TIDMANP
Anpario plc("Anpario" or the "Group")
Final Results
Anpario plc (AIM:ANP), the international producer and
distributor of natural animal feed additives for animal health,
nutrition and biosecurity is pleased to announce its full year
results for the twelve months to 31 December 2018.
Financial and operational highlights
Financial highlights
-- 34% advance in profit after tax to GBP4.0m (2017: GBP3.0m)
-- 31% uplift in diluted earnings per share to 18.52p (2017: 14.17p)
-- 8% improvement in adjusted EBITDA1 to GBP5.5m (2017: GBP5.1m)
-- Sales of GBP28.3m (2017: GBP29.2m)
-- 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 GBP12.9m at the year-end (2017: GBP13.6m)
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
GBP4.552m (2017: GBP3.403m) adjusted for: share based payments and
associated costs GBP0.118m (2017:GBP0.259m); net finance income
GBP0.087m (2017: GBP0.042m); depreciation, amortisation and
impairment charges of GBP0.871m (2017: GBP0.825m) and exceptional
items of GBPnil (2017: GBP0.627m).
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 GBP4.6m (2017:
GBP3.4m). 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 GBP1 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 LawrenceChairman6 March 2019
Financial Review
2018 2017
GBP000 GBP000
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 GBP4.6m (2017:
GBP3.4m). 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: GBP0.6m).
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 GBP5.5m (2017: GBP5.1m).
Adjusted earnings per share increased by 13% to 18.90 pence per
share (2017: 16.74 pence).
Revenues for the year declined 3% to GBP28.3m (2017: GBP29.2m).
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 GBP13.5m (2017:
GBP14.3m). 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 GBP1.3m, 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 GBP0.3m. 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 GBP1.8m (2017: GBP0.8m) 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 GBP4.0m (2017: GBP3.1m), 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 GBP12.9m (2017: GBP13.6m).
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 investor@anpario.com. This is actively used by our
Shareholders and successfully enables them to engage with the Board
in addition to attaining assistance on individual shareholder
specific matters with which we may be able to help. The Chairman
and other Directors 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 B Eng (Hons), M
Officer C Eng, MBA.
Karen Prior Group Finance BSc (Hons), FCA.
Director
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Peter Lawrence Non-Executive MSc, BSc, DIC, ACGI. C C M
Chairman
Richard Wood Senior BSc, C Eng M M C
Independent
Director
Audit = Audit Committee, Nom. = Nomination Committee, Rem. =
Remuneration Committee
C = Chair, M = Member
The Board considers that Peter Lawrence and Richard Wood are
independent. In Peter Lawrence's case the Board has specifically
considered his length of service on the Board and determined that
in terms of interest, perspective and judgement he remains
independent.
All Directors are subject to reappointment by shareholders at
the first 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 Full attendance of meeting
convened
Board meetings 4 Yes
Audit Committee meetings 2 Yes
Remuneration Committee 1 Yes
meetings
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 DirectorsRichard 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 GBP140 million turnover division of
Hagemeyer (UK) plc, a distributor of industrial products, and
gained significant experience in corporate development at Saint
Gobain UK building materials business.
Karen L Prior, BSc (Hons), FCA.Group Finance Director
Karen joined the board in October 2009 as Group Finance
Director. Previously, Karen has had roles as Finance Director of
Town Centre Securities PLC, a listed property group and UK Finance
Director of Q-Park, where she was instrumental in its establishment
and growth in the UK.
Karen has also been Financial Controller of train builders
Bombardier Transportation and spent 10 years of her early career
with Ernst and Young specialising in providing audit and business
services to entrepreneurial businesses.
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 WoodSenior 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
GBP4.0m (2017: GBP3.0m). 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 GBP1.5m
(2017: GBP1.4m).
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 % held
Shares
(000)
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 PriorCompany Secretary6 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-basedpayments Total
2018 2018 2018 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Executive
Directors
R P Edwards 209 - 11 133 55 408
K L Prior 146 - 13 99 58 316
Non-Executive
Directors
P A Lawrence*** 40 - - - - 40
R K Wood 35 - - - - 35
Total 430 - 24 232 113 799
The comparative figures for the previous year is shown below
Salary Pension Benefits Bonus* Share-basedpayments Total
2017 2017 2017 2017 2017 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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 31 Dec 31 Dec
Price
(pence per
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 WoodChairman, Remuneration Committee6 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 LawrenceChairman, Audit Committee6 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 2.Political and Economic Risk
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. Brexit uncertainty. Exchange rate fluctuations. Geopolitical risks including political and economic instability. Bad debts or trade disputes.
Changing market, legislative and regulatory needs. Animal diseases e.g. African Swine Flu, Avian Flu, PEDv. IP theft e.g. trademark infringements.
Potential Potential impact
impact
Lower sales revenue and profit. Reduction in customers or 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.
targets customers. Loss of market share. Loss of market.
Control and Control and mitigation
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 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.
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.
Risk rating Trend Risk rating Trend
LikelihoodMedium No change LikelihoodMedium Increasing
Impact Impact Medium
Medium
3.Product Development 4.Production and Quality Risk
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 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.
involving significant financial, R&D and other resources. At the development stage it is difficult to determine whether a new product will succeed.
Potential Potential impact
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 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.
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.
Control and Control and mitigation
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 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,
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 HACCP and Trading Standards compliance. Public and product liability insurance arranged.
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.
Risk rating Trend Risk rating Trend
LikelihoodMedium Decreasing LikelihoodLow No change
Impact Impact Medium
Medium
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
LikelihoodMedium Increasing LikelihoodMedium No change
Impact High Impact Medium
Risk Management
What has been successful?
-- The implementation of our direct customer sales strategy, set up of
new subsidiaries and launch of new products has mitigated
global
challenges, reduced key customer reliance and created a platform
for
future growth.
-- 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 GBP5.5m 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, GBP3.4m, 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 GBP228,000
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 We have nothing to report in
respect of the following matters where: respect of these matters.
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.
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 The Group has material balances for goodwill and intangible assets of GBP11.4m (2017: GBP10.8m) 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.
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.
description
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 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.
scope
of our
audit
responded
to the
key
audit
matter
Key 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.
observations
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 GBP228,000 (2017: GBP200,000) GBP205,000 (2017: GBP170,000)
Basis for determining 5% of pre-tax profit Parent materiality
materiality equates to 3.5%
of this entities pre-tax
profit, which is capped at
90% of group materiality.
Rationale for the benchmark We have assessed the use We have assessed the use
applied of a headline measure of a headline measure
to be appropriate as to be appropriate as
this continues this continues
to be a key driver to be a key driver
of the business's of the business's
value, is a critical component value, is a critical component
of the financial statements of the financial statements
and a key metric and a key metric
that management use to monitor that management use to monitor
the performance of the performance of
the business and the business and
communicate this communicate this
to shareholders. to shareholders.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP11,000 (2017:
GBP10,000), 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 GBP0.09m and
GBP0.20m in the current year.
Other information
The directors are responsible We have nothing to report in
for the other information. respect of these matters.
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.
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 We have nothing to report in
and accounting records respect of these matters.
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.
Directors' remuneration We have nothing to report in
Under the Companies Act 2006 we are also respect of these matters.
required to report if in our opinion
certain disclosures of directors'
remuneration
have not been made.
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 LLPStatutory AuditorLeeds, UK6 March 2019
Consolidated income statement
for the year ended 31 December 2018
2018 2017
Notes GBP000 GBP000
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
GBP000 GBP000
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 GBP000 GBP000 GBP000 GBP000
Intangible assets 11 11,373 10,820 10,811 10,249
Property, plant 12 3,710 3,347 3,689 3,300
and equipment
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 27 6 220 6 220
instruments
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 33,150 30,522 37,119 33,391
of the parent company
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 27 11 - 11 -
instruments
Current income tax 232 287 170 254
liabilities
Current liabilities 3,669 5,635 7,206 8,983
Total liabilities 4,851 6,679 8,388 10,027
Total equity and 38,001 37,201 45,507 43,418
liabilities
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
GBP5,097,000 (2017: GBP3,988,000).
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 upsharecapital Sharepremium Other reserves Retainedearnings Non-controllinginterest Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 5,291 9,515 (5,112) 18,843 - 28,537
January 2017
Profit for the period - - - 2,985 - 2,985
Currency translation - - 109 - - 109
differences
Cash flow hedge - - 162 - - 162
reserve
Total comprehensive - - 271 2,985 - 3,256
income
for the period
Issue of share capital 59 815 - - - 874
Deferred tax regarding - - 71 - - 71
share-based payments
Joint share ownership - - (825) - - (825)
plan
Share-based payment - - 189 - - 189
adjustments
Final dividend - - - (1,152) - (1,152)
relating
to 2016
Interim dividend - - - (428) - (428)
relating to 2017
Transactions 59 815 (565) (1,580) - (1,271)
with owners
Balance at 31 December 5,350 10,330 (5,406) 20,248 - 30,522
2017
Profit for the period - - - 4,000 - 4,000
Currency translation - - (3) - - (3)
differences
Cash flow hedge - - (184) - - (184)
reserve
Total comprehensive - - (187) 4,000 - 3,813
income
for the period
Issue of share capital 10 93 - - - 103
Share-based payment - - 167 - - 167
adjustments
Deferred tax regarding - - (23) - - (23)
share-based payments
Final dividend - - - (965) - (965)
relating
to 2017
Interim dividend - - - (467) - (467)
relating to 2018
Transactions 10 93 144 (1,432) - (1,185)
with owners
Balance at 31 December 5,360 10,423 (5,449) 22,816 - 33,150
2018
Company
Called upsharecapital Sharepremium Other reserves Retainedearnings Non-controllinginterest Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 5,291 9,515 (2,854) 18,560 - 30,512
January 2017
Profit for the period - - - 3,988 - 3,988
Cash flow hedge - - 162 - - 162
reserve
Total comprehensive - - 162 3,988 - 4,150
income
for the period
Issue of share capital 59 815 - - - 874
Deferred tax regarding - - 71 - - 71
share-based payments
Joint share ownership - - (825) - - (825)
plan
Share-based payment - - 189 - - 189
adjustments
Final dividend - - - (1,152) - (1,152)
relating
to 2016
Interim dividend - - - (428) - (428)
relating to 2017
Transactions 59 815 (565) (1,580) - (1,271)
with owners
Balance at 31 December 5,350 10,330 (3,257) 20,968 - 33,391
2017
Profit for the period - - - 5,097 - 5,097
Cash flow hedge - - (184) - - (184)
reserve
Total comprehensive - - (184) 5,097 - 4,913
income
for the period
Issue of share capital 10 93 - - - 103
Share-based payment - - 167 - - 167
adjustments
Deferred tax regarding - - (23) - - (23)
share-based payments
Final dividend - - - (965) - (965)
relating
to 2017
Interim dividend - - - (467) - (467)
relating to 2018
Transactions 10 93 144 (1,432) - (1,185)
with owners
Balance at 31 December 5,360 10,423 (3,297) 24,633 - 37,119
2018
Consolidated and parent company statements of cash flows
for the year ended 31 December 2018
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
Cash generated from operating 3,233 5,583 3,065 5,159
activities
Income tax paid (673) (349) (629) (349)
Net cash generated from 2,560 5,234 2,436 4,810
operating activities
Investment in subsidiary (132) (514) - (828)
Purchases of property, (695) (151) (692) (146)
plant and equipment
Proceeds from disposal of tangible - 44 - 1
and intangible assets
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 (1,432) (1,580) (1,432) (1,580)
shareholders
Net cash used in financing activities (1,329) (1,531) (1,329) (1,531)
Net (decrease)/increase in (615) 2,500 (562) 1,750
cash and cash equivalents
Effect of exchange rate changes (32) (53) - -
Cash and cash equivalents at 13,559 11,112 12,142 10,392
the beginning of the year
Cash and cash equivalents 12,912 13,559 11,580 12,142
at the end of the year
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
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 871 825 845 796
and impairment
Loss on disposal of property, 13 19 - 19
plant and equipment
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 3,233 5,583 3,065 5,159
operating activities
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.
-- Group companies
The results and financial position of all Group entities that
have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each balance sheet presented are translated
at the closing exchange rate at the date of the balance
sheet;
-- income and expenses for each income statement are translated at
average exchange rates (unless this average is not a
reasonable
approximation of the cumulative effect of the rates prevailing
on the
transaction dates, in which case the income and expenses are
translated at the rate on the dates of the transaction) ;
and
-- all resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as hedges of
such investments, are taken to shareholders' equity. When a foreign
operation is partially disposed of or sold, exchange differences
that were recognised in equity are recognised in the income
statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity
are treated as assets and liabilities of the foreign entity and
translated at the closing exchange rate.
2.6.Intangible assets
-- 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
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
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
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
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
-- Share-based payments
The Group issues equity-settled share-based payments and shares
under the Joint Share Ownership Plan ("JSOP") and Company Share
Option Plan ("CSOP") to certain employees. These are measured at
fair value and along with associated expenses are recognised as an
expense in the income statement with a corresponding increase (net
of expenses) in equity. The fair values of these payments are
measured at the dates of grant using appropriate option pricing
models, taking into account the terms and conditions upon which the
awards are granted. The fair value is recognised over the period
during which employees become unconditionally entitled to the
awards subject to the Group's estimate of the number of awards
which will lapse, either due to employees leaving the Group prior
to vesting or due to non-market based performance conditions not
being met.
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions (for example, an entity's
share price);
-- excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets
and
remaining an employee of the entity over a specified time
period); and
-- including the impact of any non-vesting conditions (for example, the
requirement for employees to save).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The grant by the Company of options over its equity instruments
to the employees of Subsidiary undertakings in the Group is treated
as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in
Subsidiary undertakings, with a corresponding credit to equity in
the Parent entity financial statements.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash-settled
transaction.
-- Pension obligations
The Group operates a defined contribution pension scheme and
contributes a percentage of salary to individual employee schemes.
Pension contributions are recognised as an expense as they fall due
and the Group has no further payment obligations once the
contributions have been paid.
2.19.Equity
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
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and deposits with financial
institutions. The Group's exposure to credit risk is influenced
mainly by the individual characteristics of each customer. The
Group has an established credit policy under which each new
customer is analysed for creditworthiness before the Group's
payment and delivery terms and conditions are offered. Where
possible, risk is minimised through settlement via letters of
credit and purchase of credit insurance. The Group's investment
policy restricts the investment of surplus cash to interest bearing
deposits with banks and building societies with high credit
ratings.
-- Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure that it will always
have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable
losses or damage to the Group's reputation.
-- Exchange rate risk
The Group's principal functional currency is pounds sterling.
However, during the year the Group had exposure to euros, US
dollars and other currencies. The Group's policy is to maintain
natural hedges, where possible, by matching revenue and receipts
with expenditure and put in place hedging instruments as considered
appropriate to mitigate the risk.
-- Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. 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 assetsThe Group tests
annually whether intangible assets have suffered any
impairment.
Impairment provisions are recorded as applicable based on
Directors'
estimates of recoverable values. Following the assessment of
the
recoverable amount of goodwill and intangibles of the Group
that
totalled GBP11.4m 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
GBP0.2m at 31 December 2018 being the present value of future lease
obligations with a corresponding increase in liabilities of
GBP0.2m. The impact on the profit before tax in the Consolidated
Income Statement is not 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
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 31
December
2018
Total 5,703 11,563 12,341 3,614 - 33,221
segmental
revenue
Inter-segment - - (4,944) - - (4,944)
revenue
Revenue from 5,703 11,563 7,397 3,614 - 28,277
external
customers
Adjusted 1,444 3,776 2,971 1,097 (3,834) 5,454
EBITDA
Depreciation (7) (12) - - (852) (871)
and
amortisation
Net finance - 1 - 2 84 87
income
Share-based - - - - (118) (118)
payments
Exceptional - - - - - -
items
Profit before 1,437 3,765 2,971 1,099 (4,720) 4,552
income tax
Income tax 103 (72) - - (583) (552)
Profit for 1,540 3,693 2,971 1,099 (5,303) 4,000
the period
Total assets 38,001 38,001
Total (4,851) (4,851)
liabilities
Americas Asia Europe MEA Head Office Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 31
December
2017
Total 6,013 12,461 10,967 3,984 - 33,425
segmental
revenue
Inter-segment - - (4,184) - - (4,184)
revenue
Revenue from 6,013 12,461 6,783 3,984 - 29,241
external
customers
Adjusted 1,818 3,775 2,641 1,528 (4,690) 5,072
EBITDA
Depreciation (13) (10) - - (802) (825)
and
amortisation
Net 1 1 - 2 38 42
finance
(income)/expense
Share-based - - - - (259) (259)
payments
Exceptional (36) (254) (3) (42) (292) (627)
items
Profit before 1,770 3,512 2,638 1,488 (6,005) 3,403
income tax
Income tax 17 (31) - (1) (403) (418)
Profit for 1,787 3,481 2,638 1,487 (6,408) 2,985
the year
Total assets 37,201 37,201
Total (6,679) (6,679)
liabilities
4. Profit for the year
Profit for the year has been arrived at after
charging/(crediting) the following items:
2018 2017
GBP000 GBP000
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 23,812 25,880
and administrative expenses
In addition to research and development expenditure noted above,
amounts included in employee expenses above totalling GBP562,000
(2017: GBP610,000) 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 GBP275,000 and expended a further
GBP453,000 on external trials in respect of current development
projects.
5. Auditor's remuneration
During the year the Group obtained the following services from
the Company's auditors:
2018 2017
GBP000 GBP000
Fees payable to Company's auditors for 58 57
the audit of Parent Company and
consolidated financial statements
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 GBP000 GBP000
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 GBP000 GBP000
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
GBP000 GBP000
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 1,121 709
potential Ordinary shares (000s)
Weighted average number for diluted 21,603 21,070
earnings per share (000's)
Profit attributable to owners of the Parent (GBP000's) 4,000 2,985
Basic earnings per share 19.53p 14.66p
Diluted earnings per share 18.52p 14.17p
2018 2017
GBP000 GBP000
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
GBP000 GBP000
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 GBP1.5m, 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 GBP000 GBP000
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 GBP000 GBP000
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) 23 (72)
directly to equity
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 GBP000 GBP000
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 Customerrelationships Patents,trademarksandregistrations Developmentcosts SoftwareandLicenses Total
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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 GBPnil (2016: GBP571,000) in respect
of exceptional impairment of development expenditure.
The reclassification to Brands represents newly generated
Product Brands from Development projects.
Goodwill Brands Customerrelationships Patents,trademarksandregistrations Developmentcosts SoftwareandLicenses Total
Company GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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 GBP000
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 GBP552,000 (2017: GBP498,000)
for the Group and GBP542,000 (2017: GBP489,000) for the
Company.
12. Property, plant and equipment
Land andbuildings Plant andmachinery Fixtures,fittingsandequipment Assets Total
inthe courseofconstruction
Group GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January 2017 2,180 1,904 545 101 4,730
Transfer of assets - 178 - (178) -
in construction
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 andbuildings Plant andmachinery Fixtures,fittingsandequipment Assets Total
inthe courseofconstruction
Company GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 1 January 2017 2,180 1,846 514 101 4,641
Additions 1 39 29 77 146
Transfer of assets - 178 - (178) -
in construction
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 GBP700,000 (2016:
GBP700,000) in respect of non-depreciable land.
13. Investment in subsidiaries
Company Unlisted investments
GBP000
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 2,616
2017 and 31 December 2018
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 Principalactivity Percentageheld Shares held Class
ofregistrationor
incorporation
Directly held
Anpario China Technology 100 Ordinary
(Shanghai)
Biotech Co.
, Ltd.
Room 703, No. Services
777 Zhao
Jia Bang
Road,
Shanghai,
China
Anpario Inc US Technology 100 Ordinary
104 South Services
Main
Street,
Greenville,
SC 29601,
United States
of America
Anpario Pty Australia Technology 100 Ordinary
Ltd
Level 17, 383 Services
Kent Street,
Sydney, NSW,
2000
Anpario Saúde Brazil Technology 100 Ordinary
e Nutrição
Animal Ltda
Rua Services
Brigadeiro
Henrique
Fontenelle,
745 - room 4,
Parque São
Domingos,
São
Paulo,
05125-000,
Brazil
Anpario Thailand Technology 100 Ordinary
(Thailand)
Ltd
65/152 Services
Chamnan
Phenjati
Building
Floor 18,
Rama
9
Road, Huaykwang
Sub-district,
Huaykwang
District,
Bangkok 10310
PT. Anpario Indonesia Technology 100 Ordinary
Biotech
Indonesia
Gedung 18 Services
Office
Park Iantai
Mezz- unit
F2,
Jl. , TB
Simatupang
Kav. 18,
Jakarta 12520
Anpario Malaysia Technology 100 Ordinary
Malaysia
Sdn. Bhd.
Real Services
Time
Corporate
Services Sdn.
Bhd. Unit
C-12-4,
Level 12,
Block C,
Megan
Avenue
II, 12 Jalan
Yap Kwan
Seng,
50450
Kuala Lumpur
Anpario Mexico Technology 100 Ordinary
Latinoamerica
SA de CV
Av. Services
Technologico
Sur # 134
cas
4, Colonia
Moderna,
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 LimitedMeriden Animal Health LimitedOrego-Stim
LimitedOptivite LimitedOptivite International LimitedAquatice
LimitedAgil LimitedKiotechagil LimitedKiotech Limited
Indirectly held
Meriden (Shanghai) Animal China Technology 100 Ordinary
Health Co. , Ltd.
Room 703, No. 777 Zhao Services
Jia Bang Road,
Shanghai, China
Optivite Animal Nutrition India Technology 100 Ordinary
Private Limited
1103-04 Windsor Apartment, Services
T-28, Shastri
Apartment, Andheri - West
Mumbai Mumbai City
MH 400053, India
Optivite Latinoamericana Mexico Technology 100 Ordinary
SA de CV
20 Boulevard de la Industria, Services
Cuautitlan-Izcalli,
Mexico, 54716, Mexico
Optivite SA (Proprietary) South Africa Technology 100 Ordinary
Limited
PO Box 578, Cape Town Services
8000, South Africa
The Group has no associates or joint-ventures.
14. Inventories
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
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 GBP11,510,000 (2017: GBP11,693,000) for
the Group and GBP11,686,000 (2017: GBP11,882,000) for the
Company.
15. Trade and other receivables
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
Trade receivables 4,871 5,282 3,757 4,605
Less: provision for impairment (247) (82) (37) (82)
of trade receivables
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
GBP000 GBP000 GBP000 GBP000
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 GBP670,000 (2017:
GBP566,000) for the Group and GBP525,000 (2017: GBP456,000) 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
GBP000 GBP000 GBP000 GBP000
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 GBP247,000 (2017:
GBP82,000) for the Group and GBP37,000 (2017: GBP82,000) 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
GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000 GBP000 GBP000
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 GBP132,000 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 GBP20,000, 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
GBP000 GBP000 GBP000 GBP000
Arising on the acquisition of the - 152 - 152
business of Cobbett Pty Ltd
Total contingent consideration - 152 - 152
18. Deferred income tax
2018 2017
Group GBP000 GBP000
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)
Acceleratedtaxallowances Fair valuegains Cashflowhedge Losses Other timingdifferences Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January 2017 613 401 - (170) (116) 728
Income (58) 60 - (17) (63) (78)
statement
(credited)/charged
(note 10)
Deferred - - 28 - (96) (68)
tax charged/(credited)
directly to equity
Foreign exchange - - - 15 - 15
As at 31 December 2017 555 461 28 (172) (275) 597
Income statement 78 87 - (103) (143) (81)
credit (note 10)
Deferred tax charged - - (27) - 66 39
directly to equity
Foreign exchange - - - (14) - (14)
As at 31 December 2018 633 548 1 (289) (352) 541
Classified as:
Deferred income (641)
tax asset
Deferred income 1,182
tax liability
Included in 'Other timing differences' above is GBP253,000
(2017: GBP112,000) 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 GBP000 GBP000
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)
Acceleratedtaxallowances Fair valuegains Cashflowhedge Losses Other timingdifferences Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January 2017 613 401 - - (50) 964
Income statement (58) 60 - - (18) (16)
(credit)/charge
Deferred - - 28 - (96) (68)
tax
charged/(credited)
directly to equity
As at 31 December 555 461 28 - (164) 880
2017
Income statement 78 87 - - (1) 164
charge/(credit)
Deferred - - (27) - 66 39
tax charged/credited
directly to equity
As at 31 December 633 548 1 - (99) 1,083
2018
Classified as:
Deferred income (99)
tax asset
Deferred income 1,182
tax liability
19. Capital commitments
The Group had authorised capital commitments as at 31 December
2018 as follows:
2018 2017
GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000 GBP000 GBP000
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:
Weightedaverageexerciseprice Shares 2018 Weightedaverageexerciseprice 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:
Weightedaverageexerciseprice Shares 2018 Weightedaverageexerciseprice 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 GBP259,000 (2016:
GBP210,000) of which GBP70,000 (2016: GBP10,000) 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 20% 20% 20% 20%
of the share price
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
GBP000 GBP000
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 GBPnil (2017: GBP627,000).
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 GBP16,667 (2017:
GBP40,000) 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 GBPnil due to Eco Animal Health Group plc at 31
December 2018 (2017: GBP4,000).
Company
The following transactions were carried out with related
parties:
2018 2017
GBP000 GBP000
Sales of goods:
Subsidiaries 4,944 4,184
Purchase of services:
Related parties 20 48
Year-end balances with related parties:
2018 2017
GBP000 GBP000
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) GBP000 GBP000
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
GBP000 GBP000
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 129Karen Prior, FD +44(0)
1909 537380
Peel Hunt LLP +44 (0)20 7418 8900
Adrian TrimmingsGeorge Sellar
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190305006053/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
March 06, 2019 02:00 ET (07:00 GMT)
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