant and equipment
Land and Plant Fixtures, fittings and equipment Assets in the course of construction Total
buildings
and machinery
£000 £000 £000 £000 £000
Cost
As at 31 December 2021 1,921 3,801 473 844 7,039
Additions 29 38 32 707 806
Transfer of assets in construction 303 1,203 (3) (1,503) -
Reclassification - - (136) - (136)
Disposals (2) (25) (29) - (56)
As at 31 December 2022 2,251 5,017 337 48 7,653
Accumulated depreciation
As at 31 December 2021 313 1,811 323 - 2,447
Charge for the year 47 391 66 - 504
Transfer of assets in construction (8) 9 - - 1
Reclassification - - (98) - (98)
Disposals (2) (24) (29) - (55)
As at 31 December 2022 350 2,187 262 - 2,799
Net book value
As at 31 December 2021 1,608 1,990 150 844 4,592
As at 31 December 2022 1,901 2,830 75 48 4,854
Held within land and buildings is an amount of £500,000 (2021: £500,000) in
respect of non-depreciable land.
The reclassification out of Fixtures, fittings and equipment of £136,000 cost
and £98,000 amortisation, represents website costs are now included as a
intangible asset, see also note 33.
35. Investment in subsidiaries
Unlisted
investments
£000
Cost
As at 1 January 2021 12,202
Investment in Subsidiaries 2,617
Write off of dormant subsidiary investments (7)
As at 31 December 2021 14,812
Investment in Subsidiaries 18
As at 31 December 2022 14,830
Provisions for diminution in value
As at 1 January 2021 and 31 December 2021 2,616
Provisions made in the year 861
As at 31 December 2022 3,477
Net book value
As at 1 January 2021 9,586
As at 31 December 2021 12,196
As at 31 December 2022 11,353
Following an impairment review it was determined that a provision for
diminution of value of £861,000 was required in relation to the investment in
Anpario Saúde e Nutrição Animal Ltda to reflect the fair value of the
investment. Last year, investment balances in dormant subsidiaries that no
longer feature as part of the Group strategy were written off, these totalled
£7,000 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 £18,000 (2021:
£2,617,000). This relates to the establishment of Anpario (Vietnam) Company
Limited.
Full list of investments
The Group holds share capital in the following Companies which are accounted
for as Subsidiaries, all of which have a principal activity of Technology
Services and the Group holds 100% of the Ordinary Shares.
Country of registration
or incorporation
Directly held
Anpario 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 Biotech 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, New Zealand
Newmarket, Auckland, 1023, NZ
Anpario (Vietnam) Company Limited
No.8, Lane 265 Chien Thang Street, Vietnam
Van Quan Residential Area,
Van Quan Ward, Ha Dong District,
Hanoi, Vietnam.
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 2022 in accordance with Section 479A of The Companies Act
2006.
** Dormant companies
36. Deferred tax
2022 2021
£000 £000
As at 1 January 1,962 1,470
Income statement (charge)/credit (36) 631
Deferred tax credited directly to equity (202) (139)
As at 31 December 1,724 1,962
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances
gains
hedge
differences
£000 £000 £000 £000 £000 £000
As at 1 January 2021 947 671 44 - (192) 1,470
Income statement credit 497 134 - - - 631
Deferred tax credited directly to equity - - (29) - (110) (139)
As at 31 December 2021 1,444 805 15 - (302) 1,962
Income statement (charge)/credit 135 (25) - (148) 2 (36)
Deferred tax charged/(credited) directly to equity - - (273) (94) 165 (202)
As at 31 December 2022 1,579 780 (258) (242) (135) 1,724
2022 2021
£000 £000
Deferred income tax asset - (302)
Deferred income tax liability 1,724 2,264
Net deferred income tax liability 1,724 1,962
37. Inventories
2022 2021
£000 £000
Raw materials and consumables 4,664 2,366
Finished goods and goods for resale 651 853
Inventory 5,315 3,219
38. Trade and other receivables
2022 2021
£000 £000
Trade receivables - gross 3,958 4,706
Less: expected credit losses (149) (166)
Trade receivables - net 3,809 4,540
Receivables from Subsidiary undertakings 6,479 8,789
Taxes 56 125
Other receivables 2 2
Prepayments 499 433
Total trade and other receivables 10,845 13,889
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 based on an assessment of changes in credit risk and
there was no impairment provision as at 31 Dec 2022 (2021: £nil).
The movements in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed
assessed
£000 £000 £000
As at 1 January 2021 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
Provisions for receivables created - 117 117
Provisions for receivables released (13) - (13)
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (90) (90)
Foreign exchange (losses) and gains - - -
As at 31 December 2022 32 117 149
39. Trade and other payables
2022 2021
£000 £000
Trade payables 2,620 2,533
Amounts due to subsidiary undertakings 4,202 4,536
Taxes and social security costs 127 102
Other payables 44 52
Accruals and deferred income 503 1,437
Trade and other payables 7,496 8,660
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
2022 2021
£000 £000
Treasury shares 1,189 1,189
Joint Share Ownership Plan 11,110 7,840
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (2,393) (2,281)
Cash flow hedge reserve 841 (61)
Other reserves 8,498 4,438
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:
2022 2021
Note £000 £000
Amounts owed by Subsidiaries 38 6,479 8,789
Amounts owed to Subsidiaries 39 4,202 4,536
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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