Final Results
Anpario plc
Anpario plc
(“Anpario” or the “Group”)
Final Results
Anpario plc (AIM:ANP), the international producer and distributor of
natural animal feed additives for animal health, nutrition and
biosecurity is pleased to announce its full year results for the twelve
months to 31 December 2018.
Financial and operational highlights
Financial highlights
-
34% advance in profit after tax to £4.0m (2017: £3.0m)
-
31% uplift in diluted earnings per share to 18.52p (2017: 14.17p)
-
8% improvement in adjusted EBITDA1 to £5.5m (2017: £5.1m)
-
Sales of £28.3m (2017: £29.2m)
-
Proposed final dividend of 5.0p (2017: 4.5p) per share, total dividend
for the year 7.2p (2017: 6.5p) an increase of 11%
-
Cash balances of £12.9m at the year-end (2017: £13.6m)
Operational highlights
-
Strong sales growth in US, Europe and Australasia markets
-
New subsidiaries were incorporated in Mexico in 2018 and post-year end
in Turkey
-
Launch of
-
Next generation of mycotoxin binders branded Anpro®
-
Omega 3 supplement delivering improved fertility benefits to dairy
farmers
Peter Lawrence, Chairman, commented:
“Trading in the current year is ahead of the same point in 2018.
However, we remain vigilant as there may be obstacles ahead due to
Brexit and African Swine Fever, in particular. Our strong balance sheet
and cash generation capability provide Anpario with a firm platform from
which to invest in new products and to develop the exciting Anpario
Direct opportunity.
Expanding profitable sales and distribution channels around the world
remains our priority and the initiatives already implemented are gaining
traction. This gives me confidence that we will return to sales growth
as 2019 progresses.”
1 Adjusted EBITDA represents profit for the period
before tax £4.552m (2017: £3.403m) adjusted for: share based payments
and associated costs £0.118m (2017:£0.259m); net finance income £0.087m
(2017: £0.042m); depreciation, amortisation and impairment charges of
£0.871m (2017: £0.825m) and exceptional items of £nil (2017: £0.627m).
Chairman’s statement
Anpario has delivered another good set of results for the year to 31
December 2018 with increases in pre-tax profit, earnings per share and
EBITDA, when compared with the previous year. This outturn has been
achieved in a challenging trading environment, which has held back sales
The rapid spread of African Swine Fever (ASF) in China and the
strengthening of the US dollar against currencies in which our customers
trade, have influenced our performance but our focus on controlling
costs whilst still implementing our development initiatives, has
delivered encouraging results.
The proportion of total sales direct to end users continues to grow and
reflects our strategic focus of working closely with our major partner
distributors. The imminent launch of Anpario Direct, our internet sales
channel, will take us into the small and medium sized farm enterprise
segment. New investment in a fully automated liquid bottling plant and
small packaging system, coupled with continued expansion of our regional
commercial teams, will offer farming communities both an efficient and
effective multi-channel service.
Profit before tax rose strongly by 34% to £4.6m (2017: £3.4m). Basic
earnings per share increased by 33% to 19.53 pence per share (2017:
14.66 pence) and diluted earnings per share increased by 31% to 18.52
pence per share (2017: 14.17 pence). The Board is recommending a final
dividend of 5.0 pence per share (2017: 4.5 pence) making a total of 7.2
pence per share for the year (2017: 6.5 pence), an increase of 11%. More
detail of the financial performance of the Group is contained in the
Financial Review that follows this statement.
Operations
The UK and Europe delivered a strong performance with sales growth of 9%
compared with the same period last year. The recovery in milk prices
helped strengthen demand for our mycotoxin binder range. Optomega Plus,
our sustainable omega 3 supplement, that helps improve fertility in
dairy cows, has been adopted by a number of dairy operators. Optomega
Plus is also used as a supplement for enriching eggs with omega 3,
bringing health benefits to human consumption.
Within Europe, Spain was a highlight, achieving a 29% sales increase,
driven by the success of Orego-Stim®, our 100% natural essential oil
product to promote well-being leading to enhanced production. Austria
and Poland both enjoyed strong sales performances with growth of 31% and
157% respectively, albeit from a lower base.
Sales of Orego-Stim® grew in the UK with a number of veterinary
organisations recommending the product and leading poultry integrators
using it. Our technical team has been researching its use in calves
which may offer a further sales opportunity.
In the USA, sales increased by 31%, when compared with the previous
year. Orego-Stim® sales contributed significantly to this advance. The
product was adopted by a number of poultry integrators to support their
antibiotic free programmes and to improve bird performance. New interest
from organic farming has also been encouraging.
Our sales to the US dairy industry continued to grow in a market
affected by low mycotoxin levels and cost pressures. Anpro® Advance, our
superior next generation toxin binder, was launched with positive
feedback. The product is highly effective at binding particularly
difficult toxins. Our dairy business has been focused initially in the
mid-west and eastern states but we have recently recruited sales
personnel for the California region, which is the top producing dairy
state and, also has a strong poultry sector.
During the first half of the year, China achieved a 7% increase in sales
but this growth reversed in the second half, leaving the territory down
11% over the full year compared to last year. African Swine Fever was
the principal cause of this reversal as it limited our ability to visit
customers and the associated market contraction has financially strained
some customers. It is expected that this situation will start to improve
by the summer while major efforts are made to constrain the disease. In
addition, the trade tariff issues between the United States and China
continue to affect demand for our additives. Our focus is being
redirected to poultry, broilers, layers and pigeons and there is
potential for our products in ruminants.
Australia increased sales by 45% across our whole range, which is used
in both swine and poultry markets where the move to reducing antibiotics
benefits Orego-Stim® in particular.
Sales in Asia declined 10%, mainly because we decided to terminate
non-core and low margin product sales in the Philippines; this accounted
for almost half of the decline. Japan, South Korea and Vietnam all
performed well.
Sales in Latin America declined 21%, when compared with the same period
last year, although the second half saw an improving trend with a strong
fourth quarter performance, especially in Brazil. Chile returned to
sales growth having overcome the disruption caused by changing
distributors and the ensuing delay to product registrations. The period
also benefitted from new sales into the aquaculture markets in Brazil
and Ecuador, where we plan to extend our product range. A subsidiary in
Mexico was established to build strong commercial relationships with the
larger end users. Many of the Mexican and Brazilian integrators form
part of the United States infrastructure, where they have subsidiaries
and cross-shareholdings. Our new Mexican subsidiary will offer
group-wide service and commercial deals across their businesses.
Across the Middle East, sales declined by 9%, due to a combination of
geopolitical issues and the strengthening of the US dollar. It is
pleasing to report that Egypt, Iraq and Saudi Arabia delivered double
digit growth. Turkey experienced a decline in sales of 37%, partly as a
result of one of its major integrators going bankrupt. As Turkey remains
an important and large market opportunity, we have recently incorporated
a wholly owned Turkish subsidiary and are recruiting additional local
sales people to target veterinary customers.
Brexit
Anpario’s products and processes comply with the required European Union
regulations. In the event of the UK leaving the EU, we have plans in
place with our EU suppliers to try to minimise any disruption. These
arrangements include increasing raw material stock levels in the UK and
supporting our European distributors with additional stock, which may
increase working capital and storage costs, but this should not be
material.
Production
We have progressively invested in automation to ensure the throughput
and lead times for our powdered products meet customer demand,
especially during peak periods. We are investing an additional £1
million in an automated bottling plant to give us the capability to
manufacture and bottle the liquid versions of our products. Liquid
formulations are increasing in popularity with customer groups such as
vets, who are considering feed additives to replace banned antibiotics.
Market research indicates that the internet is used extensively by
farmers to research health and production issues. Anpario Direct will
offer specialist technical support to farmers using blogs, videos and
knowledge transfer through its online platform. Anpario Direct’s
internet sales channel, initially for the UK market, will offer liquid
products as the platform targets smaller farm enterprises and other
niche segments such as equine and game birds. Production changes are in
place to manufacture smaller pack sizes for the powder products in the
Anpario Direct range. By extending the product range and offering
express delivery, our goal is to be the destination of choice for tech
savvy farmers looking to purchase sophisticated products for animal
health, nutrition and biosecurity.
Innovation and development
During the rapid transition to antibiotic free meat production, farmers
are seeking alternatives that provide a better return on investment than
the products they currently use. Orego-Stim® is the leading phytogenics
brand in the market. It achieves consistent performance results, due to
the action of its natural oregano oil and unique carrier system.
Trials have shown that Orego-Stim®, on its own or in combination with
vaccine, can assist birds to achieve their performance potential,
following periods of intestinal stress, such as coccidiosis challenge.
Orego-Stim® does not affect vaccination programmes and may be
complementary. Research into other disease vaccination programmes
including ileitis is currently in progress. Disease control relies on
oral vaccination of pigs at about 10 to 12 weeks of age or antibiotic
medication.
A report from The National Animal Health Monitoring Service (NAHMS), a
non-regulatory unit of the US Department of Agriculture, indicates that
96% of US swine and 90% of EU pig farms are infected by ileitis, which
results in a considerable cost increase for producers. Orego-Stim® is
highly cost effective in controlling this disease.
Our research into using our additives against infections such as
Salmonella may present further opportunities for us and for farmers
wanting to achieve antibiotic free production.
During the year, we launched our next generation of mycotoxin binders
under the brand name Anpro®. We have undertaken an extensive programme
of both in-vitro and in-vivo testing in poultry, swine and ruminant
species during the past three years. Anpro® has been independently
tested against the main competitor products and significantly
outperformed the other toxin binders. Orego-Stim® and Anpro® are just
two of the key product groups which are expected to drive the future
growth of the Group.
People
Anpario’s growth and development reflects the strength and diversity of
its people across the globe. This year has been challenging and it is
our staff who, in no small part, have delivered profit growth through
their hard work, diligence and belief in the Group. The customer care
ethos and desire to produce the best quality products in the market is
inherent in the motivation of the Anpario team. Their commitment and
dedication is greatly appreciated.
Corporate Governance
The Board has adopted the Quoted Companies Alliance Corporate Governance
Code (“QCA Code”) from 20 September 2018.
As Chairman, it is my responsibility to ensure the highest practicable
standards of corporate governance are in place. Previously the Group was
not required to, but closely followed, the recommendations on corporate
governance as set out in both the UK Corporate Governance Code and the
QCA code. The formal adoption of the QCA Code will serve as a vehicle
with which we can improve communication to all stakeholders to increase
their visibility of the high standards that are in place within the
Group.
The Board and staff at Anpario 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 Group’s culture, objectives and processes is
essential to support the success of the Group in creating long-term
shareholder value.
Outlook
Trading in the current year is ahead of the same point in 2018. However,
we remain vigilant as there may be obstacles ahead due to Brexit and
African Swine Fever, in particular. Our strong balance sheet and cash
generation capability provide Anpario with a firm platform from which to
invest in new products and to develop the exciting Anpario Direct
opportunity.
Expanding profitable sales and distribution channels around the world
remains our priority and the initiatives already implemented are gaining
traction. This gives me confidence that we will return to sales growth
as 2019 progresses.
Peter Lawrence
Chairman
6 March 2019
Financial Review
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
Revenue
|
|
28,277
|
|
29,241
|
|
Gross profit
|
|
13,541
|
|
14,346
|
|
Profit before tax
|
|
4,552
|
|
3,403
|
|
Adjusted EBITDA (note 3)
|
|
5,454
|
|
5,072
|
|
Adjusted earnings per share (note 8)
|
|
18.90p
|
|
16.74p
|
|
|
|
|
|
|
|
Net assets
|
|
33,150
|
|
30,522
|
|
Cash (absorbed)/generated
|
|
(615)
|
|
2,500
|
|
Cash and cash equivalents
|
|
12,912
|
|
13,559
|
|
Profit before tax rose strongly by 34% to £4.6m (2017: £3.4m). Basic
earnings per share increased by 33% to 19.53 pence per share (2017:
14.66 pence) and diluted earnings per share increased by 31% to 18.52
pence per share (2017: 14.17 pence).
There were no exceptional items in the year (2017: £0.6m). Previously
these were incurred as part of the restructuring of the business, which
we now consider to be complete.
Adjusted EBITDA, increased by 8% to £5.5m (2017: £5.1m). Adjusted
earnings per share increased by 13% to 18.90 pence per share (2017:
16.74 pence).
Revenues for the year declined 3% to £28.3m (2017: £29.2m). principally
because of our planned strategic withdrawal from non-core and low margin
product sales in the Philippines but also through the impact of the
strengthening of sterling against the US dollar when compared with the
prior year. The Group has hedges in place to mitigate this risk, the
benefit of which is realised through operating expenses.
Gross profit was 6% lower than last year at £13.5m (2017: £14.3m). This
was the result of both the foreign exchange impact mentioned above and
exceptional price inflation of a few key raw materials. Nevertheless,
increased sales to direct end user segments in strategically important
markets, helped to reduce the impact of these factors.
Administrative expenses fell during the year by £1.3m, without impeding
our strategic development plans. Throughout the year, we continued to
recruit selectively to enhance our regional sales teams consequently
employment costs, excluding bonuses, rose 9%. We also increased our
marketing efforts to raise our profile and revitalise our sales
positioning and materials.
Included in administrative costs are net foreign exchange gains of
£0.3m. These comprised the reversal of prior year losses and the benefit
of effective hedging instruments, which offset some of the impact on
revenue. Sales bonuses were reduced reflecting the sales performance.
Capital expenditure rose to £1.8m (2017: £0.8m) as a result of our risk
reduction and cost improvement plan to bring more of our production
in-house and to add a bottling plant for Anpario Direct sales. There was
also an increase in research and development expenditure to accelerate
the generation of new products.
Group inventory levels increased to £4.0m (2017: £3.1m), as we built raw
material stock levels as part of Brexit contingency planning; the
remainder was the result of increased sales in regions such as USA and
Australia where the long transit times lead to higher inventory
requirements.
The balance sheet remains strong and debt free, with a year-end cash
balance of £12.9m (2017: £13.6m).
The Board is recommending a final dividend of 5.0 pence per share (2017:
4.5 pence) making a total of 7.2 pence per share for the year (2017: 6.5
pence), an increase of 11%. This dividend, payable on 26 July to
shareholders on the register on 12 July, continues to reflect the
Board’s confidence in the future and its ability to generate cash.
Non-financial
Health and safety – major accidents reportable to the Board in the year
nil (2017: nil).
The Group also regards growth of business in key target markets and the
on-going achievement of product registrations and quality assurance
accreditations as other KPIs.
Our business model and strategy
Business Model
Anpario is an international producer and distributor of high performance
natural feed additives for animal health, hygiene and nutrition. Our
products work in harmony with the natural aspects of the animal’s
biology; and Anpario’s expertise is focused on intestinal and animal
health, and utilizing this understanding to improve animal performance
and producer profitability.
Anpario supplies its customers with quality assured products
manufactured in the United Kingdom and has an established global sales
and distribution network in over 70 countries.
Anpario was built up through a combination of acquisitions and organic
growth by establishing wholly owned subsidiaries in a number of key meat
producing countries. The portfolio of products has been developed with
the customer and the animal in mind, taking into account the life stages
of the animal and the periods when they will be more challenged.
Anpario is well positioned to benefit from the trends in growth of the
world’s population, the increasing demand for meat and fish protein in
developing countries and the tightening of global regulation which
favours more natural feed additive solutions. Seizing these
opportunities is how Anpario intends to deliver long-term shareholder
value.
Our business model is based on:
-
Products - high quality efficacious products presented well
-
Channel - Control the sales channel to ensure we develop strong
technical and commercial relationships with the end users of Anpario
products.
-
Story - Powerful value add proposition demonstrating the
financial and performance benefits of our product solutions.
-
Branding – Build an impeccable Anpario brand which global
customers can trust as having innovative, high quality and effective
solutions for customers
-
Quality – Throughout supply chain and manufacturing processes
-
Efficiency – Efficient automated production with high
operational gearing.
Strategy
-
Regional focus
-
Developing local commercial and technical relationships across the
world
-
Delivered through
-
Regional Sales Structure
-
Local language speakers
-
Resource that understands local market needs and challenges
-
Closer relationships with key end customers
-
Actions in 2018
-
Further expansion of regional teams
-
Setup of new subsidiary operations to serve local markets
-
Future plans
-
Subsidiary operations to begin trading in Turkey and Mexico
-
Further selective recruitment of high calibre regional resource
-
Launch of Anpario Direct in the UK market to target the
smaller farm segment
-
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
-
Help the customer meet disease and regulatory challenges.
-
Actions in 2018
-
Further research and development of Orego-Stim in helping to
support gut health and improve productivity through disease
challenge.
-
Launch of new mycotoxin binder range, Anpro®.
-
Launch of Optomega Omega 3 supplement to improve dairy cow
fertility and egg enrichment.
-
Targeting aquaculture market in Latin America.
-
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.
-
Look for product opportunities which broaden our range and
species opportunities.
-
Operations
-
High quality, consistent and efficient manufacturing
-
Delivered through
-
Automated production facilities
-
Key industry quality accreditations
-
Quality supply partners
-
Actions in 2018
-
Brought the manufacture of Orego-Stim powder into Manton Wood.
-
Expanded warehouse capacity.
-
Future plans
-
Automated liquid bottling plant
-
Production in smaller pack sizes
-
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.
-
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 2018
-
Delivered high growth in recent Australian acquisition
-
Established clear policy and framework
-
Extensive search of European specialty feed additive producers.
-
Future plans
-
Continue active search for acquisition opportunities within
criteria.
Corporate governance
Chairman’s introduction
The Company’s shares are traded on the Alternative Investment Market
(“AIM”) of the London Stock Exchange. Anpario has chosen to apply the
Quoted Companies Alliance Corporate Governance Code (“QCA Code”) from 20
September 2018.
In my role as Chairman, it is my responsibility to ensure the highest
practicable standards of corporate governance are in place. Previously,
the Company was not required to, but closely followed the
recommendations on corporate governance as set out in both the UK
Corporate Governance Code and the QCA code. The formal adoption of the
QCA Code will serve as a vehicle with which we can improve communication
to all stakeholders to increase visibility of the high standards that
are already in place within the Company.
Anpario offers natural solutions to the food farming industry which work
in harmony with the natural aspects of an animal’s biology to promote
healthy growth at the least cost to the environment and the producer.
Our products enable the production of top quality protein that partners
future farming practice around the world. This objective and our
engagement with stakeholders, ensures that we act in a manner that is
responsible and beneficial to all.
The board and staff at the Company are committed to behaving
professionally and responsibly to ensure that the highest standards of
honesty, integrity and corporate governance are maintained. Enshrining
these values through the Company’s culture, objectives and processes is
essential to support the success of the Company in creating long-term
shareholder value.
Principle 1: Our strategy and business model to promote long-term
value for shareholders
Anpario is well positioned to benefit from the trends in growth of the
world’s population, the increasing demand for meat and fish protein in
developing countries and the tightening of global regulation which
favours more natural feed additive solutions. Seizing these
opportunities is how Anpario intends to deliver long-term shareholder
value. More information is included in the Strategic Report.
Anpario has specific resource and processes in place to proactively
identify and manage risk to protect the continued growth and long-term
future that is possible as outlined above. Our annual report details
specific financial and non-financial risks and uncertainties facing the
business and any measures in place to mitigate them.
Principle 2: Understanding and meeting shareholder needs and
expectation
Communications with shareholders are given high priority and Anpario
recognises the importance and value in reciprocal and open communication
with its many investors. This is key to ensure alignment between the
motivations and expectations of our shareholders and our strategy and
business model.
This communication takes place in many forms to serve different
purposes. Our Interim Statements and Annual Reports contain detailed
information for shareholders to understand our performance, strategy and
future plans. Between these disclosures, the Company also issues RNS
announcements, as required, which serve to keep shareholders updated
about regulatory matters or changes that they should be notified of.
These RNS announcements, as well as wider news articles about the
Company, are available on our website www.anpario.com.
The Annual General Meeting is the main opportunity for all shareholders
to engage with Anpario. Shareholders are notified in advance of the date
and location of the meeting as well as the resolutions that are to be
voted on. At the meeting, the Board and key personnel give a
presentation about the most recent published results and our strategy;
they are also available to answer any questions that shareholders may
have.
The Directors actively seek to build strong relationships with
institutional investors and investment analysts. Presentations are given
immediately following Interim Statement and Annual Report announcements.
Feedback directly from shareholders via the Company’s advisers after
these regular analyst and shareholder meetings ensures that the Board
understands shareholder views. The Board as a whole are kept informed of
the views and concerns of major shareholders and are made aware of any
significant investment reports from analysts.
Shareholders are encouraged to contact the Company should they have any
questions or concerns and can do so using a dedicated email address [email protected].
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 meets or has contact with major
shareholders as necessary.
The Executive Directors hold shares and participate in incentive plans
in the Company which ensures that their interests are fully aligned with
those of other shareholders.
Principal 3: Corporate social responsibilities and wider stakeholders
Anpario seeks to ensure a sustainable business, behaving socially,
ethically and environmentally responsibly and engaging with all of its
key stakeholders, including the communities in which the Company
operates, its people and the environment. As we evolve our business
model and strategy we ensure that we identify any new stakeholders and
seek to understand them alongside existing stakeholders. Some of the key
stakeholders are discussed below.
Employees
Anpario is an inclusive organisation where no-one receives less
favourable treatment on the grounds of gender, nationality, marital
status, colour, race, ethnic origin, creed, sexual orientation or
disability. Employees embody Anpario’s key values of “Integrity,
Teamwork, Innovation and Leadership”.
Over 100 employees work for Anpario in the UK and its global operations.
It is the Group’s policy to involve colleagues in the business and to
ensure that matters of concern to them, including the Group’s aims and
objectives and its financial performance, are communicated in an open
way. Where appropriate, employees are offered the opportunity to become
shareholders in order to promote active participation in, and commitment
to, the Group’s success.
The Employee handbook which applies globally and includes detailed
policies and guides for employees which cover:
-
Behaviour - Equal Opportunities and Dignity at Work, Anti-Bribery and
Anti-Corruption, Communications and Privacy.
-
Family - Parental, Dependents, Maternity, Paternity, Flexible working,
Adoption.
-
General - Grievance, Whistle blowing, Discrimination and Bullying, and
Disciplinary.
-
Safety - Health and Safety handbook, Occupational Health Policy, Drug
and Alcohol abuse.
Specific training is given to all employees in respect of key policies
including online training videos on the Company’s intranet and
appropriate health and safety training.
Employees are encouraged to further develop their skills and provide
appropriate training in order to support our people and grow
organisational capabilities. Anpario currently:
-
has several apprentices places;
-
recruits graduates in disciplines such as biosciences, accountancy,
law and HR.
-
works closely with several global universities on joint scientific
initiatives;
-
provides ongoing professional training support, extensive coaching and
management development programmes;
-
provides financial and study leave for professional and work related
qualifications.
The Company has a bonus scheme in place for its employees with targets
aligned with shareholders as appropriate to their roles and
responsibilities. The provision of share option and sharesave schemes
has resulted in over 50% of our employees participating in one or more
of the current schemes in operation.
Anpario supports local community initiatives and employee charity work.
An analysis of Directors, senior managers and other employees by gender
as at 6 March 2019 is as follows:
|
|
Male
|
|
Female
|
|
Directors
|
|
3
|
|
1
|
|
Management
|
|
24
|
|
14
|
|
Administration and Production staff
|
|
42
|
|
31
|
|
|
|
69
|
|
46
|
|
Suppliers, Customers and Regulators
Anpario supplies products to many countries and aims to enhance animal
health and nutrition. Internal quality control ensures: the safety of
its products; transparency and traceability.
Anpario retain key industry quality accreditations in particular UFAS
and FEMAS certifications. The Group is committed to achieving a safe and
secure working environment in all locations operating an established
Group health and safety policy applicable to all employees.
-
Responsible procurement policies are in place to source raw materials
to high specification and rigorous quality standards. Anpario seeks to
partner suppliers operating to highest standards of honesty and
integrity. These ethics include through responsible procurement and
due diligence, ensuring: suppliers operate rigorous quality standards
and comply with all applicable ethical labour and, trade laws and
regulations, including the requirements of The Modern Slavery Act 2015;
-
the operation of manufacturing facilities to the highest standards;
compliance with recognised quality standards; and a safe and secure
working environment in all our locations;
-
compliance with environmental legislation and responsible practices
minimising the impact of its operations on the environment;
-
absolute transparency and traceability of raw materials and compliance
with international regulations;
-
zero tolerance of bribery and corruption.
Environment
The Group recognises the importance of good environmental controls. It
is the Group’s policy to comply with environmental legislation currently
in place, adopt responsible environmental practices and give
consideration to minimising the impact of its operations on the
environment.
Material supply:
-
Fish & marine oils used for our products are processed by-products
from farmed fish productions for human consumption or sourced from
suppliers certified for sustainable fishing.
-
Raw materials used within products are primarily common minerals in
high grade quality from plentiful natural resources.
-
Pre-used reconditioned & cleaned intermediate bulk containers are used
for packaging & supply of bulk liquids.
Environmental Controls & good practices
-
90% of carrier and materials are supplied in bulk and added directly
into production to minimise packaging waste and labour requirements.
-
100% liquid bulk ingredients are stored in bunded storage silos;
liquid bulk deliveries are accepted only when the site drainage system
is blocked with a bung to prevent accidental spills from entering into
the general sewerage system.
-
A dust extraction system is used to minimise dust in the production
area and prevent dust from being emitted into the environment.
-
Manufacturing processes generate 1% of the production volume as
product and material waste due to manufacturing & cleaning activities.
This product and material waste is collected by a waste contractor and
environmentally recycled.
-
Digital marketing brochures are created that can easily be emailed or
viewed via the website as opposed to being printed and posted out.
-
Travel is managed to ensure trips are multi-purpose or alternatively
using telephones, Skype and conference centres and webinars.
-
A paperless office policy is encouraged.
The Group adopts a clear Code of Conduct setting out the behaviour
expected from all employees and business partners (including suppliers,
customers, consultants, agents and representatives). It shall not
knowingly take any actions which violate any applicable national and
international anti-bribery and corruption legislation, including the UK
Bribery Act 2010.
Principle 4: Effective Risk Management
Anpario has specific resource and processes in place to proactively
identify and manage risk to protect the continued growth and long-term
future. However, any such system of internal control can provide only
reasonable, but not absolute, assurance against material misstatement or
loss. The Board considers that the internal controls in place are
appropriate for the size, complexity and risk profile of the Company and
that they balance exploiting opportunities and protecting against
threats. The Principal Risks and Uncertainties section of this annual
report details specific financial and non-financial risks and
uncertainties facing the business and where possible the measures in
place to mitigate them.
Risk management and control
Effective risk analysis is fundamental to the execution of Anpario’s
business strategy and objectives.
Our risk management and control processes are designed to make
management of risk an integrated part of the organisation. The framework
is used to identify, evaluate, mitigate and monitor significant risks,
and to provide reasonable but not absolute assurance that the Group will
be successful in achieving its objectives.
The focus is on significant risks that, if they materialise, could
substantially and adversely affect the Group’s business, viability,
prospects and share price.
The requirement for an Internal Audit function is to be kept under
review.
Risk management process
We recognise that a level of risk taking is inherent within a commercial
business; our risk management process is designed to identify, evaluate
and mitigate the risks and uncertainties we face.
The CEO is the ultimate Risk Manager. The Board establishes our risk
appetite; oversees the risk management and internal control framework
and monitors the Group’s exposure to principal risks.
The Executive Management Board (EMB) owns the risk management process
and is responsible for managing specific risks. The EMB members are also
responsible for embedding rigorous risk management in operational
processes and performance management and review.
The EMB members are responsible for the risk analysis, controls and
mitigation plans for their individual section of the business.
The Audit Committee reviews the effectiveness of the risk management
process and the internal control framework and ensures appropriate
executive ownership for all key risks.
These processes ensure that all Directors receive detailed reports from
management and are able to discuss the risks, controls and mitigations
in place and therefore satisfy themselves that key risks are being
effectively managed.
Internal control framework
Anpario’s internal control framework is designed to ensure the:
-
Effectiveness and efficiency of business operations;
-
Reliability of financial reporting;
-
Compliance with all applicable laws and regulations and
-
Assignment of Authority and Responsibility.
Anpario’s values underpin the control framework and it is the Board’s
aim that these values drive the behaviours and actions of all employees.
The key elements of the control framework are:
Management Structure
The Board sets formal authorisation levels and controls that allow it to
delegate authority to the EMB and Senior Managers. The management
structure has clearly defined reporting lines and operating standards.
Strategy and Business Planning
We have a strategic plan which is developed by the EMB and endorsed by
the Board.
Business objectives and performance measures are defined annually,
together with budgets and forecasts.
Monthly business performance reviews are conducted at both Group and
business unit levels.
Policies and Procedures
Our key financial, legal and compliance policies and procedures that
apply across the Group are:
-
Code of Conduct;
-
Levels of Authorities;
-
Ways of Working (WOWs);
-
Anti-Bribery and Corruption Policy;
-
GDPR and Privacy Policy;
-
Due diligence including sanctions checks are conducted.
Operational controls
Our operational control processes include:
-
Product Pipeline Review: Our 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: We manage and monitor lifecycle
management activities for our key products to meet the changing needs
of our customers, environmental and regulatory standards.
-
Quality Assurance: Our manufacturing facility has an
established Quality Management System operating under FEMAS and UFAS.
Our system is designed to ensure that all products are manufactured to
a consistently high standard in compliance with all relevant
regulatory requirements.
-
Product Registration: Our registration team operates a robust
system to ensure all products are correctly registered within the
jurisdiction in which they are sold.
-
Pricing: Our pricing structure is managed and monitored to
provide equitable pricing for all customer groups.
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.
-
A formalised reporting structure which includes the setting of
detailed annual budgets and key performance indicators which are
updated on a regular basis to form forecasts;
-
These are reviewed at both management and Board meetings where all key
aspects of the business are 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 cash movements are reconciled and monitored by the finance
department and the Group’s cash flow is monitored;
-
Segregation of accounting duties;
-
Reconciliation and review of financial statements and judgements;
-
Internal and external training to ensure staff are aware of the latest
standards and best practice, and
-
Membership of professional bodies and compliance with associated code
of ethics.
Principle 5: The Board
The Board of Directors is collectively responsible and accountable to
shareholders for the long-term success of the Company. The Board
provides leadership within a framework of prudent and effective controls
designed to ensure strong corporate governance and enable risk to be
assessed and managed.
The Board regularly reviews the operational performance and plans of the
Company and determines the Company’s strategy, ensuring that the
necessary financial and human resources are in place in order to meet
the Company’s objectives. The Board also sets the Company’s values and
standards, mindful of its obligations to shareholders and other
stakeholders.
Full details and biographies of the Board are available on our website,
the Board comprises of two independent Non-Executive Directors and two
Executive Directors.
Executive Directors
|
|
|
|
|
|
Key Committees
|
|
Name
|
|
Role
|
|
Qualifications
|
|
Audit
|
|
Nom.
|
|
Rem.
|
|
Richard Edwards
|
|
Chief Executive Officer
|
|
B Eng (Hons), C Eng, MBA.
|
|
|
|
M
|
|
|
|
Karen Prior
|
|
Group Finance Director
|
|
BSc (Hons), FCA.
|
|
|
|
|
|
|
|
Independent Non-Executive Directors
|
|
|
|
|
|
Key Committees
|
|
Name
|
|
Role
|
|
Qualifications
|
|
Audit
|
|
Nom.
|
|
Rem.
|
|
Peter Lawrence
|
|
Non-Executive Chairman
|
|
MSc, BSc, DIC, ACGI.
|
|
C
|
|
C
|
|
M
|
|
Richard Wood
|
|
Senior Independent Director
|
|
BSc, C Eng
|
|
M
|
|
M
|
|
C
|
|
Audit = Audit Committee, Nom. = Nomination Committee, Rem. =
Remuneration Committee
C = Chair, M = Member
The Board considers that Peter Lawrence and Richard Wood are
independent. In Peter Lawrence’s case the Board has specifically
considered his length of service on the Board and determined that in
terms of interest, perspective and judgement he remains independent.
All Directors are subject to reappointment by shareholders at the first
Annual General Meeting following their appointment and thereafter by
rotation.
The Board delegates its authority for certain matters to its Audit,
Remuneration and Nomination Committees. The Board approves and reviews
the terms of reference of each of the Committees which are available on
the Company’s website, http://www.anpario.com/aim-26/.
The Board meets formally at least four times per annum. All Board
members receive agendas and comprehensive papers prior to each Board
meeting. The Group Finance Director is also the Company Secretary and is
responsible to the Board for ensuring that Board procedures are followed
and that applicable rules and regulations are adhered to.
In addition to formal Board and Committee meetings, ad hoc decisions of
the Board and Committees are taken after discussion throughout the
financial year as necessary through the form of written resolutions.
All Directors in office at the time of the various committee meetings
were in attendance for all of the meetings convened between 8 March 2018
and 6 March 2019. A list of the meetings convened during the year is set
out below.
|
|
Number of meetings convened
|
|
Full attendance of meeting
|
|
Board meetings
|
|
4
|
|
Yes
|
|
Audit Committee meetings
|
|
2
|
|
Yes
|
|
Remuneration Committee meetings
|
|
1
|
|
Yes
|
|
The Chief Executive Officer works full time for the Group. The Group
Finance Director is contractually employed for a four day week, however,
additional hours are worked to ensure the roles and responsibilities of
the position are fully met. The Non-executive Directors have commitments
outside of Anpario plc. They are summarised on the Board biographies
available from http://www.anpario.com/directors/.
All the Non-Executive Directors give the appropriate amount of time
required to fulfil their responsibilities to Anpario.
Principal 6: Ensuring Directors have between them the necessary
up-to-date experience, skills and capabilities
The Nomination Committee aims to ensure that composition of the Board
reflects appropriate balance of skills and experience required to ensure
long-term shareholder value and manage risk. Details of the role of the
Nomination Committee and the activities it performs in relation to these
matters is included in the “Maintaining Governance Structures” section
later on in this document.
The Board biographies available on the website give an indication of
their breadth of skills and experience. Each member of the Board takes
responsibility for maintaining their own skill set, which includes roles
and experience with other boards and organisations as well as formal
training and seminars.
Principal 7: Evaluating Board Performance
The performance of the Board is evaluated formally on an annual basis,
following the conclusion of the annual Audit and finalisation of the
Annual Report. The Chairman leads this process which looks at the
effectiveness of both the Board as a unit and its individual members.
When addressing overall Board performance the factors considered,
include but are not limited to, underlying group financial performance,
the success of new strategy implementation and the effectiveness of risk
and control measures. This process further looks at the performance of
each member and considers their individual successes, commitment and
alignment to the overall Group strategy. As appropriate, it will also
look to confirm that members have maintained their independence.
As part of the adoption of QCA, Anpario are reassessing the processes
around evaluating Board performance in order to increase the visibility
to shareholders.
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 Senior 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 in
place within the business and are given the required support and
guidance to develop further. At the required time, it is the Nomination
Committee’s role to make decisions about future appointments to the
Board.
Principle 8: Promoting a corporate culture based on ethical values
and behaviours
Anpario has a strong ethical culture, the Board is responsible for
setting and promoting this throughout our processes and behaviours. The
policies related to these matters are regularly reviewed and updated and
distributed to employees and other stakeholders as appropriate. Further,
specific training is given to keep staff updated on relevant changes,
these sessions are often recorded for future reference and new staff.
A copy of our code of conduct is available on our website, http://www.anpario.com/code-of-conduct/.
This sets out policies on Corporate Social Responsibility and
Anti-Bribery and Anti-Corruption. Anpario also have a whistleblowing
policy that is applicable to all our employees, other workers, our
suppliers and those providing services to our organisation.
Principal 9: Maintaining governance structures
Anpario is confident that the governance structures in place in the
Company are appropriate for its size and individual circumstances whilst
ensuring they are fit for purpose and support good decision making by
the Board.
The Board defines a series of matters reserved for its decision. These
include strategy, finance, corporate governance, approval of significant
capital expenditure, appointment of key personnel and compliance with
legal and regulatory requirements.
There is clear segregation of responsibility within the Board. The
Non-Executive Chairman is responsible for providing leadership to and
managing the business of the Board, in particular ensuring strong
Corporate Governance policies and values. The role of Chief-Executive
Officer is concerned with the formulation and implementation of the
strategy of the Company and is responsible for all operational aspects
of the business. The role of the Group Finance Director is to provide
strategic and financial guidance and to develop the necessary policies
and procedures to ensure sound financial management and control of the
Company. The Group Finance Director also acts as Company Secretary and
is further responsible for advising on corporate governance matters and
ensuring compliance with relevant legislative and legal requirements.
Details of the key committees are set out below, the terms of reference
for each are available on our website as part of the committee section
of the AIM 26 disclosures http://www.anpario.com/aim-26/.
Audit Committee
Details are contained within the Audit Committee Report section of this
Annual Report.
Remuneration Committee
Details are contained within the Remuneration Committee Report section
of this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the two Non-Executive Directors
and the Chief Executive Officer and is chaired by Peter Lawrence.
Meetings are held as required by the Chairman. The role of the committee
is as follows.
-
Regularly review the structure, size and composition (including the
skills, knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to any changes;
-
Give full consideration to succession planning for Directors and other
senior executives taking into account the challenges and opportunities
facing the Company, and the skills and expertise needed on the Board
in the future;
-
Keep under review the leadership needs of the organisation, both
executive and non-executive, with a view to ensuring the continued
ability of the organisation to compete effectively in the marketplace;
-
Keep up to date and informed about strategic issues and commercial
changes affecting the Company and the market in which it operates;
-
Review and approve selection procedures for potential Board members,
whether executive or non-executive, whether for immediate appointment
to the Board or after a probationary period;
-
Be responsible for identifying and nominating for approval of the
Board, candidates to fill Board vacancies as they arise;
-
Ensure that on appointment to the Board, non-executive Directors
receive a formal letter of appointment setting out clearly what is
expected of them in terms of time commitment, committee service and
involvement outside Board meetings;
-
Ensure that following appointment to the Board, Directors undergo an
appropriate induction programme;
-
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. In Identifying
suitable candidates the committee shall consider candidates from a wide
range of backgrounds; consider candidates on merit against objective
criteria and with due regard to the benefits of diversity on the Board,
including gender, taking care that appointees have enough time available
to devote to the position;
For the appointment of a Chairman, the committee shall produce a job
specification, including the time commitment expected. A proposed
Chairman's other significant commitments should be disclosed to the
Board before appointment and any changes to the Chairman's commitments
should be reported to the Board as they arise;
Prior to the appointment of a Director, the proposed appointee should be
required to disclose any other business interests that may result in a
conflict of interests and be required to report any future business
interests that could result in a conflict of interest;
Principal 10: Communicating governance and performance matters with
shareholders and wider stakeholders
Communications with shareholders are given high priority and we
proactively promote engagement through a range of measures. More details
of which are provided earlier in this document about how Anpario seek to
engage with and understand Shareholders and wider Stakeholders.
The most recent AGM took place on 28 June 2018, full details of which
are included in the 2017 annual report available from our Website. The
results of the AGM are set out below. None of the resolutions had a
significant number of votes cast against it.
No.
|
|
Resolution
|
|
Result
|
|
1
|
|
Accept Financial Statements and Statutory Reports
|
|
Passed
|
|
2
|
|
Approve Final Dividend
|
|
Passed
|
|
3
|
|
Re-elect Peter Lawrence as Non-Executive Chairman
|
|
Passed
|
|
4
|
|
Re-elect Richard Wood as Senior Independent Director
|
|
Passed
|
|
5
|
|
Re-appoint Deloitte LLP as Auditors
|
|
Passed
|
|
6
|
|
Authorise Issue of Equity with Pre-emptive rights
|
|
Passed
|
|
7
|
|
Authorise Issue of Equity without Pre-emptive rights
|
|
Passed
|
|
8
|
|
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 http://www.anpario.com/annual-interim-reports/.
Included within these documents are the notices of previous annual
general meetings, the results of which are released as RNS announcements
and can be found in the News Releases section of our website http://www.anpario.com/.
Board of Directors
Richard P Edwards, B Eng (Hons), C
Eng, MBA.
Chief Executive Officer (N)
Richard Edwards joined the Board in December 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.
Karen L Prior, BSc (Hons), FCA.
Group Finance Director
Karen joined the board in October 2009 as Group Finance Director.
Previously, Karen has had roles as Finance Director of Town Centre
Securities PLC, a listed property group and UK Finance Director of
Q-Park, where she was instrumental in its establishment and growth in
the UK.
Karen has also been Financial Controller of train builders Bombardier
Transportation and spent 10 years of her early career with Ernst and
Young specialising in providing audit and business services to
entrepreneurial businesses.
Peter A Lawrence, MSc, BSc, DIC, ACGI.
Non-Executive
Chairman (A, N, R)
Peter joined the Board in August 2005 as a Non-Executive Director and
became Non- Executive Chairman in 2017. Peter is the founder of ECO
Animal Health Group plc where he is now the Non-Executive Chairman
having been an Executive Director ever
since its formation in 1972. Peter is the Non-Executive Chairman of
Baronsmead Venture Trust plc and Amati AIM VCT plc, he is also an
Executive Director of Algatechnologies Ltd.
Richard K Wood
Senior Independent Director (A, N, R)
Richard joined the Board in November 2017 as a Senior Independent
Director. Richard has considerable global animal health experience
having built Genus plc from a small company privatised by the
government, into a world leading animal genetics company. More recently,
Richard was a senior independent non-executive director of Avon Rubber
plc and was also chairman of Ocean Harvest Technology Inc., a small
manufacturer of therapeutic animal feeds using seaweeds.
Richard has previously held the position of Chairman at Atlantic
Pharmaceuticals plc, Innovis (a sheep genetics company) and Silent
Herdsman Limited (Farming Technology).
Key A: Audit Committee N: Nomination Committee R: Remuneration Committee
The Terms of Reference of the Audit, Nomination and Remuneration
Committees are available on the Company’s website: www.anpario.com/aim-26/
Directors’ report
The Directors present their annual report and audited consolidated
financial statements for the year-ended 31 December 2018.
Results and dividends
The profit for the year after tax from continuing operations was £4.0m
(2017: £3.0m). The Directors propose a final dividend of 5.0p per share
(2017: 4.5p) making a total of 7.2p per share for the year (2017: 6.5p),
amounting to a total dividend of £1.5m (2017: £1.4m).
Directors
The Directors during the year under review and subsequently were:
Peter A Lawrence
|
|
|
Non-Executive Chairman
|
Richard P Edwards
|
|
|
Chief Executive Officer
|
Karen L Prior
|
|
|
Group Finance Director
|
Richard K Wood
|
|
|
Senior Independent Director
|
The Board regards the Non-Executive Directors as being independent. The
biographies and roles of all Directors and their roles on the Audit,
Remuneration and Nomination Committees are set out earlier in this
report.
Details of the Directors’ interests in the shares of the Company are
provided in the Directors’ remuneration report.
Substantial shareholdings
At 1 March 2019, the Company had been notified of the following holdings
of 3 per cent or more of its issued share capital:
|
|
Ordinary
Shares
(000)
|
|
% held
|
|
Royal Trust Corp of Canada Custodians
|
|
2,650
|
|
11.4
|
|
Unicorn Asset Management Limited
|
|
2,046
|
|
8.8
|
|
Gresham House Asset Management Limited
|
|
1,399
|
|
6.0
|
|
Downing LLP
|
|
1,349
|
|
5.8
|
|
Investec Wealth & Investment Limited
|
|
1,110
|
|
4.8
|
|
Allianz Global Investors GmbH
|
|
1,100
|
|
4.7
|
|
Schroder Investment
|
|
804
|
|
3.5
|
|
Miton Group plc
|
|
761
|
|
3.3
|
|
Hargreaves Lansdown Asset Mgt
|
|
739
|
|
3.2
|
|
Review of the business and future developments
A full review of the year, together with an indication of future
developments, is given in the Chairman’s statement.
Group research and development activities
The Group is continually researching into and developing new products.
Details of expenditure incurred and impaired or written off during the
year are shown in the note 4 of these the financial statements.
Share capital
During the year 41,853 (2017: 30,068) Ordinary shares of 23p each were
issued pursuant to the exercise of share options. During the year the
Company issued nil (2017: 225,018) Ordinary shares of 23p at market
price to the Trustees of The Anpario plc Employees’ Share Trust. A
Special Resolution will be proposed at our AGM to renew the Directors’
limited authority last granted in 2018 to make market purchases of
Ordinary shares in the capital of the Company. The Company holds 143,042
(2017: 143,042) Ordinary shares of 23p in treasury.
Independent auditors
The auditors, Deloitte LLP, have indicated their willingness to continue
in office, and a resolution that they be re-appointed will be proposed
at the AGM.
Stockbrokers
Peel Hunt LLP is the Company’s stockbroker and nominated adviser.
The closing share price on 31 December 2018 was 325.0p per share (2017:
397.5p per share).
Indemnities
By virtue of, and subject to, Article 172 of the current Articles of
Association of the Company, the Company has granted an indemnity to
every Director, alternate Director, Secretary or other officer of the
Company. Such provisions remain in force at the date of this report. The
Group has arranged appropriate insurance cover for any legal action
against the Directors and officers.
Financial risk management
Details of the Company’s financial risk management policy are set out in
note 2.21 of the financial statements.
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 prepared the Group and Parent Company
financial statements in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the European Union.
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 the Company and of the profit
or loss of the Group for that period. 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;
-
state whether applicable IFRSs as adopted by the European Union 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 and the Group 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 the Group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement of disclosure to auditors
So far as the Directors are aware:
-
there is no relevant audit information of which the Company’s auditors
are 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 auditors are aware of
that information.
By order of the Board
Karen L Prior
Company Secretary
6 March 2019
Report of the Remuneration Committee
Introduction
On behalf of the Remuneration Committee, I am pleased to present the
Remuneration Report for the year ended 31 December 2018. The Committee
seeks to provide a framework that is aligned to the strategy and values
of the Company and to the interests of shareholders. It recognises the
need to recruit, retain and appropriately incentivise high calibre
directors and managers to deliver the Company’s strategy.
Overview
The Remuneration Committee is responsible for reviewing the performance
of Executive Directors as well as determining the scale and structure of
their remuneration, their terms and conditions of service and the grant
of share awards, having due regard to the interests of shareholders.
The Committee is also responsible for reviewing the overall policy in
respect of remuneration of all other employees of the Company and
establishing the Company’s policy and operation of share incentive
schemes.
In determining the remuneration of senior executives, the Committee
seeks to enable the Company to attract and retain executives of the
highest calibre. The Committee also makes recommendations to the Board
concerning the allocations of options to executives under the long-term
incentive plan and for the administration of the scheme.
The terms of reference of the Remuneration committee can be found on the
Company’s website http://www.anpario.com/aim-26/.
Composition and Meetings
The Remuneration Committee comprises Richard Wood, Senior Non-Executive
Director and Committee Chairman, and Peter Lawrence, Non-Executive
Chairman of the Board. Executive Directors are invited to attend
meetings as required if thought advantageous for consideration of a
particular agenda item. The Remuneration Committee meets as necessary to
fulfil its objectives but as a minimum, at least once a year. The
committee met once during the year ended 31 December 2018 with full
attendance by the Committee members.
AIM Requirements
As an AIM company, Anpario plc, is not required to comply with schedule
8 of the large and medium-sized companies’ regulations 2008. However, it
is moving towards this full level of reporting and disclosures in this
report reflect this.
Directors’ remuneration
The remuneration of the Chairman and each Director during the year ended
31 December 2018 is set out in the tables below. The detail contained in
this summary has been expanded this year, as such the prior year figures
have been re-presented.
|
|
Salary
|
|
Pension
|
|
Benefits
|
|
Bonus*
|
|
Share-based payments
|
|
Total
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R P Edwards
|
|
209
|
|
-
|
|
11
|
|
133
|
|
55
|
|
408
|
|
K L Prior
|
|
146
|
|
-
|
|
13
|
|
99
|
|
58
|
|
316
|
|
Non-Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P A Lawrence***
|
|
40
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
R K Wood
|
|
35
|
|
-
|
|
-
|
|
-
|
|
-
|
|
35
|
|
Total
|
|
430
|
|
-
|
|
24
|
|
232
|
|
113
|
|
799
|
|
The comparative figures for the previous year is shown below
|
|
Salary
|
|
Pension
|
|
Benefits
|
|
Bonus*
|
|
Share-based payments
|
|
Total
|
|
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R P Edwards
|
|
209
|
|
-
|
|
13
|
|
133
|
|
101
|
|
456
|
|
K L Prior
|
|
151
|
|
8
|
|
11
|
|
101
|
|
77
|
|
348
|
|
Non-Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P A Lawrence***
|
|
40
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
R S Rose**
|
|
40
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
R K Wood**
|
|
6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6
|
|
Total
|
|
446
|
|
8
|
|
24
|
|
234
|
|
178
|
|
890
|
|
* The bonuses to Directors are determined and paid after the
publication of annual results, so the above figures are awards made for
the previous financial year. No bonus has been accrued for 2018.
**R S Rose resigned as Non-Executive Chairman on 1 September 2017. R
K Wood was appointed as Senior Independent Director on 1 November 2017.
*** The payment of the Chairman’s remuneration changed during the
year and is now paid as a salary directly as an employee of Anpario PLC.
Previously these amounts were paid to ECO Animal Health Group plc. For
clarity and consistency, the salary figure above includes these amounts.
Key Activities
During the year, the Committee:
-
Reviewed the salary and bonus arrangements to the Executive Directors
and approved cost of living increases, where appropriate, for staff.
No cost of living adjustment has been made for Executive and
Non-Executive Directors.
-
Reviewed the allocation of issued share capital for all incentive
schemes.
-
Reviewed proposals for the grant of share related incentive schemes.
-
Approved recommended proposals for short-term bonus incentives.
Remuneration Policy and Advisors
The objectives of the remuneration policy are to ensure that the overall
remuneration of senior executives is aligned with the performance of the
Company and preserves an appropriate balance of annual profit delivery
and longer term shareholder value.
The Committee keeps the remuneration policy, in particular the need for
share ownership guidelines for Executive Directors, regularly under
review and will take action whenever deemed necessary to ensure that
remuneration is aligned with the overall strategic objectives of the
Company.
The Committee seeks advice, if appropriate, from independent advisors
where required on remuneration related matters.
Long Term Incentive Plans
The Executive Directors receive remuneration under three long term
incentive plans: Enterprise Management Scheme (“EMI” which is now
closed; Joint Share Ownership Plan (“JSOP”); and Save As You Earn Scheme
(“SAYE”).
Under the Company’s EMI and SAYE Scheme the following Directors have the
right to acquire Ordinary shares of 23p each as follows:
|
|
|
Option
Price
(pence per
|
|
31 Dec
|
|
31 Dec
|
|
|
|
|
Share)
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
R P Edwards
|
|
|
158.50
|
|
80,000
|
|
80,000
|
|
|
|
|
290.00
|
|
42,400
|
|
42,400
|
|
|
|
|
224.13
|
|
4,015
|
|
4,015
|
|
|
|
|
334.00
|
|
2,694
|
|
2,694
|
|
|
|
|
|
|
|
|
|
|
K L Prior
|
|
|
158.50
|
|
80,000
|
|
80,000
|
|
|
|
|
290.00
|
|
42,400
|
|
42,400
|
|
|
|
|
224.13
|
|
4,015
|
|
4,015
|
|
|
|
|
334.00
|
|
2,694
|
|
2,694
|
|
Share plan limits
There is a limit to the total number of new shares which may be issued
under awards under Long Term Incentive Plans which might involve the
issue of new shares. That limit is the total number of new shares over
which future awards may be made, when added to the total number of
shares issued and issuable under awards granted on 16 September 2016 and
any awards which are outstanding as at that date shall not exceed 16.3%
of the total of the number of shares in issue from time to time.
Joint Share Ownership Plan
The Joint Share Ownership Plan (“JSOP”) and the Anpario plc Employees
Shares Trust (“the Trust”) were established and approved by resolution
of the Non-Executive Directors on 26 September 2011. The JSOP provides
for the acquisition by employees, including Executive Directors, of
beneficial interests as joint owners (with the Trust) of Ordinary Shares
in the Company upon the terms of a Joint Ownership Agreement (“JOA”).
The terms of the JOAs provide, inter alia, that if jointly owned shares
become vested and are sold, the proceeds of sale will be divided between
the joint owners so that the participating Director receives an amount
equal to any growth in the market value of the jointly owned Ordinary
shares above the initial market value, less a “carrying cost”
(equivalent to simple interest at 4.5 per cent per annum on the initial
market value) and the Trust receives the initial market value of the
jointly owned shares plus the carrying cost. Jointly owned Ordinary
shares will become vested if the participant remains with the Company
for a minimum period of 3 years.
The Directors interests in the JSOP shares are as follows:
|
|
|
2018
|
|
2017
|
R P Edwards
|
|
|
1,350,000
|
|
1,350,000
|
K L Prior
|
|
|
1,200,000
|
|
1,200,000
|
Directors’ interests
The interests of the Directors who served during the period, as at 31
December 2018, in the ordinary shares of the Company were as follows: -
|
|
|
Ordinary shares
of 23p each
|
|
|
|
|
|
31 Dec
|
|
31 Dec
|
|
|
|
|
|
2018
|
|
2017
|
|
P A Lawrence
|
|
|
|
63,350
|
|
63,350
|
|
R P Edwards
|
|
|
|
206,687
|
|
206,687
|
|
K L Prior
|
|
|
|
206,800
|
|
206,800
|
|
There was no change in the Directors’ interests between 31 December 2018
and 6 March 2019.
Non-Executive Directors and Chairman
Remuneration of the Non-Executive directors is determined by the
Chairman and the Chief Executive Officer. The Non-Executive Directors
are not entitled to annual bonuses or employee benefits and their fees
are subject to annual review.
The Chairman’s remuneration is determined by Remuneration Committee in
conjunction with the Chief Executive Officer. However, the Chairman is
not entitled to vote on the matter.
Each of the Chairman and Non-Executive Director have a letter of
appointment stating their annual fee and termination terms.
The Chairman and Non-Executive Director appointments are for a period of
three years from the date of the letter of appointment. The appointments
are terminable on three months written notice at any time by either the
Company or the Non-Executive Director.
Executive Directors
The Executive Directors remuneration is determined by the Committee.
They are eligible to participate in a discretionary annual bonus scheme
which is based on annual target profit measures and corporate activities
including acquisitions and disposals aligned with shareholder returns.
The Executive Directors are also eligible to participate in the employee
long term incentive plans as mentioned above.
Richard Edwards
Richard Edwards is engaged as Chief Executive Officer of the Company
under a service agreement dated 5 November 2006. His appointment is
terminable by the Company on 12 months’ written notice and the Executive
on 6 months’ notice.
Karen Prior
Karen Prior is engaged as Group Finance Director of the Company under a
service agreement dated 1 October 2009. Her appointment is terminable by
the Company on 12 months’ written notice and the Executive on 6 months’
notice.
Richard Wood
Chairman, Remuneration Committee
6 March
2019
Audit committee report
Composition and meetings of the Audit Committee
The Audit Committee is comprised of the two Non-Executive Directors,
whom the Board considers to be independent and is chaired by Peter
Lawrence. Meetings are also attended, by invitation, by the Finance
Director, external auditors and other management as appropriate.
The Committee meets at least twice each financial year with the external
auditors and considers any issues that are identified during the course
of their audit work. The Board is satisfied that the Committee members
have recent and relevant financial experience.
The Committee met twice during the year ended 31 December 2018 with full
attendance by the Committee members.
Role, responsibilities and terms of reference
The Audit Committee’s role is to assist the Board in the effective
discharge of its responsibilities for financial reporting and internal
control. The Audit Committee’s responsibilities include:
Financial reporting
Monitor the integrity of the financial statements of the Company, and
any formal announcements relating to the Company’s financial
performance, reviewing significant financial reporting judgments
contained in them focusing particularly on:
-
The consistency of and any changes to accounting policies and
practices;
-
The methods used to account for significant or unusual transactions
where different approaches are possible;
-
Whether the Company has followed appropriate accounting standards and
made appropriate estimates and judgments, taking into account the
views of the external auditor;
-
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;
-
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;
-
Review the Company's systems and controls for the detection of fraud
and prevention of bribery.
External audit
Consider and make recommendations to the Board, to be put to
shareholders for approval at the AGM, in relation to the appointment,
re-appointment and removal of the external auditor. The Committee shall
oversee the selection process for a new auditor and if an auditor
resigns, the Committee shall investigate the issues leading to this and
decide whether any action is required. Oversee the relationship with the
external auditor including (but not limited to):
-
Recommendations on their remuneration, whether fees for audit or
non-audit services and that the level of fees is appropriate to enable
an adequate audit to be conducted;
-
Approval of their terms of engagement, including any engagement letter
issued at the start of each audit and the scope of the audit;
-
Assessing annually the external auditor's independence and objectivity
taking into account relevant UK professional and regulatory
requirements and the relationship as a whole, including the provision
of any non-audit services;
-
Satisfying itself that there are no relationships (such as family,
employment, investment, financial or business) between the auditor and
the Company (other than in the ordinary course of business);
-
Monitoring the auditor's compliance with relevant ethical and
professional guidance on the rotation of audit partner;
-
Assessing annually the qualifications, expertise and resources of the
auditor and the effectiveness of the audit process which shall include
a report from the external auditor on their own internal quality
procedures;
-
Develop and implement a policy on the engagement of the external
auditor to supply non-audit services;
-
Discuss with the external auditor(s) before the audit commences the
nature and scope of the audit, and ensure co-ordination where more
than one audit firm is involved;
-
Review the findings of the audit, discussing any major issues which
arose during the audit, any problems and reservations arising from the
Interim and Final audits, and any matters the auditors may wish to
discuss (in the absence of management where necessary);
-
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 auditors
The Committee reviews the independence of the external auditors,
Deloitte LLP on an annual basis. It receives a detailed audit plan, from
Deloitte LLP, identifying their assessment of the key risks. The
Committee assesses the effectiveness of the audit process in addressing
these matters through the reporting it receives from Deloitte LLP.
P A Lawrence
Chairman, Audit Committee
6 March 2019
Risk management
We have examined in detail key risks and evaluated the likelihood and
potential impact. These risks are the most significant but not
necessarily the only ones associated with the Group and its businesses.
In common with all businesses, we face risks of a generic nature, for
example failure of projects, foreign exchange, supply chain disruption
and the recruitment, development and retention of employees. The
following table shows some of the risks that are more specific to our
business together with details of the controls and mitigation in place
to manage our exposure. More information on our risk management
framework can be found in the Corporate Governance Statement.
1. Market Risk
|
|
2. Political and Economic Risk
|
Risks
|
|
Risks
|
-
We sell to direct end users and through our distributor network
which are constantly targeted by competitors.
-
M & A activity resulting in market consolidation.
-
Changing market, legislative and regulatory needs.
-
Animal diseases e.g. African Swine Flu, Avian Flu, PEDv.
-
IP theft e.g. trademark infringements.
|
|
-
Brexit uncertainty.
-
Exchange rate fluctuations.
-
Geopolitical risks including political and economic instability.
-
Bad debts or trade disputes.
|
Potential impact
|
|
Potential impact
|
-
Lower sales revenue and profit.
-
Reduction in customers or targets customers.
-
Loss of market share.
-
Loss of market.
|
|
-
Volatility in markets. Supply chain: delays, additional costs,
tariffs or lack of continuity. Regulatory changes.
-
Unable to sell or transport finished goods to EU. Unable to
import goods from EU.
-
Border delays.
-
Reduced revenue, increased costs and lower profitability.
|
Control and mitigation
|
|
Control and mitigation
|
-
Establishing a global marketing strategy with clearly defined
product and species related goals for each region.
-
Regular monitoring of sales budgets and sales prospects by the
management and the Board.
-
Regional and species diversity and an extensive range of
products with new product development and launches.
-
A clear and effective marketing strategy communicating the
benefits of Anpario solutions.
-
Close customer engagement, relationships to understand, and
address their needs.
-
Global trademark watches and pre-emptive legal action.
|
|
-
Established a cross functional team to assess and monitor Brexit
impact.
-
Increased inventory of EU sourced raw materials.
-
Extended terms provided to EU distributors to ensure supply in
short term.
-
Limiting and hedging of foreign currency exposure.
-
Wide geographic diversity reduces dependency in a single country
or region.
-
Rigorous customer and supplier due diligence and monitoring of
regional and customer exposures.
-
Use of credit insurance and letters of credit.
|
Risk rating
|
|
Trend
|
|
Risk rating
|
|
Trend
|
Likelihood Medium
Impact Medium
|
|
No change
|
|
Likelihood Medium
Impact Medium
|
|
Increasing
|
3. Product Development Risk
|
|
4. Production and Quality Risk
|
Risks
|
|
Risks
|
-
Failure to deliver new products due to pipeline delays or
products not meeting commercial expectations.
-
Product development is a complex, risky process involving
significant financial, R&D and other resources.
-
At the development stage it is difficult to determine whether a
new product will succeed.
|
|
-
Plant closures due to major accident or incident or disaster.
-
Health and Safety issues.
-
Inadequate or poor adherence to quality systems allow faulty
product to reach customer.
-
Defective raw materials
-
Defective plant and equipment in our manufacturing facility.
|
Potential impact
|
|
Potential impact
|
-
Reduction in competitiveness in the market. Lost opportunities.
-
A succession of trial failures could adversely affect our
ability to deliver shareholder expectations.
-
Our market position in key areas could be affected, resulting in
reduced revenues and profits.
-
Where we are unable to develop and launch a product this would
result in impairment of intangible assets.
-
Valuable resources may be wasted.
|
|
-
Loss of production for a significant period e.g. more than one
month potentially leading to loss of sales.
-
Accidents, fatality and possible fine or closure.
-
Poor product quality or product contamination.
-
Damage to customer relationship, reputation and financial loss.
|
Control and mitigation
|
|
Control and mitigation
|
-
Current products are not at end of lifecycle. Continual
monitoring and review of current products is carried out by
global Technical Team. Different regions have markets that are
at different points in development.
-
Potential new development projects are evaluated from a
commercial, financial and technical perspective. The pipeline is
reviewed regularly by the Board. Regular updates are provided to
the Board.
-
Each research project or trial is managed by qualified technical
managers. Projects and trials are monitored to ensure that they
are completed on time, deliver expected outcomes and provide
useable data. Final review and evaluation to ensure learning.
-
Multiple studies are conducted to assess the effects of the
product on target species. We carry out a range of product
developments to reduce the risk and support major product
development.
-
In respect of all new product launches a detailed marketing plan
is established and progress against that plan is regularly
monitored.
|
|
-
All products can be produced at approved toll manufacturers in
the UK. Business interruption and property insurance policies
arranged.
-
Third party advisor utilised and strict management controls
enforced. Employers’ liability insurance arranged.
-
Continued investment in automation has improved product
consistency and quality.
-
Supplier accreditation, UFAS and FEMAS certification,
HACCP and Trading Standards compliance. Public and product
liability insurance arranged.
|
Risk rating
|
|
Trend
|
|
Risk rating
|
|
Trend
|
Likelihood Medium
Impact Medium
|
|
Decreasing
|
|
Likelihood Low
Impact Medium
|
|
No change
|
5. Systems Risk
|
|
6. Legislation, Regulatory and Non-compliance Risk
|
|
Risks
|
|
Risks
|
|
-
IT or communications failure, due to, accident or sabotage.
-
Cyber attack.
-
Data breach.
|
|
-
Failure to comply with export controls and sanctions.
-
Failure to comply with anti-bribery and corruption legislation.
-
Non-compliance with tax, legal or regulatory obligations.
-
Failure to comply with regulatory requirements.
|
|
Potential impact
|
|
Potential impact
|
|
-
Unable to operate.
-
Criminal attack could be aimed at stealing money, extortion,
fraud, data theft etc.
-
GDPR imposes heavy financial penalties, plus reputational damage.
|
|
-
Litigation against Anpario, potential fines and reputational
damage.
-
Financial penalties, reputational damage, unable to operate in
certain jurisdictions.
-
Prevented from trading with countries e.g. Iran even though our
products are exempt from sanctions.
|
|
Control and mitigation
|
|
Control and mitigation
|
|
-
Regular back up of data, third party provider for storage and
system support.
-
Firewall, regular back up of data, crime insurance in place.
-
Continual review and strengthening of processes, controls and
security.
-
Information Policy, Privacy Policy and Breach Notification
Policy issued during 2018.
-
Staff and partner awareness communication and training.
|
|
-
Vigilance and monitoring of all appropriate notifications to
ensure compliance and pre-emptive actions.
-
Clear communicated policies and Code of Conduct issued to all
employees and partners.
-
Internal training and awareness communications.
-
Support from external experts in all countries in which we
operate.
-
Due diligence is carried out on all customers, directors and
shareholders.
|
|
Risk rating
|
|
Trend
|
|
Risk rating
|
|
Trend
|
|
Likelihood Medium
Impact High
|
|
Increasing
|
|
Likelihood Medium
Impact Medium
|
|
No change
|
|
Risk Management
What has been successful?
-
The implementation of our direct customer sales strategy, set up of
new subsidiaries and launch of new products has mitigated global
challenges, reduced key customer reliance and created a platform for
future growth.
-
We are working with DEFRA and industry peers to overcome the
introduction of new onerous regulatory importation restrictions in
China.
-
We successfully challenged the infringement of Orego-stim® trademark
in China.
-
We continually endeavour to improve our key control processes. During
2018 we have:
-
Conducted IT disaster recovery exercises;
-
Communicated globally Anpario’s Code of Conduct to reinforce
ethical behaviour;
-
Published a new suite of Data Privacy policy and procedural
guidance documents to support compliance with the EU General Data
Protection Regulation (GDPR);
-
Updated our Group Employment Handbook and Employment policies
supplemented by training and online videos;
-
Developed and coached key managers.
What can be improved?
We will continue to review our internal control framework and improve
our risk management capabilities. We will revise our processes in
response to new or emerging risks and to any improvements recommended by
management, external auditors and advisors.
Brexit Contingency Planning
In the absence of clarity on post Brexit trading arrangements, we set
out below some of the key steps being taken to plan for and mitigate any
disruption resulting from changes to the way in which we currently
conduct business. Anpario has been proactively engaged in understanding
the potential scenarios and drawing up plans to mitigate any future
risks to the business. We have appointed a steering group of experienced
cross-functional professional managers who are working together with our
stakeholders to manage the process and challenges we face.
Richard Edwards has met with Dr Liam Fox, Secretary of State for
International Trade. John Butlin has met; Andrew Mitchell, HM Trade
Commissioner for Europe; Amanda Brooks, Director Trade Remedies, Access
and Controls, Department for International Trade (DIT) and Mark Carney,
Governor of the Bank of England. Karen Prior, John Butlin and Cindy
Thomson have attended numerous Brexit seminars with DIT, British
Chambers of Commerce and lawyers.
Business Continuity
Anpario is a global business with a long history of both exporting and
importing from EU and non-EU countries. We have Anpario subsidiaries in
ten countries with representation in every continent. We continually
review, explore options and implement planning decisions to optimise
this representation and recruit key management to ensure continuity and
growth of the business. The Group seeks to minimise reliance on key
territories and individual customers and distributors by increasing
geographic spread and market penetration.
We have recently incorporated a wholly owned subsidiary in Germany as
part of our Brexit strategy; this will give us a base within the EU if
we need it for manufacturing, warehousing, employment or other purpose.
Import of raw materials and packaging
Anpario import a significant proportion of raw materials and packaging
from the EU. We potentially face congestion in ports and temporary
import delays by customs agents and freight forwarders struggling with
new or unclear legislation.
In 2018, the value of raw materials and packaging purchased from the EU
27 was £5.5m representing 40% of the total. Our EU partners are equally
concerned to ensure that supply chains are not disrupted. Meetings and
discussions have therefore been ongoing with key suppliers regarding
planning for Brexit implications and potential outcomes. We have
received assurances from our acid supplier that buffer stocks will be
stored in the UK.
Where possible, we have purchased key raw materials and these are
already in stock at our premises and a third party warehouse. We hold
approximately one-month’s raw material requirements. Anpario also
imports goods from other territories outside of the EU and has a long
history of dealing with import freight clearance and working with agents
who provide effective professional customs clearance services. If
necessary, this will enable us to purchase raw materials and packaging
from alternative suppliers outside the EU.
Export of Anpario products
Anpario is a long established business, which has developed through
exports and currently supplies more than 70 countries across the world.
In 2018, £3.4m, approximately 12% of our sales were to EU 27 countries.
In recent years, this has been declining as a proportion of total sales
because growth has been predominately in Asia Pacific, Middle East and
the Americas. We continue to review sales strategy and resources to
create expansion across all regions and target growth territories both
within and outside the EU.
We are currently processing orders for customers within the EU for
despatch prior to 25 March to ensure arrival before 29 March. A number
of customers have ordered between one and six month’s additional stock.
Anpario have agreed to invoice these consignments on extended terms of
between 60 and 180 days.
Product regulatory requirements
All Anpario products conform to current EU standards and we expect this
to continue. Our products are on the EU register of safe to use and do
not require registration in EU. There is a risk that we may have to
register products or that a certificate of free sale will be required
after Brexit.
The Group has clearly established quality systems and procedures in
place to obtain required regulatory approvals and always strives to meet
or exceed regulatory requirements and ensure that its employees have
detailed experience and knowledge of the regulations. The compliance and
legal teams liaise closely with government bodies who oversee the
industry standards such as DEFRA and remain constantly updated in
respect of proposed and actual changes in order to ensure that the
business is equipped to deal with and adhere to such changes.
Where any changes are identified which could affect our ability to
continue to market and sell any of our products, a response team will be
dedicated to mitigate such risk and to retain effective communication
with the relevant regulators.
Trade Tariffs
In the absence of a trade agreement between the EU and the UK, trade
tariffs may be applied on goods we import from the EU, which could
affect future prices of Anpario products. They may also increase prices
to our EU customers by the addition of any duties imposed on their
purchases from our operations in the UK. We already continually review
our pricing and will take action to control our cost base and to ensure
that we remain as competitive as possible. We will communicate any
potential impact to our customers directly and as soon as possible if
they are likely to be affected.
Exchange rate
Anpario’s businesses could be affected by significant currency
fluctuations. As a consequence of Anpario’s extensive international
dealings, Board approved hedging policies have been in place for many
years. In 2019, we have options in place to sell USD/buy GBP and to sell
USD/buy EUR. Exchange rates are continually monitored and action will be
taken as far as possible to mitigate negative effects and anticipated
exposures through implementation of hedging policy and entering into
financial instrument contracts.
Employees
We have EU citizens based in the UK who have been employed for a number
of years; they have applied, or will be applying, for settled status. We
do not anticipate any difficulties caused by the lack of free movement.
We also employ people in several EU countries under direct local
employment contracts.
Conclusion
Whilst it is not currently possible to fully understand and gauge the
future obstacles facing UK & EU businesses we have continually been very
active in making our views known to senior government ministers.
We are also actively working with government departments such as the
Department for International Trade and DEFRA on issues such as trade
barriers and regulations.
Rest assured, Anpario will continue to monitor developments and take
whatever steps are necessary to protect our operations and minimise any
disruption to our business.
Independent auditors’ report to the members of Anpario plc
Report on the audit of the financial statements
Opinion
In our opinion:
-
the financial statements of Anpario plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) give a true and fair view of the state of
the Group’s and of the parent company’s affairs as at 31 December 2018
and of the Group’s profit for the year then ended;
-
the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union;
-
the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied
in accordance with the provisions of the Companies Act 2006; and
-
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
-
the consolidated income statement;
-
the consolidated statement of comprehensive income;
-
the consolidated and parent company balance sheets;
-
the consolidated and parent company statements of changes in equity;
-
the consolidated and parent company cash flow statements; and
-
the related notes 1 to 27.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European Union
and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities
for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance
with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting
Council’s (the ‘FRC’s’) Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Summary of our audit approach
Key audit matters
|
|
The key audit matter that we identified in the current year was:
-
The valuation of intangible assets.
|
Materiality
|
|
The materiality that we used for the group financial statements was
£228,000 which was determined on the basis of 5% of profit before
taxation.
|
Scoping
|
|
Our full scope procedures included the UK entity which covered 92%
of the total revenue for the Group and all of the Group’s profit. We
have undertaken specific procedures on balances in the overseas
subsidiaries to address specific risks to the group.
|
Significant changes in our approach
|
|
The revenue recognition key audit matter has been removed in the
current year as this is no longer an area of focus.
|
Conclusions relating to going concern
We are required by ISAs (UK) to report in respect of the following
matters where:
-
the directors’ use of the going concern basis of accounting in
preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant
doubt about the group’s or the parent company’s ability to
continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the
financial statements are authorised for issue.
|
|
We have nothing to report in respect of these matters.
|
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
In the prior year, revenue recognition specific to cut-off was a key
audit matter, this is no longer considered as an area of focus.
The valuation of intangible assets
|
Key audit matter description
|
|
The Group has material balances for goodwill and intangible assets
of £11.4m (2017: £10.8m) as outlined in note 11. Per IAS 36,
goodwill and other intangibles with indefinite useful lives must be
tested for impairment annually. As, the carrying values of these
intangible assets are contingent on future cashflows there is a risk
of material misstatement that the value of these assets is impaired
if the cash flows do not meet the expectations of the Group. When
performing their impairment review management is required to make
judgements in assessing future cashflows that include assumptions
surrounding growth rates, capital expenditure and product sales. A
change in these assumptions may result in an impairment to the
carrying value of intangible assets and goodwill. As a result the
forecasts used by management to assess the carrying value of
intangible assets through a value in use calculation is deemed to be
a key audit matter.
In the prior year existence was also a key audit matter. This is
no longer considered to be a focus as we have identified the cash
flows used within the impairment review to be the focus area in
the current year.
There is also a potential for fraud through possible manipulation
in relation to the cash flows used by management within their
impairment review calculation to avoid the need for impairment.
|
How the scope of our audit responded to the key audit matter
|
|
-
We have evaluated the design and implementation of the key
controls relating to the assessment of the carrying value of
these intangible assets.
-
We challenged management's assumptions used in the impairment
model specifically the cash flow projections by sensitising
against current run rates and growth levels that have been
achieved.
-
We challenged the levels of capital expenditure used in
management’s model based on historical levels that have been
incurred.
-
We tested the integrity and arithmetical accuracy of
management's model and supporting calculations for the
impairment review.
-
We have reviewed management’s paper on Brexit with responses to
all of the potential risks and the mitigations that are in place
that could impact future cashflows.
|
Key observations
|
|
We concur with the treatment and carrying value of the intangibles
balance and the corresponding amounts of amortisation and are
satisfied that the assumptions used in the impairment model are
within a suitable range.
|
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
|
|
Group financial statements
|
|
Parent company financial statements
|
|
Materiality
|
|
£228,000 (2017: £200,000)
|
|
£205,000 (2017: £170,000)
|
|
Basis for determining materiality
|
|
5% of pre-tax profit
|
|
Parent materiality equates to 3.5% of this entities pre-tax profit,
which is capped at 90% of group materiality.
|
|
Rationale for the benchmark applied
|
|
We have assessed the use of a headline measure to be appropriate as
this continues to be a key driver of the business’s value, is a
critical component of the financial statements and a key metric that
management use to monitor the performance of the business and
communicate this to shareholders.
|
|
We have assessed the use of a headline measure to be appropriate as
this continues to be a key driver of the business’s value, is a
critical component of the financial statements and a key metric that
management use to monitor the performance of the business and
communicate this to shareholders.
|
|
We agreed with the Audit Committee that we would report to the Committee
all audit differences in excess of £11,000 (2017: £10,000), as well as
differences below that threshold that, in our view, warranted reporting
on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
The full scope audit was in relation to the UK entity. As the overseas
subsidiaries act as distribution channels for the UK entity these were
not deemed to be significant. The UK entity comprises 78% (2017: 81%) of
the Group’s total external revenue. Excluding intercompany balances, the
UK entity equates to 92% (2017: 92%) of the Group’s total revenue.
There are no other areas of sub consolidation within the Group. Audit
work to respond to the risks of material misstatement was performed
directly by the group audit engagement team. Due to the nature of the
Group, we have undertaken specific procedures on certain balances within
the overseas subsidiaries, specifically in relation to the entity in the
USA. Audit work to respond to the risks of material misstatement in
these subsidiaries was performed directly by the group audit engagement
team. The specific tests conducted on these balances were undertaken at
a component materiality that was 40% (2017: 40% - 60%) of the Group’s
materiality. Component materiality ranged between £0.09m and £0.20m in
the current year.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
|
|
We have nothing to report in respect of these matters.
|
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.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-
the information given in the strategic report and the directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
-
the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and of the
parent company and their environment obtained in the course of the
audit, we have not identified any material misstatements in the
strategic report or the directors’ report.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
-
we have not received all the information and explanations we
require for our audit; or
-
adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
-
the parent company financial statements are not in agreement
with the accounting records and returns.
|
|
We have nothing to report in respect of these matters.
|
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in
our opinion certain disclosures of directors’ remuneration have
not been made.
|
|
We have nothing to report in respect of these matters.
|
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for
this report, or for the opinions we have formed.
Matthew Hughes BSc (Hons) ACA (Senior statutory auditor)
For and on
behalf of Deloitte LLP
Statutory Auditor
Leeds, UK
6
March 2019
Consolidated income statement
for the year ended 31 December 2018
|
|
|
|
2018
|
|
2017
|
|
|
|
Notes
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
3
|
|
28,277
|
|
29,241
|
|
Cost of sales
|
|
|
|
(14,736)
|
|
(14,895)
|
|
Gross profit
|
|
|
|
13,541
|
|
14,346
|
|
Administrative expenses
|
|
|
|
(9,076)
|
|
(10,358)
|
|
Exceptional items
|
|
25
|
|
-
|
|
(627)
|
|
Operating profit
|
|
|
|
4,465
|
|
3,361
|
|
Finance income
|
|
7
|
|
87
|
|
42
|
|
Profit before income tax
|
|
|
|
4,552
|
|
3,403
|
|
Income tax expense
|
|
10
|
|
(552)
|
|
(418)
|
|
Profit for the year
|
|
|
|
4,000
|
|
2,985
|
|
|
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
|
|
|
Owners of the parent
|
|
|
|
4,000
|
|
2,985
|
|
Non-controlling interests
|
|
|
|
-
|
|
-
|
|
Profit for the year
|
|
|
|
4,000
|
|
2,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
8
|
|
19.53p
|
|
14.66p
|
|
Diluted earnings per share
|
|
8
|
|
18.52p
|
|
14.17p
|
|
Consolidated statement of comprehensive income
for the year ended 31 December 2018
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
4,000
|
|
2,985
|
|
Items that may be subsequently reclassified to profit or loss:
|
|
|
|
|
|
|
|
Exchange difference on translating foreign operations
|
|
|
|
(3)
|
|
109
|
|
Cashflow hedge movements (net of deferred tax)
|
|
|
|
(184)
|
|
162
|
|
Total comprehensive income for the period
|
|
|
|
3,813
|
|
3,256
|
|
|
|
|
|
|
|
|
|
Attributable to the owners of the parent:
|
|
|
|
3,813
|
|
3,256
|
|
Consolidated and parent company balance sheets
as at 31 December 2018
|
|
|
|
Group
|
|
Company
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
Notes
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
11
|
|
11,373
|
|
10,820
|
|
10,811
|
|
10,249
|
|
Property, plant and equipment
|
|
12
|
|
3,710
|
|
3,347
|
|
3,689
|
|
3,300
|
|
Investment in subsidiaries
|
|
13
|
|
-
|
|
-
|
|
5,393
|
|
5,393
|
|
Deferred tax assets
|
|
18
|
|
641
|
|
447
|
|
99
|
|
164
|
|
Non-current assets
|
|
|
|
15,724
|
|
14,614
|
|
19,992
|
|
19,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
14
|
|
4,031
|
|
3,088
|
|
2,458
|
|
2,028
|
|
Trade and other receivables
|
|
15
|
|
5,328
|
|
5,720
|
|
11,471
|
|
9,922
|
|
Derivative financial instruments
|
|
27
|
|
6
|
|
220
|
|
6
|
|
220
|
|
Cash and cash equivalents
|
|
16
|
|
12,912
|
|
13,559
|
|
11,580
|
|
12,142
|
|
Current assets
|
|
|
|
22,277
|
|
22,587
|
|
25,515
|
|
24,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
38,001
|
|
37,201
|
|
45,507
|
|
43,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
|
21
|
|
5,360
|
|
5,350
|
|
5,360
|
|
5,350
|
|
Share premium
|
|
|
|
10,423
|
|
10,330
|
|
10,423
|
|
10,330
|
|
Other reserves
|
|
23
|
|
(5,449)
|
|
(5,406)
|
|
(3,297)
|
|
(3,257)
|
|
Retained earnings
|
|
22
|
|
22,816
|
|
20,248
|
|
24,633
|
|
20,968
|
|
Equity attributable to owners of the parent company
|
|
33,150
|
|
30,522
|
|
37,119
|
|
33,391
|
|
Non-controlling interest
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total equity
|
|
|
|
33,150
|
|
30,522
|
|
37,119
|
|
33,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
18
|
|
1,182
|
|
1,044
|
|
1,182
|
|
1,044
|
|
Non-current liabilities
|
|
|
|
1,182
|
|
1,044
|
|
1,182
|
|
1,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
17
|
|
3,426
|
|
5,348
|
|
7,025
|
|
8,729
|
|
Derivative financial instruments
|
|
27
|
|
11
|
|
-
|
|
11
|
|
-
|
|
Current income tax liabilities
|
|
|
|
232
|
|
287
|
|
170
|
|
254
|
|
Current liabilities
|
|
|
|
3,669
|
|
5,635
|
|
7,206
|
|
8,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
4,851
|
|
6,679
|
|
8,388
|
|
10,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
38,001
|
|
37,201
|
|
45,507
|
|
43,418
|
|
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 £5,097,000 (2017:
£3,988,000).
The financial statements were approved by the Board and authorised for
issue on 6 March 2019.
Richard P Edwards
|
|
|
Karen L Prior
|
Chief Executive Officer
|
|
|
Group Finance Director
|
Company Number: 03345857
Consolidated and parent company statements of changes in equity
for the year ended 31 December 2018
Group
|
|
Called up share capital
|
|
Share premium
|
|
Other reserves
|
|
Retained earnings
|
|
Non- controlling interest
|
|
Total equity
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2017
|
|
5,291
|
|
9,515
|
|
(5,112)
|
|
18,843
|
|
-
|
|
28,537
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
2,985
|
|
-
|
|
2,985
|
|
Currency translation differences
|
|
-
|
|
-
|
|
109
|
|
-
|
|
-
|
|
109
|
|
Cash flow hedge reserve
|
|
-
|
|
-
|
|
162
|
|
-
|
|
-
|
|
162
|
|
Total comprehensive income for the period
|
|
-
|
|
-
|
|
271
|
|
2,985
|
|
-
|
|
3,256
|
|
Issue of share capital
|
|
59
|
|
815
|
|
-
|
|
-
|
|
-
|
|
874
|
|
Deferred tax regarding share–based payments
|
|
-
|
|
-
|
|
71
|
|
-
|
|
-
|
|
71
|
|
Joint share ownership plan
|
|
-
|
|
-
|
|
(825)
|
|
-
|
|
-
|
|
(825)
|
|
Share-based payment adjustments
|
|
-
|
|
-
|
|
189
|
|
-
|
|
-
|
|
189
|
|
Final dividend relating to 2016
|
|
-
|
|
-
|
|
-
|
|
(1,152)
|
|
-
|
|
(1,152)
|
|
Interim dividend relating to 2017
|
|
-
|
|
-
|
|
-
|
|
(428)
|
|
-
|
|
(428)
|
|
Transactions with owners
|
|
59
|
|
815
|
|
(565)
|
|
(1,580)
|
|
-
|
|
(1,271)
|
|
Balance at 31 December 2017
|
|
5,350
|
|
10,330
|
|
(5,406)
|
|
20,248
|
|
-
|
|
30,522
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
4,000
|
|
-
|
|
4,000
|
|
Currency translation differences
|
|
-
|
|
-
|
|
(3)
|
|
-
|
|
-
|
|
(3)
|
|
Cash flow hedge reserve
|
|
-
|
|
-
|
|
(184)
|
|
-
|
|
-
|
|
(184)
|
|
Total comprehensive income for the period
|
|
-
|
|
-
|
|
(187)
|
|
4,000
|
|
-
|
|
3,813
|
|
Issue of share capital
|
|
10
|
|
93
|
|
-
|
|
-
|
|
-
|
|
103
|
|
Share-based payment adjustments
|
|
-
|
|
-
|
|
167
|
|
-
|
|
-
|
|
167
|
|
Deferred tax regarding share–based payments
|
|
-
|
|
-
|
|
(23)
|
|
-
|
|
-
|
|
(23)
|
|
Final dividend relating to 2017
|
|
-
|
|
-
|
|
-
|
|
(965)
|
|
-
|
|
(965)
|
|
Interim dividend relating to 2018
|
|
-
|
|
-
|
|
-
|
|
(467)
|
|
-
|
|
(467)
|
|
Transactions with owners
|
|
10
|
|
93
|
|
144
|
|
(1,432)
|
|
-
|
|
(1,185)
|
|
Balance at 31 December 2018
|
|
5,360
|
|
10,423
|
|
(5,449)
|
|
22,816
|
|
-
|
|
33,150
|
|
Company
|
|
Called up share capital
|
|
Share premium
|
|
Other reserves
|
|
Retained earnings
|
|
Non- controlling interest
|
|
Total equity
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2017
|
|
5,291
|
|
9,515
|
|
(2,854)
|
|
18,560
|
|
-
|
|
30,512
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
3,988
|
|
-
|
|
3,988
|
|
Cash flow hedge reserve
|
|
-
|
|
-
|
|
162
|
|
-
|
|
-
|
|
162
|
|
Total comprehensive income for the period
|
|
-
|
|
-
|
|
162
|
|
3,988
|
|
-
|
|
4,150
|
|
Issue of share capital
|
|
59
|
|
815
|
|
-
|
|
-
|
|
-
|
|
874
|
|
Deferred tax regarding share–based payments
|
|
-
|
|
-
|
|
71
|
|
-
|
|
-
|
|
71
|
|
Joint share ownership plan
|
|
-
|
|
-
|
|
(825)
|
|
-
|
|
-
|
|
(825)
|
|
Share-based payment adjustments
|
|
-
|
|
-
|
|
189
|
|
-
|
|
-
|
|
189
|
|
Final dividend relating to 2016
|
|
-
|
|
-
|
|
-
|
|
(1,152)
|
|
-
|
|
(1,152)
|
|
Interim dividend relating to 2017
|
|
-
|
|
-
|
|
-
|
|
(428)
|
|
-
|
|
(428)
|
|
Transactions with owners
|
|
59
|
|
815
|
|
(565)
|
|
(1,580)
|
|
-
|
|
(1,271)
|
|
Balance at 31 December 2017
|
|
5,350
|
|
10,330
|
|
(3,257)
|
|
20,968
|
|
-
|
|
33,391
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
5,097
|
|
-
|
|
5,097
|
|
Cash flow hedge reserve
|
|
-
|
|
-
|
|
(184)
|
|
-
|
|
-
|
|
(184)
|
|
Total comprehensive income for the period
|
|
-
|
|
-
|
|
(184)
|
|
5,097
|
|
-
|
|
4,913
|
|
Issue of share capital
|
|
10
|
|
93
|
|
-
|
|
-
|
|
-
|
|
103
|
|
Share-based payment adjustments
|
|
-
|
|
-
|
|
167
|
|
-
|
|
-
|
|
167
|
|
Deferred tax regarding share–based payments
|
|
-
|
|
-
|
|
(23)
|
|
-
|
|
-
|
|
(23)
|
|
Final dividend relating to 2017
|
|
-
|
|
-
|
|
-
|
|
(965)
|
|
-
|
|
(965)
|
|
Interim dividend relating to 2018
|
|
-
|
|
-
|
|
-
|
|
(467)
|
|
-
|
|
(467)
|
|
Transactions with owners
|
|
10
|
|
93
|
|
144
|
|
(1,432)
|
|
-
|
|
(1,185)
|
|
Balance at 31 December 2018
|
|
5,360
|
|
10,423
|
|
(3,297)
|
|
24,633
|
|
-
|
|
37,119
|
|
Consolidated and parent company statements of cash flows
for the year ended 31 December 2018
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operating activities
|
|
3,233
|
|
5,583
|
|
3,065
|
|
5,159
|
|
Income tax paid
|
|
(673)
|
|
(349)
|
|
(629)
|
|
(349)
|
|
Net cash generated from operating activities
|
|
2,560
|
|
5,234
|
|
2,436
|
|
4,810
|
|
Investment in subsidiary
|
|
(132)
|
|
(514)
|
|
-
|
|
(828)
|
|
Purchases of property, plant and equipment
|
|
(695)
|
|
(151)
|
|
(692)
|
|
(146)
|
|
Proceeds from disposal of tangible and intangible assets
|
|
-
|
|
44
|
|
-
|
|
1
|
|
Payments to acquire intangible assets
|
|
(1,106)
|
|
(624)
|
|
(1,104)
|
|
(622)
|
|
Interest received
|
|
87
|
|
42
|
|
127
|
|
66
|
|
Net cash used in investing activities
|
|
(1,846)
|
|
(1,203)
|
|
(1,669)
|
|
(1,529)
|
|
Joint Share Ownership Plan
|
|
-
|
|
(825)
|
|
-
|
|
(825)
|
|
Proceeds from issuance of shares
|
|
103
|
|
874
|
|
103
|
|
874
|
|
Dividend paid to Company's shareholders
|
|
(1,432)
|
|
(1,580)
|
|
(1,432)
|
|
(1,580)
|
|
Net cash used in financing activities
|
|
(1,329)
|
|
(1,531)
|
|
(1,329)
|
|
(1,531)
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
(615)
|
|
2,500
|
|
(562)
|
|
1,750
|
|
Effect of exchange rate changes
|
|
(32)
|
|
(53)
|
|
-
|
|
-
|
|
Cash and cash equivalents at the beginning of the year
|
|
13,559
|
|
11,112
|
|
12,142
|
|
10,392
|
|
Cash and cash equivalents at the end of the year
|
|
12,912
|
|
13,559
|
|
11,580
|
|
12,142
|
|
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operating activities
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
4,552
|
|
3,403
|
|
5,821
|
|
4,435
|
|
Net finance income
|
|
(87)
|
|
(42)
|
|
(127)
|
|
(66)
|
|
Depreciation, amortisation and impairment
|
|
871
|
|
825
|
|
845
|
|
796
|
|
Loss on disposal of property, plant and equipment
|
|
13
|
|
19
|
|
-
|
|
19
|
|
Share-based payments
|
|
167
|
|
189
|
|
167
|
|
189
|
|
Fair value adjustment to derivatives
|
|
32
|
|
(44)
|
|
32
|
|
(44)
|
|
Changes in working capital:
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
(900)
|
|
(855)
|
|
(430)
|
|
(370)
|
|
Trade and other receivables
|
|
401
|
|
965
|
|
(1,539)
|
|
(696)
|
|
Trade and other payables
|
|
(1,816)
|
|
1,123
|
|
(1,704)
|
|
896
|
|
Net cash generated from operating activities
|
|
3,233
|
|
5,583
|
|
3,065
|
|
5,159
|
|
Notes to the financial statements
for the year ended 31 December 2018
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. The Company is traded on the Alternative Investment
Market (“AIM”) of the London Stock Exchange and is incorporated and
domiciled in the UK. The address of its registered office is Manton Wood
Enterprise Park, Worksop, Nottinghamshire, S80 2RS. The presentation
currency of the Group is pounds sterling. For details of the basis of
consolidation see note 2.2.
2. Summary of significant accounting policies
2.1. Basis of preparation
The Group has presented its financial statements in accordance with
International Financial Reporting Standards (“IFRSs”), as endorsed by
the European Union, IFRS IC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. The financial statements
are prepared on a going concern basis under the historical cost
convention.
The preparation of financial statements in conformity with IFRS requires
the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the
amount, event or actions, actual results ultimately may differ from
those estimates.
The estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period,
or in a period of the revision and future periods if the revision
affects both current and future periods.
The principal accounting policies of the Group are set out below, and
have been applied consistently in dealing with items which are
considered material in relation to the Group’s financial statements.
The Company has taken advantage of the exemption provided in section 408
of the Companies Act 2006 not to publish its individual income statement
and related notes.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements
of the Company and its Subsidiaries drawn up to 31 December 2018.
Subsidiaries are all entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of
the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50% of
the voting power but is able to govern the financial and operating
policies by virtue of de-facto control.
De-facto control may arise in circumstances where the size of the
Group’s voting rights relative to the size and dispersion of holdings of
other shareholders give the Group the power to govern the financial and
operating policies, etc. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a
Subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The
Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts
of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred. If the business
combination is achieved in stages, the acquisition date carrying value
of the acquirer’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date; any gains or losses
arising from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an
asset or liability is recognised in accordance with IAS 39 in profit or
loss. Contingent consideration that is classified as equity is not
re-measured and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest
over the net identifiable assets acquired and liabilities assumed. If
this consideration is lower than the fair value of the net assets of the
Subsidiary acquired, the difference is recognised in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and losses
resulting from intercompany transactions that are recognised in assets
are also eliminated. Accounting policies of Subsidiaries have been
changed where necessary to ensure consistency with the policies adopted
by the Group.
2.3. Revenue recognition
On 1 January 2018, the Group adopted IFRS 15 ‘Revenue from Contracts
with Customers’, which did not result in a classification or measurement
adjustment to retained earnings on transition or a restatement of
comparative information.
Revenue comprises the fair value of the consideration received or
receivable for the sale of goods in the ordinary course of the Group’s
activities. Revenue is shown net of value added tax, returns, rebates
and discounts and after eliminating sales within the Group.
Revenue is derived principally from the sales of goods and in some
instances the goods are sold on Cost and Freight (CFR) or Cost,
Insurance and Freight (CIF) Incoterms. When goods are sold on a CFR or
CIF basis, the Group is responsible for providing these services
(shipping and insurance) to the customer, sometimes after the date at
which Anpario has lost control of the goods. Revenue is recognised when
the performance obligations have been satisfied, which is once control
of the goods has transferred from Anpario to the buyer. Anpario
considers revenue related to the shipping and insurance service element
of the contract to be immaterial and does not consider there to be
separate performance obligations.
2.4. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as
the Board.
2.5. Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into pounds sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are recorded at
the rate ruling at the date of the transaction. All differences are
included in the profit or loss for the period.
-
Functional and presentational currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (“functional currency”). The
consolidated financial statements are presented in pounds sterling,
which is the Company’s functional and presentational currency.
-
Transactions and balances
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the date of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period end
exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred
in equity as qualifying cash flow hedges and qualifying net investment
hedges.
Translation differences on non-monetary financial assets and liabilities
are reported as part of the fair value gain or loss. Translation
differences on non-monetary financial assets and liabilities such as
equities held at fair value through profit or loss are recognised as
part of the fair value gain or loss.
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
-
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.
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.
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.
Research expenditure is written off to the income statement in the year
in which it is incurred.
Where appropriate, once development work has been completed the asset(s)
generated may be reclassified to another intangible asset category and
be subjected to the relevant accounting treatment as defined in this
note.
Development costs that are directly attributable to the design and
testing of identifiable and unique products controlled by the Group are
recognised as intangible assets when the following criteria are met:
-
it is technically feasible to complete the product so that it will be
available for use;
-
management intends to complete the product and use or sell it;
-
there is an ability to use or sell the product;
-
it can be demonstrated how the product will generate probable future
economic benefits;
-
adequate technical, financial and other resources to complete the
development and to use or sell the product are available; and
-
the expenditure attributable to the product during its development can
be reliably measured.
Directly attributable costs that are capitalised as part of the product
include the development employee costs and an appropriate portion of
relevant overheads.
Brands are stated at cost less accumulated amortisation and impairment.
Brand names acquired in a business combination are recognised at fair
value based on an expected royalty value at the acquisition date. Useful
lives of brand names are estimated and amortised over 10 to 20 years,
except where they are deemed to have an indefinite life and consequently
are not amortised. Brands with an indefinite useful life are reviewed
for impairment at least annually or more frequently if events or changes
in circumstances indicate a potential impairment. However, they are
allocated to appropriate cash-generating units and subject to impairment
testing on an annual basis. Any impairment is recognised immediately
through the income statement and is not subsequently reversed.
Customer relationships 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.
2.7. Impairment of non-financial assets
The carrying amounts of the Group’s assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment,
if so the asset’s recoverable amount is estimated. The recoverable
amount is the higher of its fair value less costs to sell and its value
in use. For intangible assets that are not yet available for use,
goodwill or other intangible assets with an indefinite useful life, an
impairment test is performed at each balance sheet date.
In assessing value in use, the expected future cash flows from the asset
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. An impairment loss is recognised in the
income statement whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount.
A previously recognised impairment loss is reversed if the recoverable
amount increases as a result of a change in the estimates used to
determine the recoverable amount, but not to an amount higher than the
carrying amount that would have been determined (net of depreciation and
or amortisation) had no impairment loss been recognised in prior years.
For goodwill, a recognised impairment loss is not reversed.
2.8. Investments
Investments in Subsidiaries are stated at cost less provision for
diminution in value.
2.9. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment. Cost includes the original purchase price
of the asset and the costs attributable to bringing the asset to its
working condition for its intended use. Land is not depreciated.
Depreciation is provided at rates calculated to write off the cost less
estimated residual value of each asset over its expected useful life, as
follows:
Buildings
|
|
|
50 years or period of lease if shorter
|
Plant and machinery
|
|
|
3–10 years
|
Fixtures, fittings and equipment
|
|
|
3–10 years
|
Assets in the course of construction for production, supply or
administrative purposes, or for purposes not yet determined, are carried
at cost, less any recognised impairment loss. Cost includes professional
fees and, for qualifying assets, borrowing costs capitalised in
accordance with the Group’s accounting policy. Depreciation of these
assets, on the same basis as other assets, commences when the assets are
ready for their intended use.
The carrying amounts of the Group’s assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment
and an impairment loss is recognised in the income statement where
appropriate.
Gains and losses on disposals are determined by comparing the proceeds
with the carrying amount and are recognised within the income statement.
2.10. Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost is determined using the average cost method. The cost of finished
goods comprises raw materials, direct labour, other direct costs and
related production overheads. Net realisable value is the estimated
selling price in the ordinary course of business.
2.11. Trade receivables
Trade receivables are recognised and carried at original invoice amounts
less an allowance for any amount estimated to be uncollectable.
2.12. Trade payables
Trade payables are obligations to pay for goods or services that have
been acquired in the ordinary course of business from suppliers. Trade
payables are classified as current liabilities if payment is due within
one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as noncurrent liabilities.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits with
banks, other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts.
2.14. Derivative financial instruments
On 1 January 2018, the Group adopted IFRS 9 ‘Financial Instruments’,
which replaced IAS 39 ‘Financial Instruments: Recognition and
Measurement’. The new standard has been applied retrospectively, but did
not result in a material change the Group’s accounting policies or a
restatement or prior period financial assets and liabilities.
The Group designates certain hedging instruments, which include
derivatives, embedded derivatives and non-derivatives in respect of
foreign currency risk, as either fair value hedges, cash flow hedges, or
hedges of net investments in foreign operations. Hedges of foreign
exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the
relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the inception of the hedge
and on an ongoing basis, the Group documents whether the hedging
instrument is highly effective in offsetting changes in fair values or
cash flows of the hedged item.
The Group uses derivative financial instruments to manage certain
exposures to fluctuations in foreign currency exchange rates, these have
been designated as qualifying cash flow hedges.
IFRS 9 removes the requirement to demonstrate hedge effectiveness
between a range of 80-125% and instead requires that you can demonstrate
an economic relationship between the hedged item and hedging instrument.
The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated in reserves in equity. The gain or
loss relating to the ineffective portion is recognised immediately in
profit or loss within other income or other expense. Amounts accumulated
in equity are reclassified to profit or loss in the periods when the
hedged item affects profit or loss (for instance when the forecast sale
that is hedged takes place).
IFRS 9 also impacts the provision for trade receivables. The Group
always recognises lifetime ECL for trade receivables. The expected
credit losses on these financial assets are estimated using a provision
matrix based on the Group’s historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of
money where appropriate.
Lifetime ECL represents the expected credit losses that will result from
all possible default events over the expected life of a financial
instrument. In contrast, 12m ECL represents the portion of lifetime ECL
that is expected to result from default events on a financial instrument
that are possible within 12 months after the reporting date.
There has been no material impact on adoption of IFRS 9.
2.15. Leasing
The Group has entered into leases on certain property, plant and
equipment.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases are charged to the income statement
on a straight-line basis over the period of the lease.
2.16. Exceptional items
Exceptional items are disclosed separately in the financial statements
where it is necessary to do so to provide further understanding of the
financial performance of the Group. They are material items of income or
expense that have been shown separately due to the significance of their
nature or amount.
2.17. Taxation
The tax expense for the period comprises current and deferred tax. Tax
is recognised in the income statement, except to the extent that it
relates to items recognised in other comprehensive income or directly in
equity. In this case the tax is also recognised in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the
countries where the Company’s Subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill; deferred income tax is
not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates and laws that
have been enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on
investments in Subsidiaries, except where the timing of the reversal of
the temporary difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
2.18. Employee benefits
The Group issues equity-settled share-based payments and shares under
the Joint Share Ownership Plan (“JSOP”) and Company Share Option Plan
(“CSOP”) to certain employees. These are measured at fair value and
along with associated expenses are recognised as an expense in the
income statement with a corresponding increase (net of expenses) in
equity. The fair values of these payments are measured at the dates of
grant using appropriate option pricing models, taking into account the
terms and conditions upon which the awards are granted. The fair value
is recognised over the period during which employees become
unconditionally entitled to the awards subject to the Group’s estimate
of the number of awards which will lapse, either due to employees
leaving the Group prior to vesting or due to non-market based
performance conditions not being met.
The Group operates a number of equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The fair
value of the employee services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted:
-
including any market performance conditions (for example, an entity’s
share price);
-
excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time period); and
-
including the impact of any non-vesting conditions (for example, the
requirement for employees to save).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest. The
total expense is recognised over the vesting period, which is the period
over which all of the specified vesting conditions are to be satisfied.
In addition, in some circumstances employees may provide services in
advance of the grant date and therefore the grant date fair value is
estimated for the purposes of recognising the expense during the period
between service commencement period and grant date.
At the end of each reporting period, the Group revises its estimates of
the number of options that are expected to vest based on the non-market
vesting conditions. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
When the options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium.
The grant by the Company of options over its equity instruments to the
employees of Subsidiary undertakings in the Group is treated as a
capital contribution. The fair value of employee services received,
measured by reference to the grant date fair value, is recognised over
the vesting period as an increase to investment in Subsidiary
undertakings, with a corresponding credit to equity in the Parent entity
financial statements.
The social security contributions payable in connection with the grant
of the share options is considered an integral part of the grant itself,
and the charge will be treated as a cash-settled transaction.
The Group operates a defined contribution pension scheme and contributes
a percentage of salary to individual employee schemes. Pension
contributions are recognised as an expense as they fall due and the
Group has no further payment obligations once the contributions have
been paid.
2.19. Equity
Share capital is determined using the nominal value of Ordinary shares
that have been issued. Incremental costs directly attributable to the
issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
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.
The premium arising on the issue of consideration shares to acquire a
business is credited to the merger reserve.
Amounts arising on the restructuring of equity and reserves to protect
creditor interests are credited to the special reserve.
Exchange differences arising on the consolidation of foreign operations
are taken to the translation 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.
The JSOP shares reserve arises when the Company issues equity share
capital under the JSOP, which is held in trust by Anpario plc Employees’
Share Trust (“the Trust”). The interests of the Trust are consolidated
into the Group’s financial statements and the relevant amount treated as
a reduction in equity.
2.20. Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a
liability in the Group’s financial statements in the period in which the
dividends are approved by the Company’s shareholders.
2.21. Financial risk management
The Group is exposed to a number of financial risks, including credit
risk, liquidity risk, exchange rate risk and capital risk.
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from
customers and deposits with financial institutions. The Group’s exposure
to credit risk is influenced mainly by the individual characteristics of
each customer. The Group has an established credit policy under which
each new customer is analysed for creditworthiness before the Group’s
payment and delivery terms and conditions are offered. Where possible,
risk is minimised through settlement via letters of credit and purchase
of credit insurance. The Group’s investment policy restricts the
investment of surplus cash to interest bearing deposits with banks and
building societies with high credit ratings.
Liquidity risk 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.
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.
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. In
order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends payable to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
2.22. Key accounting judgements and critical accounting
estimates
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are:
-
Estimated impairment value of intangible assets
The Group tests
annually whether intangible assets have suffered any impairment.
Impairment provisions are recorded as applicable based on Directors’
estimates of recoverable values. Following the assessment of the
recoverable amount of goodwill and intangibles of the Group that
totalled £11.4m as per note 14 of the financial statements, the
directors consider the recoverable amount of goodwill and intangibles
to be supported by their value in use calculation. Budgets comprise
forecasts of revenue, staff costs and overheads based on current and
anticipated market conditions that have been considered and approved
by the Board. Whilst the Group is able to manage aspects of costs, the
revenue projections are inherently uncertain due to the short term
nature of business and unstable market conditions driven by external
factors such as African Swine Fever. The sensitivity analysis in
respect of the recoverable amount of goodwill is presented in note 11.
The Directors do not consider there to be any key judgements.
2.23. Impact of accounting standards and interpretations
IFRS 16 Leases: will have a material impact on the reported assets and
liabilities for the Group. The standard will be applied for accounting
periods starting after 1 January 2019, therefore the Group’s first
financial year that is impacted will be the year ending 31 December
2019. IFRS16 requires operating leases to be capitalised on the
statement of financial position. The Directors have performed a review
of the effect of IFRS 16 on the Group and the indicative impact is to
increase fixed assets by approximately £0.2m at 31 December 2018 being
the present value of future lease obligations with a corresponding
increase in liabilities of £0.2m. The impact on the profit before tax in
the Consolidated Income Statement is not expected to be material. The
cash flow impact is nil.
3. Segment information
All revenues from external customers are derived from the sale of goods
in the ordinary course of business to the agricultural markets and are
measured in a manner consistent with that in the income statement.
Management has determined the operating segments based on the reports
reviewed by the Board that are used to make strategic decisions. The
Board considers the business from a geographic perspective.
Management considers adjusted EBITDA to assess the performance of the
operating segments, which comprises profit before interest, tax,
depreciation and amortisation adjusted for share-based payments and
exceptional items.
Inter-segment revenue is charged at prevailing market prices or in
accordance with local transfer pricing regulations.
|
|
Americas
|
|
Asia
|
|
Europe
|
|
MEA
|
|
Head Office
|
|
Total
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segmental revenue
|
|
5,703
|
|
11,563
|
|
12,341
|
|
3,614
|
|
-
|
|
33,221
|
|
Inter-segment revenue
|
|
-
|
|
-
|
|
(4,944)
|
|
-
|
|
-
|
|
(4,944)
|
|
Revenue from external customers
|
|
5,703
|
|
11,563
|
|
7,397
|
|
3,614
|
|
-
|
|
28,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
1,444
|
|
3,776
|
|
2,971
|
|
1,097
|
|
(3,834)
|
|
5,454
|
|
Depreciation and amortisation
|
|
(7)
|
|
(12)
|
|
-
|
|
-
|
|
(852)
|
|
(871)
|
|
Net finance income
|
|
-
|
|
1
|
|
-
|
|
2
|
|
84
|
|
87
|
|
Share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(118)
|
|
(118)
|
|
Exceptional items
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Profit before income tax
|
|
1,437
|
|
3,765
|
|
2,971
|
|
1,099
|
|
(4,720)
|
|
4,552
|
|
Income tax
|
|
103
|
|
(72)
|
|
-
|
|
-
|
|
(583)
|
|
(552)
|
|
Profit for the period
|
|
1,540
|
|
3,693
|
|
2,971
|
|
1,099
|
|
(5,303)
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
38,001
|
|
38,001
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
(4,851)
|
|
(4,851)
|
|
|
|
Americas
|
|
Asia
|
|
Europe
|
|
MEA
|
|
Head Office
|
|
Total
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segmental revenue
|
|
6,013
|
|
12,461
|
|
10,967
|
|
3,984
|
|
-
|
|
33,425
|
|
Inter-segment revenue
|
|
-
|
|
-
|
|
(4,184)
|
|
-
|
|
-
|
|
(4,184)
|
|
Revenue from external customers
|
|
6,013
|
|
12,461
|
|
6,783
|
|
3,984
|
|
-
|
|
29,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
1,818
|
|
3,775
|
|
2,641
|
|
1,528
|
|
(4,690)
|
|
5,072
|
|
Depreciation and amortisation
|
|
(13)
|
|
(10)
|
|
-
|
|
-
|
|
(802)
|
|
(825)
|
|
Net finance (income)/expense
|
|
1
|
|
1
|
|
-
|
|
2
|
|
38
|
|
42
|
|
Share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(259)
|
|
(259)
|
|
Exceptional items
|
|
(36)
|
|
(254)
|
|
(3)
|
|
(42)
|
|
(292)
|
|
(627)
|
|
Profit before income tax
|
|
1,770
|
|
3,512
|
|
2,638
|
|
1,488
|
|
(6,005)
|
|
3,403
|
|
Income tax
|
|
17
|
|
(31)
|
|
-
|
|
(1)
|
|
(403)
|
|
(418)
|
|
Profit for the year
|
|
1,787
|
|
3,481
|
|
2,638
|
|
1,487
|
|
(6,408)
|
|
2,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
37,201
|
|
37,201
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
(6,679)
|
|
(6,679)
|
|
4. Profit for the year
Profit for the year has been arrived at after charging/(crediting) the
following items:
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
Cost of inventories recognised as an expense
|
|
11,510
|
|
11,693
|
|
Employee expenses (note 6)
|
|
5,588
|
|
6,087
|
|
Share-based payment charges
|
|
118
|
|
259
|
|
Depreciation of property, plant and equipment
|
|
319
|
|
327
|
|
Amortisation of intangible assets
|
|
552
|
|
498
|
|
Loss on disposal of tangible and intangible assets
|
|
13
|
|
19
|
|
Net foreign exchange (gains)/losses
|
|
(275)
|
|
642
|
|
Research and development expenditure
|
|
45
|
|
24
|
|
Acquisition, closure and restructuring
|
|
-
|
|
627
|
|
Other expenses
|
|
5,942
|
|
5,704
|
|
Total cost of sales, distribution and administrative expenses
|
|
23,812
|
|
25,880
|
|
In addition to research and development expenditure noted above, amounts
included in employee expenses above totalling £562,000 (2017: £610,000)
relate to our specialist technical team remuneration costs. The team
includes specialists in poultry, swine, ruminant & aquaculture species.
Out of this we have capitalised internal costs of £275,000 and expended
a further £453,000 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 auditors:
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
Fees payable to Company’s auditors for the audit of Parent Company
and consolidated financial statements |
|
58
|
|
57
|
|
|
|
|
|
|
|
|
|
|
Fees payable to Company’s auditors for other services:
|
|
|
|
|
|
The audit of Company Subsidiaries
|
|
8
|
|
-
|
|
Total fees payable to Company's auditors
|
|
66
|
|
57
|
|
6. Employees
Number of employees
The average monthly number of employees including Directors during the
year was:
|
|
2018
|
|
2017
|
|
Group
|
|
Number
|
|
Number
|
|
Production
|
|
25
|
|
25
|
|
Administration
|
|
25
|
|
25
|
|
Sales and Technical
|
|
62
|
|
61
|
|
Total average headcount
|
|
112
|
|
111
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Company
|
|
Number
|
|
Number
|
|
Production
|
|
25
|
|
25
|
|
Administration
|
|
18
|
|
18
|
|
Sales and Technical
|
|
34
|
|
40
|
|
Total average headcount
|
|
77
|
|
83
|
|
In addition to employees, Anpario also engages various sales and
technical specialists on a consultancy basis in several countries.
Employment costs
|
|
2018
|
|
2017
|
|
Group
|
|
£000
|
|
£000
|
|
Wages and salaries
|
|
4,808
|
|
5,412
|
|
Social security costs
|
|
590
|
|
530
|
|
Other pension costs
|
|
190
|
|
145
|
|
Share-based payment charges
|
|
118
|
|
259
|
|
Total employment costs
|
|
5,706
|
|
6,346
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Company
|
|
£000
|
|
£000
|
|
Wages and salaries
|
|
3,253
|
|
4,096
|
|
Social security costs
|
|
388
|
|
337
|
|
Other pension costs
|
|
152
|
|
132
|
|
Share-based payment charges
|
|
118
|
|
259
|
|
Total employment costs
|
|
3,911
|
|
4,824
|
|
7. Finance income
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
Interest receivable on short-term bank deposits
|
|
87
|
|
42
|
|
Total finance income
|
|
87
|
|
42
|
|
8. Earnings per share
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
Weighted average number of shares in issue (000s)
|
|
20,482
|
|
20,361
|
|
Adjusted for effects of dilutive potential Ordinary shares (000s)
|
|
1,121
|
|
709
|
|
Weighted average number for diluted earnings per share (000's)
|
|
21,603
|
|
21,070
|
|
|
|
|
|
|
|
Profit attributable to owners of the Parent (£000's)
|
|
4,000
|
|
2,985
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
19.53p
|
|
14.66p
|
|
Diluted earnings per share
|
|
18.52p
|
|
14.17p
|
|
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Adjusted profit attributable to owners of the Parent
|
|
|
|
|
|
Profit attributable to owners of the Parent
|
|
4,000
|
|
2,985
|
|
Exceptional items (net of tax)
|
|
-
|
|
544
|
|
Prior year tax adjustments
|
|
(129)
|
|
(121)
|
|
Adjusted profit attributable to owners of the Parent
|
|
3,871
|
|
3,408
|
|
|
|
|
|
|
|
Adjusted earnings per share
|
|
18.90p
|
|
16.74p
|
|
Diluted adjusted earnings per share
|
|
17.92p
|
|
16.17p
|
|
9. Dividend payable
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
2016 final dividend paid: 5.5p per 23p share
|
|
-
|
|
1,152
|
|
2017 interim dividend paid: 2.0p per 23p share
|
|
-
|
|
428
|
|
2017 final dividend paid: 6.0p per 23p share
|
|
965
|
|
-
|
|
2018 interim dividend paid: 2.5p per 23p share
|
|
467
|
|
-
|
|
|
|
1,432
|
|
1,580
|
|
A final dividend in respect of the year ended 31 December 2018 of 5.0p
per share, amounting to a total dividend of £1.5m, is to be proposed at
the Annual General Meeting on 27 June 2019. These financial statements
do not reflect this dividend payable.
10. Income tax expense
|
|
Group
|
|
|
|
2018
|
|
2017
|
|
Income tax expense charged to the Income Statement
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Current tax
|
|
|
|
|
|
Current tax on profits for the year
|
|
732
|
|
633
|
|
Adjustment for prior years
|
|
(99)
|
|
(137)
|
|
Total current tax
|
|
633
|
|
496
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
|
Origination and reversal of temporary differences
|
|
(50)
|
|
(94)
|
|
Adjustment for prior years
|
|
(31)
|
|
16
|
|
Total deferred tax (note 18)
|
|
(81)
|
|
(78)
|
|
|
|
|
|
|
|
Total income tax expense charged to the income statement
|
|
552
|
|
418
|
|
|
|
Group
|
|
|
|
2018
|
|
2017
|
|
Income tax expense credited directly to equity
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Current tax
|
|
|
|
|
|
Current tax on profits for the year
|
|
(15)
|
|
(4)
|
|
Total current tax
|
|
(15)
|
|
(4)
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
|
Origination and reversal of temporary differences
|
|
38
|
|
(68)
|
|
Adjustment for prior years
|
|
-
|
|
-
|
|
Total deferred tax (note 18)
|
|
38
|
|
(68)
|
|
|
|
|
|
|
|
Total income tax expense charged/(credited) directly to equity
|
|
23
|
|
(72)
|
|
Adjustments in respect of prior years represent the benefits from
enhanced research and development tax credits.
The tax on the Company’s profit before tax differs from the theoretical
amount that would arise using the standard domestic tax rate applicable
to profits of the Company as follows:
|
|
2018
|
|
2017
|
|
Factors affecting the charge for the year
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Profit before tax
|
|
4,552
|
|
3,403
|
|
|
|
|
|
|
|
Tax at the UK domestic rate of 19% (2017: 19.25%)
|
|
865
|
|
655
|
|
Tax effects of:
|
|
|
|
|
|
Non-deductible expenses
|
|
33
|
|
104
|
|
Losses not recognised for deferred tax
|
|
232
|
|
182
|
|
Research and development tax credits
|
|
(363)
|
|
(332)
|
|
Prior year tax adjustments
|
|
(129)
|
|
(121)
|
|
Tax credit recognised directly in equity
|
|
(23)
|
|
3
|
|
Other tax adjustments
|
|
(63)
|
|
(73)
|
|
Income tax expense
|
|
552
|
|
418
|
|
Corporation tax is calculated at 19% (2017: 19.25%) of the estimated
assessable profit for the year.
Further reductions to the UK tax rate were announced as part of the
Finance Act 2016. The tax rate reduced to 19.00% from 1 April 2017 and
will further reduce to 17.00% from 1 April 2020. These changes have been
enacted by the balance sheet date and considered when measuring the
deferred tax balances.
11. Intangible assets
|
|
Goodwill
|
|
Brands
|
|
Customer relationships
|
|
Patents, trademarks and registrations
|
|
Development costs
|
|
Software and Licenses
|
|
Total
|
|
Group
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
5,490
|
|
2,768
|
|
686
|
|
1,050
|
|
2,198
|
|
521
|
|
12,713
|
|
Additions
|
|
470
|
|
43
|
|
100
|
|
307
|
|
249
|
|
68
|
|
1,237
|
|
Disposal
|
|
-
|
|
(43)
|
|
-
|
|
(10)
|
|
-
|
|
-
|
|
(53)
|
|
Foreign exchange
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
(1)
|
|
As at 31 December 2017
|
|
5,960
|
|
2,768
|
|
786
|
|
1,346
|
|
2,447
|
|
589
|
|
13,896
|
|
Reclassifications
|
|
-
|
|
664
|
|
-
|
|
-
|
|
(664)
|
|
-
|
|
-
|
|
Additions
|
|
-
|
|
-
|
|
-
|
|
291
|
|
716
|
|
99
|
|
1,106
|
|
Foreign exchange
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
(1)
|
|
As at 31 December 2018
|
|
5,960
|
|
3,432
|
|
786
|
|
1,636
|
|
2,499
|
|
688
|
|
15,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation/impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
-
|
|
227
|
|
365
|
|
232
|
|
1,661
|
|
96
|
|
2,581
|
|
Charge for the year
|
|
-
|
|
83
|
|
78
|
|
166
|
|
97
|
|
74
|
|
498
|
|
Disposal
|
|
-
|
|
-
|
|
-
|
|
(3)
|
|
-
|
|
-
|
|
(3)
|
|
As at 31 December 2017
|
|
-
|
|
310
|
|
443
|
|
395
|
|
1,758
|
|
170
|
|
3,076
|
|
Charge for the year
|
|
-
|
|
84
|
|
79
|
|
240
|
|
65
|
|
84
|
|
552
|
|
As at 31 December 2018
|
|
-
|
|
394
|
|
522
|
|
635
|
|
1,823
|
|
254
|
|
3,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2018
|
|
5,960
|
|
3,038
|
|
264
|
|
1,001
|
|
676
|
|
434
|
|
11,373
|
|
As at 31 December 2017
|
|
5,960
|
|
2,458
|
|
343
|
|
951
|
|
689
|
|
419
|
|
10,820
|
|
As at 1 January 2017
|
|
5,490
|
|
2,541
|
|
321
|
|
818
|
|
537
|
|
425
|
|
10,132
|
|
The charge above includes £nil (2016: £571,000) in respect of
exceptional impairment of development expenditure.
The reclassification to Brands represents newly generated Product Brands
from Development projects.
|
|
Goodwill
|
|
Brands
|
|
Customer relationships
|
|
Patents, trademarks and registrations
|
|
Development costs
|
|
Software and Licenses
|
|
Total
|
|
Company
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
5,490
|
|
2,679
|
|
559
|
|
1,041
|
|
2,198
|
|
521
|
|
12,488
|
|
Additions
|
|
-
|
|
-
|
|
-
|
|
305
|
|
249
|
|
68
|
|
622
|
|
Disposal
|
|
-
|
|
-
|
|
-
|
|
(10)
|
|
-
|
|
-
|
|
(10)
|
|
As at 31 December 2017
|
|
5,490
|
|
2,679
|
|
559
|
|
1,336
|
|
2,447
|
|
589
|
|
13,100
|
|
Reclassifications
|
|
-
|
|
664
|
|
-
|
|
-
|
|
(664)
|
|
-
|
|
-
|
|
Additions
|
|
-
|
|
-
|
|
-
|
|
289
|
|
716
|
|
99
|
|
1,104
|
|
As at 31 December 2018
|
|
5,490
|
|
3,343
|
|
559
|
|
1,625
|
|
2,499
|
|
688
|
|
14,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation/impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
-
|
|
138
|
|
238
|
|
232
|
|
1,661
|
|
96
|
|
2,365
|
|
Charge for the year
|
|
-
|
|
83
|
|
69
|
|
166
|
|
97
|
|
74
|
|
489
|
|
Disposal
|
|
-
|
|
-
|
|
-
|
|
(3)
|
|
-
|
|
-
|
|
(3)
|
|
As at 31 December 2017
|
|
-
|
|
221
|
|
307
|
|
395
|
|
1,758
|
|
170
|
|
2,851
|
|
Charge for the year
|
|
-
|
|
84
|
|
69
|
|
240
|
|
65
|
|
84
|
|
542
|
|
As at 31 December 2018
|
|
-
|
|
305
|
|
376
|
|
635
|
|
1,823
|
|
254
|
|
3,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2018
|
|
5,490
|
|
3,038
|
|
183
|
|
990
|
|
676
|
|
434
|
|
10,811
|
|
As at 31 December 2017
|
|
5,490
|
|
2,458
|
|
252
|
|
941
|
|
689
|
|
419
|
|
10,249
|
|
As at 1 January 2017
|
|
5,490
|
|
2,541
|
|
321
|
|
809
|
|
537
|
|
425
|
|
10,123
|
|
The reclassification to Brands represents newly generated Product Brands
from Development projects.
Goodwill is allocated to the Group’s cash-generating units (“CGU’s”)
identified according to trading brand. The recoverable amount of a CGU
is determined based on value-in-use calculations.
These calculations use pre-tax cash flow projections based on financial
budgets approved by management covering a five-year period. Cash flows
beyond a five-year period are extrapolated using estimated growth rates
of 2.5% per annum (2017: 2.5%).
The discount rate used of 12% (2017: 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 10.5 percentage points to a negative growth of minus 8
percentage points would cause the carrying value of goodwill to equal
its recoverable amount.
Goodwill is allocated as follows:
Goodwill
|
|
|
|
|
|
|
£000
|
Acquisition of Kiotechagil operations
|
|
|
|
|
|
3,552
|
Acquisition of Optivite operations
|
|
|
|
|
|
592
|
Acquisition of Meriden operations
|
|
|
|
|
|
1,346
|
Acquisition of Cobbett business
|
|
|
|
|
|
470
|
As at 31 December 2017 and 31 December 2018
|
|
|
|
|
5,960
|
Brands relate to the fair value of the Optivite brands acquired in the
year ended 31 December 2009 and Meriden brands acquired in the year
ended 31 December 2012. These are deemed to have between 20 years and an
indefinite useful life due to the inherent intellectual property
contained in the products, the longevity of the product lives and global
market opportunities. Brands with indefinite useful lives are assessed
for impairment with goodwill in the annual impairment review as
described above.
Amortisation/Impairment of intangible assets is included in
administrative expenses, totalling £552,000 (2017: £498,000) for the
Group and £542,000 (2017: £489,000) for the Company.
12. Property, plant and equipment
|
|
Land and buildings
|
|
Plant and machinery
|
|
Fixtures, fittings and equipment
|
|
Assets in the course of construction
|
|
Total
|
|
Group
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
2,180
|
|
1,904
|
|
545
|
|
101
|
|
4,730
|
|
Transfer of assets in construction
|
|
-
|
|
178
|
|
-
|
|
(178)
|
|
-
|
|
Additions
|
|
1
|
|
39
|
|
34
|
|
77
|
|
151
|
|
Disposals
|
|
-
|
|
(29)
|
|
(148)
|
|
-
|
|
(177)
|
|
Foreign exchange
|
|
-
|
|
(4)
|
|
(1)
|
|
|
|
(5)
|
|
As at 31 December 2017
|
|
2,181
|
|
2,088
|
|
430
|
|
-
|
|
4,699
|
|
Additions
|
|
-
|
|
82
|
|
59
|
|
554
|
|
695
|
|
Disposals
|
|
-
|
|
(33)
|
|
(1)
|
|
-
|
|
(34)
|
|
As at 31 December 2018
|
|
2,181
|
|
2,137
|
|
488
|
|
554
|
|
5,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
276
|
|
583
|
|
332
|
|
-
|
|
1,191
|
|
Charge for the year
|
|
32
|
|
214
|
|
81
|
|
-
|
|
327
|
|
Disposals
|
|
-
|
|
(22)
|
|
(142)
|
|
-
|
|
(164)
|
|
Reclassification
|
|
-
|
|
3
|
|
(3)
|
|
-
|
|
-
|
|
Foreign exchange
|
|
-
|
|
(2)
|
|
-
|
|
-
|
|
(2)
|
|
As at 31 December 2017
|
|
308
|
|
776
|
|
268
|
|
-
|
|
1,352
|
|
Charge for the year
|
|
32
|
|
217
|
|
70
|
|
-
|
|
319
|
|
Disposals
|
|
-
|
|
(20)
|
|
(1)
|
|
-
|
|
(21)
|
|
As at 31 December 2018
|
|
340
|
|
973
|
|
337
|
|
-
|
|
1,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2018
|
|
1,841
|
|
1,164
|
|
151
|
|
554
|
|
3,710
|
|
As at 31 December 2017
|
|
1,873
|
|
1,312
|
|
162
|
|
-
|
|
3,347
|
|
As at 1 January 2017
|
|
1,904
|
|
1,321
|
|
213
|
|
101
|
|
3,539
|
|
|
|
Land and buildings
|
|
Plant and machinery
|
|
Fixtures, fittings and equipment
|
|
Assets in the course of construction
|
|
Total
|
|
Company
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
2,180
|
|
1,846
|
|
514
|
|
101
|
|
4,641
|
|
Additions
|
|
1
|
|
39
|
|
29
|
|
77
|
|
146
|
|
Transfer of assets in construction
|
|
-
|
|
178
|
|
-
|
|
(178)
|
|
-
|
|
Disposals
|
|
-
|
|
(29)
|
|
(148)
|
|
-
|
|
(177)
|
|
As at 31 December 2017
|
|
2,181
|
|
2,034
|
|
395
|
|
-
|
|
4,610
|
|
Additions
|
|
-
|
|
82
|
|
56
|
|
554
|
|
692
|
|
As at 31 December 2018
|
|
2,181
|
|
2,116
|
|
451
|
|
554
|
|
5,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation/impairment
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2017
|
|
276
|
|
562
|
|
329
|
|
-
|
|
1,167
|
|
Charge for the year
|
|
32
|
|
201
|
|
74
|
|
-
|
|
307
|
|
Disposals
|
|
-
|
|
(22)
|
|
(142)
|
|
-
|
|
(164)
|
|
As at 31 December 2017
|
|
308
|
|
741
|
|
261
|
|
-
|
|
1,310
|
|
Charge for the year
|
|
32
|
|
210
|
|
61
|
|
-
|
|
303
|
|
As at 31 December 2018
|
|
340
|
|
951
|
|
322
|
|
-
|
|
1,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2018
|
|
1,841
|
|
1,165
|
|
129
|
|
554
|
|
3,689
|
|
As at 31 December 2017
|
|
1,873
|
|
1,293
|
|
134
|
|
-
|
|
3,300
|
|
As at 1 January 2017
|
|
1,904
|
|
1,284
|
|
185
|
|
101
|
|
3,474
|
|
Held within land and buildings is an amount of £700,000 (2016: £700,000)
in respect of non-depreciable land.
13. Investment in subsidiaries
Company
|
|
|
|
Unlisted investments
|
|
|
|
|
£000
|
Cost
|
|
|
|
|
As at 1 January 2017
|
|
|
|
7,181
|
Investment in Subsidiaries
|
|
|
|
828
|
As at 31 December 2017 and 31 December 2018
|
|
|
|
8,009
|
|
|
|
|
|
Provisions for diminution in value
|
|
|
|
|
As at 1 January 2017, 31 December 2017 and 31 December 2018
|
|
|
|
2,616
|
|
|
|
|
|
Net book value
|
|
|
|
|
As at 31 December 2017 and 31 December 2018
|
|
|
|
5,393
|
As at 1 January 2017
|
|
|
|
4,565
|
The increase in investment in 2017 relates partly to the acquisition of
the business of Cobbett Pty Ltd and the remainder in new subsidiaries
PT. Anpario Biotech Indonesia and Anpario (Thailand) Ltd.
Full list of investments
The Group holds share capital in the following Companies which are
accounted for as Subsidiaries.
Company
|
|
Country of registration or incorporation
|
|
Principal activity
|
|
Percentage held
|
|
Shares held Class
|
|
|
|
|
|
|
|
|
|
|
|
Directly held
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anpario (Shanghai) Biotech Co. , Ltd.
|
|
China
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Room 703, No. 777 Zhao Jia Bang Road,
|
|
|
|
Services
|
|
|
|
|
|
Shanghai, China
|
|
|
|
|
|
|
|
|
|
Anpario Inc
|
|
US
|
|
Technology
|
|
100
|
|
Ordinary
|
|
104 South Main Street, Greenville, SC 29601,
|
|
|
|
Services
|
|
|
|
|
|
United States of America
|
|
|
|
|
|
|
|
|
|
Anpario Pty Ltd
|
|
Australia
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Level 17, 383 Kent Street, Sydney, NSW, 2000
|
|
|
|
Services
|
|
|
|
|
|
Anpario Saúde e Nutriç�£o Animal Ltda
|
|
Brazil
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Rua Brigadeiro Henrique Fontenelle, 745 - room 4,
|
|
|
|
Services
|
|
|
|
|
|
Parque S�£o Domingos, S�£o Paulo, 05125-000, Brazil
|
|
|
|
|
|
|
|
|
|
Anpario (Thailand) Ltd
|
|
Thailand
|
|
Technology
|
|
100
|
|
Ordinary
|
|
65/152 Chamnan Phenjati Building Floor 18, Rama
|
|
|
|
Services
|
|
|
|
|
|
9 Road, Huaykwang Sub-district, Huaykwang District,
|
|
|
|
|
|
|
|
|
|
Bangkok 10310
|
|
|
|
|
|
|
|
|
|
PT. Anpario Biotech Indonesia
|
|
Indonesia
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Gedung 18 Office Park Iantai Mezz- unit F2, Jl. , TB
|
|
|
|
Services
|
|
|
|
|
|
Simatupang Kav. 18, Jakarta 12520
|
|
|
|
|
|
|
|
|
|
Anpario Malaysia Sdn. Bhd.
|
|
Malaysia
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Real Time Corporate Services Sdn. Bhd. Unit C-12-4, Level 12,
|
|
|
|
Services
|
|
|
|
|
|
Block C, Megan Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur
|
|
|
|
|
|
|
|
|
|
Anpario Latinoamerica SA de CV
|
|
Mexico
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Av. Technologico Sur # 134 cas 4, Colonia Moderna,
|
|
|
|
Services
|
|
|
|
|
|
CP 76030, Queretaro, Mexico
|
|
|
|
|
|
|
|
|
|
The following Companies are all directly held, with 100% holding of
Ordinary shares, registered in England and Wales and dormant. The
registered address for all of these Companies is Unit 5 Manton Wood
Enterprise Park, Worksop, Nottinghamshire, S80 2RS, United Kingdom.
Anpario UK Limited
Meriden Animal Health Limited
Orego-Stim
Limited
Optivite Limited
Optivite International Limited
Aquatice
Limited
Agil Limited
Kiotechagil Limited
Kiotech Limited
Indirectly held
Meriden (Shanghai) Animal Health Co. , Ltd.
|
|
China
|
|
Technology
|
|
100
|
|
Ordinary
|
|
Room 703, No. 777 Zhao Jia Bang Road,
|
|
|
|
Services
|
|
|
|
|
|
Shanghai, China
|
|
|
|
|
|
|
|
|
|
Optivite Animal Nutrition Private Limited
|
|
India
|
|
Technology
|
|
100
|
|
Ordinary
|
|
1103-04 Windsor Apartment, T-28, Shastri
|
|
|
|
Services
|
|
|
|
|
|
Apartment, Andheri - West Mumbai Mumbai City
|
|
|
|
|
|
|
|
|
|
MH 400053, India
|
|
|
|
|
|
|
|
|
|
Optivite Latinoamericana SA de CV
|
|
Mexico
|
|
Technology
|
|
100
|
|
Ordinary
|
|
20 Boulevard de la Industria, Cuautitlan-Izcalli,
|
|
|
|
Services
|
|
|
|
|
|
Mexico, 54716, Mexico
|
|
|
|
|
|
|
|
|
|
Optivite SA (Proprietary) Limited
|
|
South Africa
|
|
Technology
|
|
100
|
|
Ordinary
|
|
PO Box 578, Cape Town 8000, South Africa
|
|
|
|
Services
|
|
|
|
|
|
The Group has no associates or joint-ventures.
14. Inventories
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Raw materials and consumables
|
|
1,933
|
|
1,689
|
|
1,933
|
|
1,689
|
|
Finished goods and goods for resale
|
|
2,098
|
|
1,399
|
|
525
|
|
339
|
|
Total inventories
|
|
4,031
|
|
3,088
|
|
2,458
|
|
2,028
|
|
The cost of inventories recognised as expense and included in 'cost of
sales' amounted to £11,510,000 (2017: £11,693,000) for the Group and
£11,686,000 (2017: £11,882,000) for the Company.
15. Trade and other receivables
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Trade receivables
|
|
4,871
|
|
5,282
|
|
3,757
|
|
4,605
|
|
Less: provision for impairment of trade receivables
|
|
(247)
|
|
(82)
|
|
(37)
|
|
(82)
|
|
Trade receivables - net
|
|
4,624
|
|
5,200
|
|
3,720
|
|
4,523
|
|
Receivables from Subsidiary undertakings
|
|
-
|
|
-
|
|
7,277
|
|
5,108
|
|
Other receivables
|
|
52
|
|
75
|
|
28
|
|
8
|
|
Taxes
|
|
276
|
|
244
|
|
86
|
|
86
|
|
Prepayments and accrued income
|
|
376
|
|
201
|
|
360
|
|
197
|
|
Total trade and other receivables
|
|
5,328
|
|
5,720
|
|
11,471
|
|
9,922
|
|
The other classes within trade and other receivables do not contain
impaired assets.
The ageing analysis of net trade receivables is as follows:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Up to 3 months
|
|
4,391
|
|
4,639
|
|
3,534
|
|
4,007
|
|
3 to 6 months
|
|
232
|
|
518
|
|
185
|
|
516
|
|
Over 6 months
|
|
1
|
|
43
|
|
1
|
|
-
|
|
Trade receivables - net
|
|
4,624
|
|
5,200
|
|
3,720
|
|
4,523
|
|
As at 31 December 2018 trade receivables of £670,000 (2017: £566,000)
for the Group and £525,000 (2017: £456,000) for the Company were past
due but not impaired. These relate to longstanding customers where there
is no recent history of default. The ageing analysis of these
receivables is as follows:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Up to 3 months
|
|
670
|
|
655
|
|
525
|
|
456
|
|
3 to 6 months
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Over 6 months
|
|
-
|
|
43
|
|
-
|
|
-
|
|
|
|
670
|
|
698
|
|
525
|
|
456
|
|
As at 31 December 2018 trade receivables of £247,000 (2017: £82,000) for
the Group and £37,000 (2017: £82,000) for the Company were impaired and
fully provided for. The individually impaired receivables mainly related
to historic debt for which recovery is still being sought. The Group
mitigates its exposure to credit risk by extensive use of credit
insurance and letters of credit to remit amounts due. The ageing of
these trade receivables is as follows:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Up to 3 months
|
|
33
|
|
-
|
|
24
|
|
-
|
|
3 to 6 months
|
|
78
|
|
-
|
|
-
|
|
-
|
|
Over 6 months
|
|
136
|
|
82
|
|
13
|
|
82
|
|
|
|
247
|
|
82
|
|
37
|
|
82
|
|
Movement on the Group provision for impairment of trade receivables as
follows:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
As at 1 January
|
|
82
|
|
282
|
|
82
|
|
282
|
|
Provisions for receivables created
|
|
234
|
|
14
|
|
24
|
|
14
|
|
Amounts written off as unrecoverable
|
|
(69)
|
|
(109)
|
|
(69)
|
|
(109)
|
|
Amounts recovered during the year
|
|
-
|
|
(105)
|
|
-
|
|
(105)
|
|
As at 31 December
|
|
247
|
|
82
|
|
37
|
|
82
|
|
The carrying amounts of net trade and other receivables are denominated
in the following currencies:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Pounds sterling
|
|
1,598
|
|
1,679
|
|
1,598
|
|
1,679
|
|
Euros
|
|
603
|
|
585
|
|
603
|
|
585
|
|
US dollars
|
|
1,796
|
|
2,521
|
|
1,519
|
|
2,259
|
|
Other currencies
|
|
627
|
|
415
|
|
-
|
|
-
|
|
As at 31 December
|
|
4,624
|
|
5,200
|
|
3,720
|
|
4,523
|
|
16. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits held by
Group companies. The carrying amount of these assets approximates to
their fair value.
17. Trade and other payables
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Trade payables
|
|
2,374
|
|
2,601
|
|
2,296
|
|
2,516
|
|
Amounts due to subsidiary undertakings
|
|
-
|
|
-
|
|
4,075
|
|
4,075
|
|
Taxes and social security costs
|
|
119
|
|
129
|
|
103
|
|
103
|
|
Other payables
|
|
144
|
|
312
|
|
54
|
|
202
|
|
Accruals and deferred income
|
|
789
|
|
2,306
|
|
497
|
|
1,833
|
|
Total trade and other payables
|
|
3,426
|
|
5,348
|
|
7,025
|
|
8,729
|
|
Included within ‘Other payables’ above is acquisition related contingent
consideration, as outlined below. During the year a payment of £132,000
was made to the vendors of the business of Cobbett Pty Ltd, in respect
of the contingent consideration arising on acquisition. The liability
balance of £20,000, net of the payment made, has been released as it was
not due per the terms of the sale agreement.
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Arising on the acquisition of the business of Cobbett Pty Ltd
|
|
-
|
|
152
|
|
-
|
|
152
|
|
Total contingent consideration
|
|
-
|
|
152
|
|
-
|
|
152
|
|
18. Deferred income tax
|
|
|
|
|
2018
|
2017
|
Group
|
|
|
|
|
£000
|
£000
|
As at 1 January
|
|
|
|
|
597
|
728
|
Income statement credit (note 10)
|
|
|
|
|
(81)
|
(78)
|
Deferred tax charged/(credited) directly to equity
|
|
|
|
|
38
|
(68)
|
Foreign exchange
|
|
|
|
|
(14)
|
15
|
As at 31 December
|
|
|
|
|
540
|
597
|
Deferred tax liabilities/(assets)
|
|
Accelerated tax allowances
|
|
Fair value gains
|
|
Cashflow hedge
|
|
Losses
|
|
Other timing differences
|
|
Total
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
As at 1 January 2017
|
|
613
|
|
401
|
|
-
|
|
(170)
|
|
(116)
|
|
728
|
|
Income statement (credited)/charged (note 10)
|
|
(58)
|
|
60
|
|
-
|
|
(17)
|
|
(63)
|
|
(78)
|
|
Deferred tax charged/(credited) directly to equity
|
|
-
|
|
-
|
|
28
|
|
-
|
|
(96)
|
|
(68)
|
|
Foreign exchange
|
|
-
|
|
-
|
|
-
|
|
15
|
|
-
|
|
15
|
|
As at 31 December 2017
|
|
555
|
|
461
|
|
28
|
|
(172)
|
|
(275)
|
|
597
|
|
Income statement credit (note 10)
|
|
78
|
|
87
|
|
-
|
|
(103)
|
|
(143)
|
|
(81)
|
|
Deferred tax charged directly to equity
|
|
-
|
|
-
|
|
(27)
|
|
-
|
|
66
|
|
39
|
|
Foreign exchange
|
|
-
|
|
-
|
|
-
|
|
(14)
|
|
-
|
|
(14)
|
|
As at 31 December 2018
|
|
633
|
|
548
|
|
1
|
|
(289)
|
|
(352)
|
|
541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classified as:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax asset
|
|
|
|
|
|
|
|
|
|
|
|
(641)
|
|
Deferred income tax liability
|
|
|
|
|
|
|
|
|
|
|
|
1,182
|
|
Included in 'Other timing differences' above is £253,000 (2017:
£112,000) that relates to the tax impact of the elimination of
intercompany unrealised profit held in inventory.
Further reductions to the UK tax rate were announced as part of the
Finance Act 2016. The tax rate reduced to 19% from 1 April 2017 and will
further reduce to 17% from 1 April 2020. These changes have been enacted
by the balance sheet date and considered when measuring the deferred tax
balances.
A deferred tax asset has been recognised for US tax losses carried
forward on the grounds that sufficient future taxable profits are
forecast to be realised. No deferred tax asset is recognised in respect
of losses incurred in other overseas subsidiaries, due to the
uncertainty surrounding the timing of the utilisation of those losses.
|
|
|
|
|
2018
|
2017
|
Company
|
|
|
|
|
£000
|
£000
|
As at 1 January
|
|
|
|
|
880
|
964
|
Income statement credit
|
|
|
|
|
164
|
(16)
|
Deferred tax (credited)/charged directly to equity
|
|
|
|
|
39
|
(68)
|
As at 31 December
|
|
|
|
|
1,083
|
880
|
Deferred tax liabilities/(assets)
|
|
Accelerated tax allowances
|
|
Fair value gains
|
|
Cashflow hedge
|
|
Losses
|
|
Other timing differences
|
|
Total
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
As at 1 January 2017
|
|
613
|
|
401
|
|
-
|
|
-
|
|
(50)
|
|
964
|
|
Income statement (credit)/charge
|
|
(58)
|
|
60
|
|
-
|
|
-
|
|
(18)
|
|
(16)
|
|
Deferred tax charged/(credited) directly to equity
|
|
-
|
|
-
|
|
28
|
|
-
|
|
(96)
|
|
(68)
|
|
As at 31 December 2017
|
|
555
|
|
461
|
|
28
|
|
-
|
|
(164)
|
|
880
|
|
Income statement charge/(credit)
|
|
78
|
|
87
|
|
-
|
|
-
|
|
(1)
|
|
164
|
|
Deferred tax charged/credited directly to equity
|
|
-
|
|
-
|
|
(27)
|
|
-
|
|
66
|
|
39
|
|
As at 31 December 2018
|
|
633
|
|
548
|
|
1
|
|
-
|
|
(99)
|
|
1,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classified as:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax asset
|
|
|
|
|
|
|
|
|
|
|
|
(99)
|
|
Deferred income tax liability
|
|
|
|
|
|
|
|
|
|
|
|
1,182
|
|
19. Capital commitments
The Group had authorised capital commitments as at 31 December 2018 as
follows:
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
373
|
|
-
|
|
Total capital commitments
|
|
373
|
|
-
|
|
20. Financial commitments
At 31 December 2018 the Group had future aggregate minimum lease
payments under non-cancellable operating leases as follows:
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Less than one year
|
|
40
|
|
63
|
|
Between one and five years
|
|
13
|
|
63
|
|
Greater than five years
|
|
-
|
|
-
|
|
Total financial commitments
|
|
53
|
|
126
|
|
21. Called up share capital
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
Authorised
|
|
|
|
|
|
86,956,521 Ordinary shares of 23p each
|
|
20,000
|
|
20,000
|
|
1,859,672 'A' Shares of 99p each
|
|
1,841
|
|
1,841
|
|
|
|
21,841
|
|
21,841
|
|
|
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
23,261,362 (2017: 23,006,276) Ordinary shares of 23p each
|
|
5,350
|
|
5,291
|
|
Options exercised Ordinary shares of 23p each
|
|
10
|
|
59
|
|
23,303,215 (2017: 23,261,362) Ordinary shares of 23p each
|
|
5,360
|
|
5,350
|
|
During the year 41,853 (2017: 255,086) Ordinary shares of 23 pence each
were issued pursuant to employee share plans.
22. Retained earnings
|
|
Group
|
|
Company
|
|
|
|
£000
|
|
£000
|
|
As at 1 January 2017
|
|
18,843
|
|
18,560
|
|
Profit for the year
|
|
2,985
|
|
3,988
|
|
Dividends
|
|
(1,580)
|
|
(1,580)
|
|
As at 31 December 2017
|
|
20,248
|
|
20,968
|
|
Profit for the year
|
|
4,000
|
|
5,097
|
|
Dividends
|
|
(1,432)
|
|
(1,432)
|
|
As at 31 December 2018
|
|
22,816
|
|
24,633
|
|
23. Other reserves
Other reserves comprise:
|
|
Group
|
|
Company
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
£000
|
|
Treasury shares
|
|
(185)
|
|
(185)
|
|
(185)
|
|
(185)
|
|
Joint Share Ownership Plan
|
|
(7,210)
|
|
(7,210)
|
|
(7,210)
|
|
(7,210)
|
|
Merger reserve
|
|
228
|
|
228
|
|
228
|
|
228
|
|
Unrealised reserve
|
|
-
|
|
-
|
|
2,021
|
|
2,021
|
|
Share-based payment reserve
|
|
1,857
|
|
1,713
|
|
1,857
|
|
1,713
|
|
Cash flow hedge
|
|
(8)
|
|
176
|
|
(8)
|
|
176
|
|
Translation reserve
|
|
(131)
|
|
(128)
|
|
-
|
|
-
|
|
|
|
(5,449)
|
|
(5,406)
|
|
(3,297)
|
|
(3,257)
|
|
24. Share-based payments
Movements in the number of share options outstanding are as follows:
|
|
|
|
Weighted average exercise price
|
|
Shares 2018
|
|
Weighted average exercise price
|
|
Shares 2017
|
|
|
|
|
|
(p)
|
|
000
|
|
(p)
|
|
000
|
|
Outstanding at 1 January
|
|
|
|
238
|
|
749
|
|
227
|
|
793
|
|
Granted during the year
|
|
|
|
376
|
|
95
|
|
337
|
|
73
|
|
Lapsed during the year
|
|
|
|
343
|
|
(9)
|
|
232
|
|
(87)
|
|
Exercised during the year
|
|
|
|
252
|
|
(42)
|
|
205
|
|
(30)
|
|
Outstanding at 31 December
|
|
|
|
253
|
|
793
|
|
238
|
|
749
|
|
Exercisable at 31 December
|
|
|
|
|
|
419
|
|
|
|
323
|
|
Share options outstanding at the end of the year have the following
expiry dates and weighted average exercise prices:
|
|
|
|
Weighted average exercise price
|
|
Shares 2018
|
|
Weighted average exercise price
|
|
Shares 2017
|
|
|
|
|
|
(p)
|
|
000
|
|
(p)
|
|
000
|
|
2020
|
|
|
|
224
|
|
78
|
|
224
|
|
78
|
|
2021
|
|
|
|
334
|
|
43
|
|
334
|
|
45
|
|
2022
|
|
|
|
-
|
|
-
|
|
89
|
|
3
|
|
2023
|
|
|
|
159
|
|
160
|
|
159
|
|
160
|
|
2024
|
|
|
|
244
|
|
144
|
|
244
|
|
160
|
|
2025
|
|
|
|
287
|
|
115
|
|
285
|
|
135
|
|
2026
|
|
|
|
238
|
|
140
|
|
238
|
|
140
|
|
2027
|
|
|
|
350
|
|
69
|
|
343
|
|
28
|
|
2028
|
|
|
|
402
|
|
44
|
|
-
|
|
-
|
|
|
|
|
|
|
|
793
|
|
|
|
749
|
|
Anpario have applied a limit to the total number of new shares which may
be issued under awards under the CSOP, SAYE, JSOP and under any other
incentive plans which might involve the issue of new shares. That limit
will be the total number of new shares over which future awards may be
made, when added to the total number of shares issued and issuable under
awards granted on 16 September 2016 and any awards which are outstanding
as at that date shall not exceed 16.3% of the total of the number of
shares in issue from time to time.
During the year options totalling 94,500 (2017: 72,754) were awarded
under a number of incentive schemes listed in the schedule below and
41,853 (2017: 30,068) options were exercised.
The fair value of services received in return for share options granted
and the shares which have been issued into the joint beneficial
ownership of the participating Executive Directors and the Trustee of
The Anpario plc Employees’ Share Trust is calculated based on
appropriate valuation models.
The expense is apportioned over the vesting period and is based on the
number of financial instruments which are expected to vest and the fair
value of those financial instruments at the date of the grant. The
charge for the year in respect of share options granted and associated
expenses amounts to £259,000 (2016: £210,000) of which £70,000 (2016:
£10,000) is related to professional fees that have been expensed during
the year.
The weighted average fair value of options granted during the year was
determined based on the following assumptions using the Black-Scholes
pricing model.
Plan
|
|
Unapproved
|
|
CSOP
|
|
Unapproved
|
|
CSOP
|
|
Grant date
|
|
04-Aug
|
|
02-Jan
|
|
02-Jan
|
|
05-Apr
|
|
Number of options granted (000)
|
|
50
|
|
8
|
|
10
|
|
7
|
|
Grant price (p)
|
|
352.5
|
|
397.5
|
|
397.5
|
|
428.0
|
|
Exercise price (p)
|
|
352.5
|
|
397.5
|
|
397.5
|
|
428.0
|
|
Carrying cost (per annum)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Vesting period (years)
|
|
3
|
|
3
|
|
5
|
|
3
|
|
Option expiry (years)
|
|
10
|
|
10
|
|
10
|
|
10
|
|
Expected volatility of the share price
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
|
Dividends expected on the shares
|
|
1.99%
|
|
1.76%
|
|
1.76%
|
|
1.64%
|
|
Risk-free rate
|
|
0.27%
|
|
0.59%
|
|
0.82%
|
|
0.90%
|
|
Fair value (p)
|
|
38.6
|
|
46.3
|
|
57.6
|
|
52.3
|
|
25. Exceptional Items
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Acquisition costs
|
|
-
|
|
112
|
|
Closure and restructuring costs
|
|
-
|
|
515
|
|
|
|
-
|
|
627
|
|
The implementation of strategic growth initiatives, including putting in
place a new senior management structure and new direct investment in
operations in key target markets, has resulted in non-recurring and
exceptional costs of £nil (2017: £627,000). In view of the nature and
size of these items, they have not been included in the adjusted profit
measures and neither have legal costs incurred in successful and
abortive acquisitions.
26. Related party transactions
Group and Company
The following transactions were carried out with related parties:
P A Lawrence, Chairman of ECO Animal Health Group plc, is a
Non-Executive Director of the Company and £16,667 (2017: £40,000) was
paid to ECO Animal Health Group plc in respect of his services and
expenses. During the year, this arrangement was changed and P A Lawrence
is now remunerated through salary payments from Anpario plc.
There was £nil due to Eco Animal Health Group plc at 31 December 2018
(2017: £4,000).
Company
The following transactions were carried out with related parties:
|
|
2018
|
|
2017
|
|
|
£000
|
|
£000
|
|
|
|
|
|
Sales of goods:
|
|
|
|
|
Subsidiaries
|
|
4,944
|
|
4,184
|
|
|
|
|
|
Purchase of services:
|
|
|
|
|
Related parties
|
|
20
|
|
48
|
|
|
|
|
|
Year-end balances with related parties:
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
£000
|
|
£000
|
|
|
|
|
|
Receivables from related parties (note 15):
|
|
|
|
|
Subsidiaries
|
|
7,277
|
|
5,108
|
|
|
|
|
|
Payables to related parties (note 17):
|
|
|
|
|
Subsidiaries
|
|
4,075
|
|
4,075
|
Related parties
|
|
-
|
|
4
|
27. Derivative financial instruments
The Group's finance function is responsible for managing financial
risks, including currency risk. The Group seeks to minimise the effects
of these risks using various methods, including entering into 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.
|
|
2018
|
|
2017
|
|
Cashflow hedge movements (net of deferred tax)
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Change in value of cash flow hedges
|
|
(211)
|
|
190
|
|
Deferred tax liability
|
|
27
|
|
(28)
|
|
|
|
(184)
|
|
162
|
|
The fair value of the cash flow hedges, along with other forward
contracts held at fair value through profit or loss, are financial
assets or liabilities as outlined below.
|
|
2018
|
|
2017
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
Cash flow hedges
|
|
1
|
|
149
|
|
Financial assets at fair value through profit or loss
|
|
5
|
|
71
|
|
|
|
6
|
|
220
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
Cash flow hedges
|
|
11
|
|
-
|
|
|
|
11
|
|
-
|
|
The financial instruments in place are to mitigate the risks associated
with future US Dollar sales receipts. The details of the notional
amounts, hedged rate and spot rate at 31 December 2018 are outlined
below.
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
Notional amount (US Dollars 000's)
|
|
2,400
|
|
3,600
|
|
Weighted average hedged rate of financial instruments
|
|
1.3050
|
|
1.2560
|
|
Spot rate at 31 December
|
|
1.2760
|
|
1.3503
|
|
Anpario plc
Richard Edwards, CEO +44(0) 777 6417 129
Karen Prior, FD +44(0)
1909 537380
Peel Hunt LLP +44 (0)20 7418 8900
Adrian Trimmings
George Sellar

View source version on businesswire.com: https://www.businesswire.com/news/home/20190305006053/en/