REG - Anpario PLC - Half-year Report
14/09/2022 07:00
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RNS Number : 3579Z Anpario PLC 14 September 2022
Anpario plc
("Anpario" or the "Group")
Interim results
Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable
animal feed additives for animal health, nutrition and biosecurity is pleased
to announce its interim results for the six months to 30 June 2022.
Highlights
Financial highlights
- 3% increase in sales to £16.5m (2021: £16.0m)
- 10% decrease in adjusted EBITDA(1) to £3.0m (2021: £3.3m)
- Gross margins down to 42% (2021: 50%)
- 17% increase in profit after tax to £2.1m (2021: £1.8m)
- Diluted adjusted earnings per share down 3% to 9.81p (2021: 10.11p)
- 5% increase in interim dividend to 3.15p (2021: 3.00p) per share
- Cash balances of £13.3m at 30 June 2022 (Dec 2021: £15.5m)
Operational highlights
- Sales growth in Asia Pacific, Latin America, Middle East &
Africa (MEA) and the United States
- Implementation of sales price increases helped reduce impact of raw
material price inflation
- Strong demand for our natural pellet binder Mastercube® for
aquaculture
- Our unique acid-based eubiotic brand pHorce® delivered further
growth in the US swine sector as the leading anti-viral feed mitigant
- Investment in additional raw material storage at our Manton Wood
production facility completed
- New solar panel installation has reduced our electricity purchases
by 32%
Kate Allum, Chairman, commented:
"The Board is pleased to report a satisfactory performance given the
challenges experienced in the first half of the year. Sales growth was 3%
ahead of the prior year period, however adjusted EBITDA(1) declined by 10%,
albeit after legal and professional costs in relation to specific acquisition
opportunities. The decline in our gross margin is due to the significant and
immediate increase in raw material and logistics costs experienced during the
period which have been partially mitigated through sales price increases but
with an inevitable lag. Our margins, however, have improved in recent months
as a result of our actions.
Customers have also been impacted by input cost pressures, notably feed and
energy, which is hurting their profitability and in some cases viability. We
have, therefore, experienced reduced volumes with these customers in addition
to lower volumes in China because of covid lockdowns, and in Russia and
Belarus following our decision to cease trading with these countries. The
geographic and product diversity of the business has served us well during
this period and the investment in raw material storage and finished product
stocks around the world has ensured we continue to respond to customer demand.
Our strategy of offering sustainable and environmentally friendly products is
helping customers to transition away from anti-biotic growth promoters and
some of the harsher chemical treatments used in agriculture. Our research and
development are similarly focused on bringing new products to market such as
the recent launch of our 100% natural and sustainably sourced omega 3
supplement brand Optomega® Algae.
This performance would not have been possible without the efforts of our staff
and other stakeholders across the globe who have maintained composure and
continue to focus on implementing our business development initiatives. Cost
price inflation appears to have stabilised, although we are mindful that many
of our suppliers are dependent on European energy markets and logistics routes
are still subject to sporadic disruption.
Maintaining profitability at the same level of last year is going to be
challenging in the context of the current macroeconomic and geopolitical
headwinds. The second half has started at a similar level as the first but
with improved gross margins. However, full-year performance will be determined
by trading conditions and events throughout the remainder of the year. The
Group is supported by a strong balance sheet and further investment in our
global sales channels will help deliver future organic growth."
Kate Allum, Chairman
(1) Adjusted EBITDA represents operating profit for the period of £2.313m
(2021: £2.651m) adjusted for: share based payments and associated costs
£0.091m (2021: £0.027m); and depreciation and amortisation charges of
£0.604m (2021: £0.647m)
Chief Executive Officer's statement
Overview
Group sales for the six months to 30 June 2022 increased by 3% to £16.5m
(2021: £16.0m), helped by a strong recovery in South-East Asia with sales
growth of 28% mainly driven by the opening of economies post covid. China,
however, delivered a decline in sales of 9% due to covid lockdowns earlier in
the period affecting both meat consumption and logistics. Other notable
performances were Latin America, United States and the Middle East &
Africa (MEA) with sales growth driven by a combination of increased volumes
and selling prices.
Group product volumes declined by 6% but the overall increase in Group sales
was supported by a rise in weighted-average selling prices of 10% primarily
due to implementing price increases to help recover raw material price
inflation.
Gross profit decreased by 14% to £6.9m (2021: £8.0m) for the six months to
30 June 2022. Gross margins fell from 50% to 42%, primarily due to significant
raw material price inflation and increased logistics costs. The impact of this
cost inflation has typically been immediate and although we responded through
price increases there has been an inevitable lag in implementation. Even
though a proportion of logistics costs are borne by our customers it does
impact the gross margin calculation. There was also a change in product mix
compared to the same period last year with higher value Orego-Stim® sales
declining by 9% partly due to order phasing but also as some customers have
either reduced their production output or the use of Orego-Stim® to alleviate
inflationary pressures in their supply chain, despite the consequence of
animal performance being compromised.
Sales of our natural pellet binder brand Mastercube® grew by 85% benefiting
from Latin American aquafeed producers switching to sustainable and
environmentally friendly products. Also, sales of our unique acid-based
eubiotic brand pHorce® continued to grow in the US, as more swine producers
adopt it for anti-viral feed mitigation and as a replacement for zinc oxide in
piglet diets.
The first half of the year has certainly been one of the toughest to navigate
and despite the impact to our margins our overhead costs have been kept under
control whilst still investing in both sales and technical personnel to
maintain organic growth opportunities. As such, we have been able to deliver
adjusted EBITDA(1) of £3.0m, a decline of 10%, after increased legal and
professional costs relating to specific acquisition opportunities.
Unfortunately, these did not materialise however, our search for suitable
acquisition targets is undimmed.
Operational review
Americas
Overall, the region grew sales by 9% due to increased selling prices with
Latin America and the United States (US) delivering growth of 59% and 15%
respectively, but there was a decline of 23% in South America due to weaker
performances from Brazil and Chile compared to the same period last year.
Latin America performance was strong due to increased demand for our natural
pellet binder brand Mastercube® in Ecuador for aquafeed and the joint
decision with our distributor to invoice specific larger customers directly
where we can benefit from higher levels of credit insurance. In our South
America region both Brazil and Chile delivered a decline in sales of 25% and
67% respectively. Chile's performance is related to phasing of orders of
Orego-Stim® for sea lice control. Both Argentina and Peru delivered improved
performances compared to the same period last year when progress was affected
by the pandemic.
US delivered sales growth of 15% on flat volumes due to a combination of
increased average selling prices and a change in product mix where increased
volumes of our liquid presentation of Orego-Stim® offset declines in our
powder version and mycotoxin binder sales. Demand for Orego-Stim® liquid has
been stimulated by marketing initiatives we planned with key distributors
delivering to individual farms. Sales of pHorce® grew by 157% through a
combination of both volume and average selling price increases as more swine
producers use it for anti-viral feed mitigation and zinc oxide replacement.
Shipping to the US has improved but notwithstanding these disruptions and in
anticipation of increased demand through the winter months when bacterial
challenges are higher, we have built up our local stockholding across several
distribution outlets.
Asia
Overall, sales and volumes in the region increased by 7% and 2% respectively,
but there were material differences between Australasia, China and South-East
Asia. The reopening of economies in South-East Asia to both tourism and local
hospitality helped the region to deliver sales growth of 28%, with strong
performances from the Philippines and Malaysia. Our mycotoxin binder range did
particularly well which was anticipated because as the region is an importer
of grain and high prices typically mean feed mills switch to lower quality
grain but then use more mycotoxin binder to protect the animal from harmful
toxins which may be present in the poorer quality raw material. We anticipate
that as countries in the South-East Asia region roll back their covid measures
that the outlook will continue to improve.
China experienced a decline in sales of 9% with volumes of both Orego-Stim®
and our acid-based eubiotic range lower because of reduced meat protein
consumption and disruption to logistics during covid lockdown periods. Since
the period end, we have seen some recovery in China and the team is beginning
to target the aquaculture sector, but we remain cautious given the policy
towards managing covid in the country.
Sales across Australasia, which covers Australia, New Zealand and Papua New
Guinea, declined by 28% compared to the same period last year with demand
generally down across most products as farmers, under pressure from high input
and freight costs, look for cash savings. Our mould control product sales were
affected as raw material and feed exports from Australia were curtailed due to
the disruption in global shipping movements. However, the territory has had a
good start to the second half as the situation has improved.
The Middle East, Africa and India
Sales and volumes in the region grew by 12% and 24% respectively, with strong
performances from Iraq, Egypt and Saudi Arabia compared to the same period
last year. The region was materially impacted by the pandemic and so it is
encouraging to see an improvement which we expect to continue. Sales of
enzymes, mycotoxin binders and pellet binders all contributed to the improved
performance.
Europe
Sales in Europe declined by 15% compared to the same period last year
primarily affected by a reduction in volumes of our feed hygiene product where
the increase in organic acid costs made the product less viable to use in
large quantities. In addition, the very dry weather has reduced the level of
bacterial contamination in the raw material. Combined sales to Russia and
Belarus are down £0.1m due to our decision to cease trading with these
countries. Several smaller territories including Estonia, Bulgaria, Austria
and Denmark delivered growth which helped limit the overall impact.
We have recently recruited additional sales resource covering the UK and
Poland where we consider there are further growth opportunities.
Innovation and development
Our research and development activities continue to focus on environmentally
friendly and sustainable solutions for adoption by global food producers. The
industry is moving away from the use of harmful applications such as
formaldehyde and zinc oxide for antimicrobial control and a number of
Anpario's products are proven to be effective replacements. Recent trial work
performed in Brazil demonstrated encouraging results when Orego-Stim® was
used in the absence of monensin, an anti-biotic widely used in ruminant feeds,
in beef cattle. Similar field trials are also being conducted on calves in
Australia to reduce cryptosporidia. These field trials align with our recent
UK patent grant for Orego-Stim® which shows the natural oregano oil
composition reduces the proportion of bacteria in the gut that have
antimicrobial resistance, when added to the diet of young cattle.
Aquaculture trial work is currently underway in Barramundi hatcheries located
in Humpty Doo, a small town in Australia's Northern Territory. Known for its
sustainable production, Barramundi are being fed a combination of Orego-Stim®
and pHorce® for general health and bacterial control. Results so far are very
encouraging leading to reduced stress and improved recovery when transferring
fish to different tanks which overall leads to reduced mortality. The next
phase is to demonstrate further benefit during the grow-out phase where
significant feed volumes are consumed.
Orego-Stim® is a very versatile product due to the presence of many natural
essential oil compounds, which is the benefit of using a 100% natural product.
Work in the US is proving that by using Orego-Stim® we can reduce 3% of the
protein in the diet and maintain animal performance. At this level the savings
from simply the reduction in feed ration costs pay for the inclusion of
Orego-Stim®, not to mention the additional benefits from improved animal
performance, feed conversion, and the replacement of anti-biotic growth
promoters. The work is continuing to reduce protein content even further,
which helps improve overall sustainability of the global agriculture industry.
Outlook
The second half has started at a similar level as the first with a welcome
improvement in gross margins. We are mindful that inflationary cost pressures
persist, and the global energy crisis may have further consequences on our
supply base in the near term. Therefore, maintaining profitability at the same
level as in the prior year will depend on the performance in the remaining
months. However, our leading products consistently demonstrate a return on
investment in our customers' operations and the growth drivers across the meat
protein industry remain intact. Our recent investments in both storage of raw
material and global inventory ensures we can continue to supply our customers.
Our geographic and product diversity gives us a degree of confidence in the
future profitable development of the Group supported by our innovative
developments and strong balance sheet. Expanding our sales teams and channels
around the world combined with product development complemented by the search
for suitable acquisitions will remain priorities for the Group.
Richard Edwards
Chief Executive Officer
14 September 2022
Key performance indicators
Financial
H1 2022 H1 2021
Note £000 £000 change % change
Revenue 3 16,471 15,963 +508 +3%
Gross profit 6,900 8,045 -1,145 -14%
Gross margin 41.9% 50.4% -8.5%
Adjusted EBITDA 6 3,008 3,325 -317 -10%
Profit before tax 2,361 2,673 -312 -12%
Diluted adjusted earnings per share 12 9.81p 10.11p -0.30p -3%
Interim dividend 3.15p 3.00p +0.15p +5%
Cash and cash equivalents 13.320 14,601 -1,281 -9%
Net assets 41,973 39,468 +2,505 +6%
Financial review
Revenue and gross profits
Revenue for the period grew by 3% to £16.5m (2021: £16.0m), with growth flat
on a constant exchange rate basis. Volumes overall were 6% lower than the
prior year, the biggest contributor to this being a reduction in sales of our
Acid-based Eubiotics (ABE) range that have been most significantly impacted by
acute raw material price inflation. Excluding ABE's, volumes overall increased
by 2%.
Sales growth was achieved in three of the four geographic segments, Americas,
Asia and MEA with only Europe experiencing a decline in sales. There was a
welcome recovery of sales in both South-East Asia and Middle-East after
reduced sales through the pandemic. Detailed commentary on the performance of
the operating segments is available in the Chief Executive Officer's
Statement.
During the period there was a 14% decrease in gross profit to £6.9m (2021:
£8.0m) and gross margins fell to 41.9% (2021: 50.4%), full year margins for
2021 were 48.7%. The most significant factor reducing margins has been the
continuation of raw material price inflation pressures as discussed in the
annual report. This has taken two forms, with both a general level of
higher-than-normal inflation as well as some inputs experiencing significant
cost increases. Where we have seen significant cost increases, for products
like our ABE range, then we continue to try and balance customer demand and
sales volumes with profit and margins, and as such we have absorbed some
margin pressure.
Added to this, there has been a reduction in sales of Orego-Stim®, some of
this has been related to timing of larger customer orders but also related to
a reduction in our customers production output or use-rate and therefore
requirement for the product. Orego-Stim® is a lower volume, higher value
product than other ranges and so this product mix change has had a negative
impact on both sales and profit.
Successive prices increases have been implemented as cost increases have been
notified to us, but these can take longer, particularly with longer-planned
international orders, to take effect than the often-instant cost increases
that we have been experiencing. In the final month of first half of the year
we experienced improved margins as a result of both the full implementation of
price rises for the period and an increase in volumes of Orego-Stim®.
Energy costs
As already highlighted, through the Solar Panel installation earlier in the
year we are now generating our own electricity. Along with energy reduction
initiatives, this has through the first half of the year enabled us to reduce
electricity purchases by 32% to 201,619 kwH (2021: 296,602 kwH). Some of the
electricity created by the panels is also being exported back into the grid
when there is more being generated than needed on site. Also, the electricity
that we are purchasing is on a long-term fixed contract that has been in place
since before the recent spike in prices.
At our Manton Wood site we have completed a number of projects to reduce our
already very low natural gas usage by 70% to 9,096 kwH (2021: 29,990 kwH).
Administrative expenses
Administrative expenses were 15% lower at £4.6m (2021: £5.4m). Several
factors have contributed to this decline in costs including lower incentive
provisions for the current period's results, foreign exchange gains and higher
levels of staff capitalisation to R&D projects for which activity has
started to increase again following a slowdown in activity through COVID.
Some costs did increase over the prior period including travel expenditure for
which activity is still normalising and higher share-based payment charges
following the introduction of the new LTIP structure announced in March.
In addition, in excess of recurring costs associated with the on-going search
and evaluation of acquisition opportunities, we incurred non-recurring costs
of £0.2m on due diligence fees related to an acquisition opportunity that was
unfortunately unsuccessful.
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 period. The average rate experienced for GBP/USD
has reduced from 1.3890 in the prior period to 1.2936 in the first six months
of the current year, with a rate at 30 June of 1.2160. 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 GBPUSD 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 period was 10.5% (2021: 32.4%). The prior year
charge was materially higher due to changes to UK corporation tax rates on 3
March 2021 the UK government announced an increase to 25%, from 19%, from
April 2023. Deferred taxes were remeasured resulting in a deferred tax charge
of £0.4m. Excluding these exceptional charges, the underlying effective tax
rate for the prior period was 16.9%, a more appropriate comparator to the
current period's effective rate of 10.5%.
Contributing factors for the rate being lower in this period include higher
expected R&D tax credits and the benefit of the Patent Box scheme, as
detailed in the Finance Review for the last annual report. This allows
companies to apply a lower rate of corporation tax to profits attributable to
qualifying patents, in this case our market leading phytogenic product
Orego-Stim®. IFRS accounting standards require tax to be recognised on the
most likely outcome. Following work with our tax and patent advisors and some
discussions with HMRC then the first computation will be submitted shortly, at
which point Her Majesty's Revenue and Customs (HMRC) reserves the right to
query the Company's calculations. 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.
Profitability and earnings per share
Adjusted EBITDA has been restated for the prior year following the decision
made for the annual report to no longer exclude the impact of foreign exchange
gains and losses. Adjusted EBITDA for the period decreased by 10% to £3.0m
(2021: £3.3m). Profit before tax decreased by 12% to £2.4m (2021: £2.7m).
Diluted adjusted earnings per share, also restated to no longer exclude
foreign exchange gains and losses, decreased by 3% to 9.81p (2021: 10.11p),
this was driven by a lower underlying effective tax rate. Basic earnings per
share increased 17% to 10.33p (2021: 8.84p), which increased due to the prior
year having an exceptional deferred tax charge due to the future change in tax
rates to 25%.
Cash flow
Operating cash flows before changes in working capital were £3.4m (2021:
£3.5m) in the period. Changes in working capital absorbed £4.5m (2021:
£3.6m), this was mainly due to a £2.1m increase in inventories and a £2.1m
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.
The higher inventory levels are partly affected by inflation, but there has
also been an increase in raw materials due to higher onsite storage to manage
supply chain risks and strategic buying of certain key materials. In terms of
finished goods stock, which is predominantly held in our subsidiaries, then
across most territories' levels were consistent or lower than at the year end,
after the build-up of stock last year. However, we have increased our stocks
of finished goods in the USA ahead of the winter season for certain product
lines to ensure adequate stock levels to expand sales to new customers as
shipping availability is still constrained. As well as additional stock being
held to support our recently established Mexican subsidiary.
Net cash used in investing activities increased over the same period last year
to £1.0m (2021: £0.5m), this related to the completion of projects that were
in the course of construction and committed to at the end of last year.
Overall, cash and cash equivalents decreased by £2.2m in the period to a
balance of £13.3m (Dec 2021: £15.5m). The primary purpose of holding these
resources is to fund future acquisitions and we continue to explore suitable
opportunities.
Dividend
The Board has approved an interim dividend of 3.15 pence per share (2021: 3.00
pence), an increase of 5%. This dividend, payable on 25 November to
shareholders on the register on 11 November, reflects the Board's continued
confidence in the Group and its ability to generate cash.
Consolidated statement of comprehensive income
for the six months ended 30 June 2022
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
Note £000 £000 £000
Revenue 3 16,471 15,963 33,367
Cost of sales (9,571) (7,918) (17,106)
Gross profit 6,900 8,045 16,261
Administrative expenses (4,587) (5,394) (10,610)
Operating profit 2,313 2,651 5,651
Depreciation and amortisation 604 647 1,273
Adjusting items 4 91 27 53
Adjusted EBITDA 4 3,008 3,325 6,977
Net finance income 5 48 22 50
Profit before tax 2,361 2,673 5,701
Income tax (249) (867) (1,018)
Profit for the period 2,112 1,806 4,683
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translating foreign operations 423 (29) (12)
Cashflow hedge movements (net of deferred tax) (967) 68 (124)
Total comprehensive income for the period 1,568 1,845 4,547
Basic earnings per share 6 10.33p 8.84p 22.92p
Diluted earnings per share 6 9.60p 8.20p 21.16p
Adjusted earnings per share 6 10.56p 10.90p 24.92p
Diluted adjusted earnings per share 6 9.81p 10.11p 23.01p
Consolidated statement of financial position
As at 30 June 2022
as at as at as at
30 June 30 June 31 December
2022 2021 2021
Note £000 £000 £000
Intangible assets 7 11,360 11,349 11,295
Property, plant and equipment 8 5,066 4,247 4,603
Right of use assets 9 52 65 81
Deferred tax assets 1,622 1,175 1,352
Derivative financial instruments 26 489 108
Non-current assets 18,126 17,325 17,439
Inventories 10 10,426 6,739 7,578
Trade and other receivables 7,323 6,507 6,873
Derivative financial instruments 17 419 335
Current income tax assets 120 - 214
Cash and cash equivalents 13,320 14,601 15,545
Current assets 31,206 28,266 30,545
Total assets 49,332 45,591 47,984
Lease liabilities (23) (42) (17)
Derivative financial instruments (1,249) - (157)
Deferred tax liabilities (2,063) (2,106) (2,264)
Non-current liabilities (3,335) (2,148) (2,438)
Trade and other payables (3,868) (3,709) (5,172)
Lease liabilities (32) (27) (68)
Derivative financial instruments (124) (10) (4)
Current income tax liabilities - (229) -
Current liabilities (4,024) (3,975) (5,244)
Total liabilities (7,359) (6,123) (7,682)
Net assets 41,973 39,468 40,302
Called up share capital 5,448 5,433 5,446
Share premium 11,577 11,241 11,547
Other reserves (7,261) (6,449) (6,788)
Retained earnings 32,209 29,243 30,097
Total equity 41,973 39,468 40,302
Consolidated statement of changes in equity
for the six months ended 30 June 2022
Called up Share Other Retained Non-controlling interest Total
share capital
premium
reserves
earnings
equity
£000 £000 £000 £000 £000 £000
Balance at 1 Jan 2021 5,426 11,148 (6,506) 27,437 37,505
Profit for the period - - - 1,806 - 1,806
Currency translation differences - - (29) - - (29)
Cash flow hedge reserve - - 68 - - 68
Total comprehensive income for the period - - 39 1,806 - 1,845
Issue of share capital 7 93 - - - 100
Share-based payment adjustments - - 18 - - 18
Transactions with owners 7 93 18 - - 118
Balance at 30 Jun 2021 5,433 11,241 (6,449) 29,243 - 39,468
Profit for the period - - - 2,877 - 2,877
Currency translation differences - - 17 - - 17
Cash flow hedge reserve - - (192) - - (192)
Total comprehensive income for the period - - (175) 2,877 - 2,702
Issue of share capital 13 306 - - - 319
Joint-share ownership plan - - (310) - - (310)
Share-based payment adjustments - - 18 - - 18
Deferred tax regarding share-based payments - - 128 - - 128
Final dividend relating to 2020 - - - (1,372) - (1,372)
Interim dividend relating to 2021 - - - (651) - (651)
Transactions with owners 13 306 (164) (2,023) - (1,868)
Balance at 31 Dec 2021 5,446 11,547 (6,788) 30,097 - 40,302
Profit for the period - - - 2,112 - 2,112
Currency translation differences - - 423 - - 423
Cash flow hedge reserve - - (967) - - (967)
Total comprehensive income for the year - - (544) 2,112 - 1,568
Issue of share capital 2 30 - - - 32
Share-based payment adjustments - - 71 - - 71
Transactions with owners 2 30 71 - - 103
Balance at 30 Jun 2022 5,448 11,577 (7,261) 32,209 - 41,973
Consolidated statement of cash flows
for the six months ended 30 June 2022
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
Note £000 £000 £000
Operating profit for the period 2,313 2,651 5,651
Depreciation, amortisation and impairment 4 604 647 1,273
Loss on disposal of property, plant and equipment 8 - - (2)
Share-based payments 71 18 36
Fair value adjustment to derivatives 419 156 533
Operating cash flows before changes in working capital 3,407 3,472 7,491
Increase in inventories (2,137) (1,921) (2,759)
(Increase)/decrease in trade and other receivables (249) (488) (915)
(Decrease)/increase in trade and other payables (2,125) (1,141) 375
Changes in working capital (4,511) (3,550) (3,299)
Cash generated by operations (1,104) (78) 4,192
Income tax paid (361) (619) (1,047)
Net cash from operating activities (1,465) (697) 3,145
Purchases of property, plant and equipment 8 (701) (336) (917)
Proceeds from disposal of property, plant and equipment - 4 6
Payments to acquire intangible assets 7 (395) (191) (506)
Interest received 5 49 24 54
Net cash used in investing activities (1,047) (499) (1,363)
Joint share ownership plan - - (310)
Proceeds from issuance of shares 32 100 419
Cash payments in relation to lease liabilities (32) (60) (89)
Operating lease interest paid 5 (1) (2) (4)
Dividend paid to Company's shareholders - - (2,023)
Net cash from financing activities (1) 38 (2,007)
Net (decrease)/increase in cash and cash equivalents (2,513) (1,158) (225)
Effect of exchange rate changes 288 (61) (50)
Cash and cash equivalents at the beginning of the period 15,545 15,820 15,820
Cash and cash equivalents at the end of the period 13,320 14,601 15,545
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.
2. Basis of preparation
The consolidated financial statements comprise the accounts of the Company and
its subsidiaries drawn up to 30 June 2022.
The Group has presented its financial statements in accordance with UK adopted
International Financial Reporting Standards ("IFRSs").
Full details on the basis of the accounting policies used are set out in the
Group's financial statements for the year ended 31 December 2021, which are
available on the Company's website at www.anpario.com. There are not expected
to be any changes to the accounting policies and the same policies are
expected to be applicable for the year ended 31 December 2022.
This condensed consolidated interim financial information does not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2021 were approved by
the Board of Directors on 16 March 2022 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 (2) or (3) of the Companies Act 2006.
The consolidated interim financial information for the period ended 30 June
2022 is neither audited nor reviewed.
3. Operating segments
Management has determined the operating segments based on the information that
is reported internally to the Chief Operating Decision Maker, the Board of
Directors, to make strategic decisions. The Board considers the business from
a geographic perspective and is organised into four geographical operating
divisions: Americas, Asia, Europe, Middle-East and Africa (MEA) and Head
Office.
All revenues from external customers are derived from the sale of goods and
services in the ordinary course of business to the agricultural markets and
are measured in a manner consistent with that in the income statement.
Inter-segment revenue is charged at prevailing market prices or in accordance
with local transfer pricing regulations.
for the six months ended 30 Jun 2022 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 4,390 6,568 8,967 1,792 - 21,717
Inter-segment revenue - - (5,246) - - (5,246)
Revenue from external customers 4,390 6,568 3,721 1,792 - 16,471
Depreciation and amortisation (2) (27) (6) (2) (567) (604)
Net finance income - - - - 48 48
Profit before tax 2,162 1,763 1,274 384 (3,222) 2,361
for the six months ended 30 Jun 2021 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 4,033 6,111 11,045 1,446 - 22,635
Inter-segment revenue - - (6,672) - - (6,672)
Revenue from external customers 4,033 6,111 4,373 1,446 - 15,963
Depreciation and amortisation (1) (30) (5) (2) (609) (647)
Net finance income - - - - 22 22
Profit before tax 1,616 1,703 1,654 505 (2,805) 2,673
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 before tax 3,149 3,406 3,838 1,212 (5,904) 5,701
4. Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures (APMs), which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide depth and understanding
to the users of the financial statements to allow for further assessment of
the underlying performance of the Group.
The Board considers that adjusted EBITDA is the most appropriate profit
measure by which users of the financial statements can assess the ongoing
performance of the Group. EBITDA is a commonly used measure in which earnings
are stated before net finance income, amortisation and depreciation. The Group
makes further adjustments to remove items that are non-recurring or are not
reflective of the underlying operational performance either due to their
nature or the level of volatility.
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Operating profit 2,313 2,651 5,651
Share-based payments 91 27 53
Total adjustments 91 27 53
Adjusted operating profit 2,404 2,678 5,704
Depreciation and amortisation 604 647 1,273
Adjusted EBITDA 3,008 3,325 6,977
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Adjusted operating profit 2,404 2,678 5,704
Income tax expense (249) (867) (1,018)
Effect of changes to future tax rates - 416 540
Impact of prior year Patent Box tax reduction - - (137)
Income tax impact of adjustments 4 - 3
Adjusted profit after tax 2,159 2,227 5,092
5. Net finance income
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Interest receivable on short-term bank deposits 49 24 54
Finance income 49 24 54
Lease interest paid (1) (2) (4)
Finance costs (1) (2) (4)
Net finance income 48 22 50
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
Profit for the year (£000's) 2,112 1,806 4,683
Weighted average number of shares in issue 20,445,907 20,423,732 20,429,730
Number of dilutive shares 1,553,198 1,611,463 1,697,602
Weighted average number for diluted earnings per share 21,999,105 22,035,195 22,127,332
Basic earnings per share 10.33p 8.84p 22.92p
Diluted earnings per share 9.60p 8.20p 21.16p
The calculation of the adjusted and diluted adjusted earnings per share is
based on the following data:
six months to six months to year ended
30 June 30 June 31 December
Note 2022 2021 2021
Adjusted profit attributable to owners of the Parent (£000's) 4 2,159 2,227 5,092
Weighted average number of shares in issue 20,445,907 20,423,732 20,429,730
Number of dilutive shares 1,553,198 1,611,463 1,697,602
Weighted average number for diluted earnings per share 21,999,105 22,035,195 22,127,332
Adjusted earnings per share 10.56p 10.90p 24.92p
Diluted adjusted earnings per share 9.81p 10.11p 23.01p
7. Intangible assets
Goodwill Brands and developed products Customer relationships Patents, trademarks Development costs Software Total
and registrations
and Licenses
£000 £000 £000 £000 £000 £000 £000
Cost
As at 1 January 2022 5,960 4,553 786 1,807 806 797 14,709
Additions - 31 - 73 289 2 395
Foreign exchange - - - 1 - - 1
As at 30 June 2022 5,960 4,584 786 1,881 1,095 799 15,105
Accumulated amortisation
As at 1 January 2022 - 992 722 1,068 - 632 3,414
Charge for the year - 137 18 110 - 66 331
As at 30 June 2022 - 1,129 740 1,178 - 698 3,745
Net book value
As at 1 January 2022 5,960 3,561 64 739 806 165 11,295
As at 30 June 2022 5,960 3,455 46 703 1,095 101 11,360
8. 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 2022 1,921 3,801 526 844 7,092
Additions 18 26 22 635 701
Transfer of assets in construction 132 1,046 2 (1,180) -
Disposals - - (14) - (14)
Foreign exchange - - 4 - 4
As at 30 June 2022 2,071 4,873 540 299 7,783
Accumulated depreciation
As at 1 January 2022 313 1,811 365 - 2,489
Charge for the year 22 182 35 - 239
Disposals - - (14) - (14)
Foreign exchange - - 3 - 3
As at 30 June 2022 335 1,993 389 - 2,717
Net book value
As at 1 January 2022 1,608 1,990 161 844 4,603
As at 30 June 2022 1,736 2,880 151 299 5,066
9. Right-of-use assets
Land and Fixtures, fittings Total
buildings
and equipment
£000 £000 £000
Cost
As at 1 January 2022 270 3 273
Modification to lease terms 2 - 2
Foreign exchange 17 - 17
As at 30 June 2022 289 3 292
Accumulated depreciation
As at 1 January 2022 191 1 192
Charge for the year 33 1 34
Foreign exchange 14 - 14
As at 30 June 2022 238 2 240
Net book value
As at 1 January 2022 79 2 81
As at 30 June 2022 51 1 52
10. Inventories
six months to six months to year ended
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Raw materials and consumables 3,562 1,979 2,366
Finished goods and goods for resale 6,864 4,760 5,212
Inventory 10,426 6,739 7,578
Enquiries:
Anpario plc
Richard Edwards, CEO +44(0) 777 6417 129
Marc Wilson, Group Finance Director +44(0) 1909 537380
Peel Hunt LLP (NOMAD) +44 (0)20 7418 8900
Adrian Trimmings
Andrew Clark
Lalit Bose
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