TIDMANP
RNS Number : 7850T
Anpario PLC
22 March 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Group's obligations under Article 17 of MAR.
Anpario plc
("Anpario", "Group" or the "Company")
Final results
Anpario plc (AIM:ANP), the independent manufacturer of natural
sustainable feed additives for animal health, nutrition and
biosecurity is pleased to announce its full year results for the
twelve months to 31 December 2022.
Financial highlights
- 1% decrease in revenue to GBP33.1m (2021: GBP33.4m).
- 25% decrease in adjusted EBITDA(1) to GBP5.2m (2021: GBP7.0m).
- 35% decrease in pro t before tax to GBP3.7m (2021: GBP5.7m).
- Basic earnings per share down 30% to 16.13p (2021: 22.92p).
- Diluted adjusted earnings(1) per share down 28% to 16.67p (2021: 23.01p).
- Increase of 5% in proposed nal dividend of 7.35p (2021: 7.0p)
per share, total dividend for the year 10.5p (2021: 10.0p).
- Cash and bank deposit balances(2) of GBP13.6m at the year-end (2021: GBP15.5m).
Operational highlights
- Sales growth across Asia, Middle East & Africa (MEA) and
the Americas, offset by a decrease in Europe.
- Implementation of sales price increases helped partial recovery in gross margins through H2.
- Mastercube(TM) pellet binder grew by 39%, driven by demand for
natural products in aquaculture.
- pHorce(R) and Orego-Stim(R) combination presented at the
International Poultry Scientific Forum in Georgia, USA for the
prevention and control of necrotic enteritis.
ESG highlights
- Awarded ISO 14001 certification for Environmental Management Systems.
- 39% reduction in Carbon Intensity(3) , a cumulative reduction since 2019 of 62%.
"The Board reports the Group's operating performance in what has
been a difficult year impacted by supply chain disruption and
significant and immediate raw material and logistics price
inflation. This challenging backdrop has also adversely affected
many producers who have experienced input cost pressures, notably
feed and energy, hurting their profitability and in some cases
viability. Some farmers, particularly across the UK and Europe,
decided to forgo unprofitable production which is now leading to
specific food shortages in the retail channels. With less animals
being reared the demand for animal feed and therefore additives is
inevitably lower and partly explains the Group's disappointing
performance across Europe.
I am proud of the contribution and support from all our
stakeholders, especially our staff around the world, who have
maintained high customer service levels and at the same time been
able to implement sensitive sales price increases to partially
mitigate what has been unprecedented raw material price inflation.
Our margins improved in the second half of the year as a result of
our actions. We also experienced lower volumes in China because of
covid lockdowns, which was a very testing time for our local staff.
So, it is pleasing to see the relaxation of this policy and
hopefully a resumption to more normal economic activity.
Trading in the first couple of months of 2023 has been weak and
market conditions are expected to continue to be challenging
through the first half of the year. Avian influenza which for the
first time is evident around the world at the same time will
present its challenges to the industry. However, Anpario is well
diversified geographically and with a broad range of products also
targeting new markets in aquaculture and ruminants we therefore
expect the Group's performance to improve as the year progresses
supported by our strong balance sheet and business development
initiatives. Looking beyond the current trading environment, the
Group continues to see significant growth opportunities for natural
and sustainable feed additives."
Kate Allum, Chairman
(1) Adjusted EBITDA is defined in note 6.
(2) Cash and bank deposit balances include amounts shown as
short-term investments in the statement of financial position,
these are deposit accounts with notice periods of more than three
but less than six months which can be accessed instantly at the
penalty of lost interest, see note 20.
(3) Carbon intensity represents tCO2e per GBPm sales for Scope 1
and 2 emissions, more information available in the Environment and
Social Responsibility Report.
Chairman's statement
Overview
Anpario reports its revenue and profit performance for the
period during what has been a very difficult year for the Group.
Sales decreased by 1% to GBP33.1m and the decline in our gross
margins due to significant and immediate raw material price
inflation led to a decrease of 25% in Adjusted EBITDA to GBP5.2m.
Profit before tax declined 35% to GBP3.7m (2021: GBP5.7m). The
period has been characterised by a series of global events, not
least the invasion of Ukraine by Russia, which has affected energy,
agricultural commodities and certain raw materials manufactured in
the region. Global supply chains and logistics continued to be
disrupted following the pandemic and China's zero-covid policy for
most of the period.
I am proud of the way the Group planned and reacted to these
challenges and, in particular, being able to implement sensitive
sales price increases to rebuild gross margins, which improved in
the second half of the period. We have continued to invest in our
sales channels, storage capacity and energy saving initiatives such
as the solar panels at our head office and manufacturing site, as
well as increase inventory to ensure customer service levels were
maintained during this disruption. Our strong balance sheet and
control on costs enabled us to make these investments and to return
cash to shareholders by way of a 5% increase in the total dividend
subject to shareholder approval at the Annual General Meeting
(AGM).
Despite the difficult backdrop, there were positive sales
performances in Asia Pacific, Latin America, United States (US),
the Middle East & Africa (MEA) and North-West Europe. Key
products which performed well in these regions included
Mastercube(TM), pHorce(R) and our mycotoxin binder range Anpro(R).
Sales in the UK declined by 36% primarily due to a large customer
reducing their use of our feed hygiene product following
significant increases in the price of organic acids. The other
territories in Europe experiencing declines included Belarus and
Russia, following our decision to suspend trading in these
territories, with sales were down by over GBP0.2m, and Spain and
Italy where high input costs are making business very difficult for
producers.
We set up a wholly owned subsidiary in Vietnam in the prior
period and I am pleased the team delivered a strong sales
performance which affirms our strategy to supply direct to end
customers by employing local sales personnel in key markets. We
have developed valuable skills in setting up subsidiaries around
the world which can take longer to implement but prove to be more
durable. During the period we also recruited additional sales
resource in Brazil, Europe, Mexico, the Middle East and the US.
China had a difficult period where sales declined by 6% due to
disruption caused by intermittent covid lockdown periods followed
by the rapid spread of covid after the relaxation of these
restrictions at the end of the year. The opening up of China will
bolster its economy and with it, meat protein consumption, in
addition to supporting the wider Asia Pacific economy.
Given the challenges of our global supply chain we increased our
stockholding of both raw materials and finished goods in our
subsidiaries by approximately GBP2 million during the period, but
as supply chains improve our inventory levels are expected to
return to more normal levels.
Our research and development activities continue with several
scientific trials and new product development initiatives. The
scientific paper presented at the 2023 International Poultry Forum
in Georgia, USA showed that using a cost-effective combination of
our leading products, pHorce(R) and Orego-Stim(R), can prevent and
control necrotic enteritis in poultry whilst at the same time
maintaining bird performance. In addition, our recently launched
100% natural omega 3 supplement, branded Optomega(R) Algae, is now
being used in poultry feed to enrich both eggs and meat to support
improved human health.
Dividend
The Board is recommending a nal dividend of 7.35 pence per share
(2021: 7.0 pence) making a total of 10.5 pence per share for the
year (2021: 10.0 pence), an increase of 5%. This dividend, payable
on 28 July to shareholders on the register on 14 July, re ects the
Board's continued con dence in the Group and its ability to
generate cash.
AGM
The Board plans to hold the AGM on Thursday 29 June 2023, at
11.00am. We recognise that the AGM is a good opportunity for
shareholders to meet and ask questions of the Board. We will let
shareholders know nearer the time the arrangements for the AGM.
Environmental, Social and Governance (ESG)
Anpario's philosophy is to provide innovative solutions for
animal health challenges by working in synergy with the animal's
natural biological processes to support natural immunity through
improved gut health. This is complemented by our culture and ethics
which we have encapsulated in our 3 Pillars framework: People,
Planet and Promise to communicate our sustainable behaviours and
objectives including achievement of net zero carbon emissions by
2030. We have attained ISO 14001 accredition for our robust
Environmental Management System and are committed to strong
governance and stakeholder accountability which is central to our
values More information can be found in the Environment and Social
Responsibility Report and the Corporate Governance section of this
Report.
People
This period has been one of the toughest to navigate for our
staff across the globe. There has been no respite since the
pandemic to challenge our staff who have stepped up ensuring our
customers have been supported with products and services with
minimal disruption. I thank them for their unstinting support and
commitment to Anpario. The team has also embraced our
environmental, social and governance strategy, some of whom are
members of our internal 'Green Team'. Our operations department is
also continually looking at efficiency initiatives to reduce energy
usage and wastage, including being able to provide carbon footprint
data for our packaging.
Outlook
The year has started weaker than anticipated, at similar levels
to the final quarter of 2022, which reflects the current challenges
facing the global agricultural industry. The high input costs,
notably feed and energy, affecting farmers in many parts of the
world has impacted their profitability leading both to a reduction
in animals being reared and a focus on reducing animal production
costs. In addition, the strength of the US dollar and a tightening
in liquidity has led some developing countries to implement
currency controls restricting the level of trade we can prudently
do with our customers in these regions. Avian influenza which for
the first time is evident all around the world will inevitably
affect feed volumes for a period.
We expect the Group's performance to improve as the year
progresses as some of the challenges dissipate and inflationary
pressures alleviate. We have several business development
initiatives including growing our sales in both the aquaculture and
ruminant markets and as recently recruited sales personnel start to
deliver new business. In addition, the investment in production
automation in recent years enables the Group to keep tight cost
control when volumes are subdued.
Anpario's products improve animal feed conversion rates through
both natural gut health improvement making the animal more
efficient in nutrient utilisation and by improving feed quality. We
will continue to run our 'Produce More for Less' campaign to remind
customers of the efficiency benefits delivered by our products
which are even greater when their input costs are high.
Our geographic diversity and strong balance sheet afford us to
invest in developing the Group even during challenging periods. We
therefore remain confident in the future profitable development of
the Group with the industry growth drivers still intact and look
forward to supplementing our organic growth initiatives with
suitable acquisition opportunities which may arise.
Kate Allum
Chairman
22 March 2023
Chief Executive Officer's statement
Overview of the financial year
Group sales for the year to 31 December 2022 declined by 1% to
GBP33.1m (2021: GBP33.4m) with sales growth across Asia, Middle
East & Africa (MEA) and the Americas offset by a significant
decrease in Europe. Asia Pacific, excluding China which declined by
6%, grew sales by 15% and Latin America and the United States (US)
experienced growth of 44% and 19% respectively, helped by a
favourable exchange rate. Latin America's strong performance can be
attributed to sales of our natural pellet binder brand
Mastercube(TM) into aquaculture markets and demand for our
acid-based eubiotics range. The US continued to benefit from
pHorce(R), the leading anti-viral feed mitigant product, which is
also successfully being used as a replacement for zinc oxide in
piglet diets.
China experienced a 6% decline in sales due to the intermittent
covid lockdowns throughout the year followed by an abrupt end to
the restrictions which led to the rapid spread of the virus at the
end of the period. Europe including the UK inflicted the biggest
impact on Group performance with sales declining 22%. The result
included the loss of a significant customer, for which our feed
hygiene product was no longer commercially viable following
significant increases in organic acid prices. This product is more
acutely exposed to organic acid cost increases than others across
our range and we were able to retain other smaller customers. As
well as an overall reduction in animal production levels especially
in the pig and egg-layer sectors in the UK and across Europe, where
feed and energy costs forced some farmers to limit production.
Group product volumes declined by 11% which was offset by an
increase in the weighted-average selling price of 11% due to the
actions taken to recover raw material price inflation. Our
strongest product growth came from our natural pellet binder and
mycotoxin binder range, especially in Asia, where any switch to
lower quality grain because of high prices would require an
increase in the use of mycotoxin binders to improve feed quality.
Sales of higher value Orego-Stim(R) declined by 8% as farmers
reduced their production output or their use of Orego-Stim(R) to
alleviate inflationary pressures in their operations, despite the
consequence of animal performance being compromised. This change in
product mix also affected our overall gross margin.
We are receiving very positive customer feedback on the
performance of Orego-Stim(R) in ruminants, following our research
with the University of Reading which showed that Orego-Stim(R)
reduced the proportion of bacteria in the gut that show
antimicrobial resistance, when added to the diets of young cattle.
Our recently launched natural and sustainably sourced omega 3
supplement brand Optomega(R) Algae is being used in dairy feeds for
animal fertility and in poultry for egg and meat enrichment. Our
unique carrier and packaging technology allows us to specify an
extended shelf-life compared to competitor products.
During the period we recently developed and launched a new
phytogenic product in a water-soluble form to add to the
Orego-Stim(R) range. Orego-Stim(R) Forte is Anpario's newest
phytogenic feed additive for aquaculture, containing 100% natural
oregano essential oils (OEO), saponin and natural astaxanthin. It
is fully water soluble and specifically designed for use in feed or
on farm, to defend against infectious pathogens and support the
performance of aquatic species.
Group gross profit decreased by 13% to GBP14.1m (2021: GBP16.3m)
for the year to 31 December 2022 due to the significant increases
in raw material and logistics costs and the change in product mix,
with gross margins lower at 42.7% (2021: 48.7%) compared to the
same period last year. A number of sales price increases were
implemented during the year which helped to improve gross margins
in the second half. Our focus on margin recovery and cost control
will continue during this year.
The investment in automation and storage capacity in our Manton
Wood production plant affords the Group a solid platform from which
to grow profitably as the market improves, taking advantage of our
operational gearing. We are committed to building our sales
presence in key markets around the world through recruitment to
support both existing and new customers in the transition to using
natural additives to improve animal health, productivity, and
performance.
Operational review
Asia
Overall, this segment grew sales by 4% with the Asia Pacific
region, which accounted for 56% of Asia's sales, achieving growth
of 15% in contrast to Australasia and China which declined by 7%
and 6% respectively. There were strong performances in the
Philippines, Malaysia and Vietnam driven by growth in demand for
mycotoxin binders and acid-based eubiotics. Vietnam is particularly
encouraging given we recently set up a wholly owned subsidiary and
see its combination of agriculture and aquaculture as being an
attractive opportunity for Anpario's broad product range,
especially our new aquaculture product Orego-Stim(R) Forte.
Bangladesh, Indonesia and South Korea struggled with high energy
and imported feed raw material costs with sales declines of 33%,
25% and 16% respectively. Orders for Bangladesh were delayed at the
end of the period due to central bank foreign currency restrictions
preventing letters of credit being issued to importers. Any
weakening of the US dollar is expected to help improve this
specific issue evident in some developing economies.
China which accounted for 13% of Group sales during the period
struggled with covid lockdowns and the subsequent reversal of
government policy at the end of last year. The relaxation of people
movement including tourism and business activity should bring a
welcome resumption of economic activity not just in China but also
the wider region. The small to medium sized pig farmer in China has
all but disappeared following African Swine Fever with the emphasis
now on larger more sophisticated integrators with the feed mill
sector becoming more relevant to the non-integrated sector. Our
China team is therefore working to target feed mills with added
value solutions they can offer their customers.
Americas
With better energy security and locally grown raw materials for
animal feed the Americas region experienced less disruption than
the rest of the world in the animal production industry. Overall,
the segment grew sales by 11%, partially helped by a favourable
exchange rate, but also strong performances in Latin America and
the United States (US) which grew sales by 44% and 19%
respectively.
All countries except one, Guatemala, in Latin America delivered
sales growth including strong performances from Mexico, Ecuador and
Colombia with growth of 55%, 27% and 111% respectively. The region
benefited from an increase in sales of our Mastercube(TM) pellet
binder for aquafeed purposes and acid-based eubiotic products,
especially in Mexico. Sales to our South America region declined by
19% weighed down by weak performances from Brazil and Chile, which
delivered declines of 14% and 65% respectively. Chile's weak
performance is due to lower sales of Orego-Stim(R) for sea lice
control compared to the prior period. The region's weak performance
was tempered by a strong showing from both Argentina and Peru.
In the US pHorce(R) continues to prove its credentials in the
swine market as an anti-viral feed mitigant and is also being used
as an effective replacement for zinc oxide in piglet diets as the
industry starts to look for safe environmentally friendly
alternatives. Demand for Orego-Stim(R) was maintained by a number
of marketing initiatives with key distributors and running
commercial trials in the ruminant market for feeding young cattle.
The territory also experienced an increase in mycotoxin binder
demand. We instigated some management changes at the beginning of
the period which included recruiting account managers which overall
helped improve the profitability of the business unit.
The Middle East, Africa and India
The Middle East delivered sales growth of 9% supported by sales
price increases and a focus on higher value-add products,
offsetting a volume decline of 5%. There were some very strong
performances from Egypt and Saudi Arabia with sales more than
doubling and from India and the United Arab Emirates (UAE) which
both delivered growth of more than 60%. The region experienced
declines in Iraq, which performed very strongly last year, and
Pakistan. Sales of our mycotoxin binders, pellet binders and
phytogenics products continued to deliver growth in contrast to
demand for our acid-based eubiotic products which declined due to
the significant price inflation of organic acids.
We expect some parts of this region to be adversely affected by
the strength of the US dollar in 2023, especially those countries
which are net importers of grain and energy.
Europe
Clearly Europe delivered the most disappointing performance with
sales declining 21%, but the region suffered from significant
geopolitical events none more so than Russia's invasion of Ukraine
which exacerbated already chaotic supply chains hungover from the
Covid-19 pandemic. Europe's energy crisis and the impact of high
grain prices meant farmers across the region faced an unprofitable
near-term future with some choosing to reduce output as they were
unable to recover inflationary costs from retail channels. The
decline in production has affected the poultry and swine markets
across Europe with, for example, the number of eggs packed in UK
packing stations declining by 12% in quarter four of 2022 compared
to the same quarter in 2021 and German pork production decreased by
more than 9% in 2022 and by over 5% across the EU for the year to
October 2022.
Inevitably we delivered a decrease in sales in several countries
including Italy and Spain with a reduction of around 40% each.
However, the biggest impact was the United Kingdom (UK) which
declined by 36%, and because of its importance to the region the
amount was more significant and was the result of losing price
sensitive feed hygiene business due to significant cost inflation
of organic acids which more than doubled from their low point
before the pandemic. We also had a reduction in combined sales of
GBP0.2m from Russia and Belarus following our decision to suspend
trading in these territories.
There were some positive performances especially in North West
Europe with sales growth of 69% which includes countries such as
Austria, Denmark, Switzerland and Serbia which is a new territory
for the Group. Other good performances were in Hungary and Israel
with sales growth of 89% and 69% respectively. Product growth in
North West Europe predominantly came from Orego-Stim(R) and our
acid-based eubiotic range. This performance followed the recent
review of our distribution relationships in the region supported by
our European stockholding hub.
Innovation and development
With the expansion of our global sales team, we have taken the
decision to invest in a customer relationship management (CRM)
system to improve the management of the sales process, contact
management, customer retention and marketing campaigns. The nature
of our business is that the sales process can be lengthy, often
with multiple decision makers. A CRM system will give senior
management greater visibility of order progress across the Group
and identify buying patterns to help improve customer retention. In
addition the sales team will be able to link global accounts giving
better visibility of product usage in customers' facilities in
different parts of the world. The CRM system will be rolled out on
a regional basis in a phased approach during 2023.
During the period we developed and launched a new phytogenic
feed additive for aquaculture, containing 100% natural oregano
essential oils (OEO), saponin and natural astaxanthin. It is fully
water soluble and specifically designed for use in feed or on farm,
to defend against infectious pathogens and support the performance
of aquatic species. Trials of Orego-Stim(R) Forte have shown to
inhibit Vibrio species growth after 48-hours in the absence of
antibiotics, performing as well as Florfenicol, a commonly used
antibiotic to mitigate aquaculture bacterial infections.
Since the development of our Optomega(R) Algae product, which is
gaining traction in both the dairy and poultry sectors, our
research is now investigating how the product can help reduce
greenhouse gas emissions and farm carbon footprint. Farmers are
more likely to adopt products which reduce their environmental
impact if these products bring a productive benefit in themselves.
If we can assign a carbon value to Optomega(R) Algae, then
eventually this can be used by the farmer to offset his emissions
in other activities on the farm or reduce any future carbon taxes
which may be legislated for by various governments around the
world. The New Zealand government has already announced plans to
tax agricultural emissions, including those related to the burps,
urine, and dung of livestock like sheep and cows.
Growth Strategy
Our organic growth strategy has been focused on expanding and
strengthening our global sales channels by recruiting local sales
and technical teams and setting up wholly owned subsidiaries. We
now have a platform on which to build a greater presence by
increasing our sales resource to build critical mass in key
markets. This is the next phase of development in our sales
channels and is supported by the implementation of the CRM
system.
Both the Americas, because of their strong position in energy
and agricultural commodities and Asia due to its large population
and above average Gross Domestic Product (GDP) growth are key
markets for Anpario currently accounting for over 65% of Group
sales. Changes in regulation which are often initially introduced
in Europe or from consumer pressure are, over time, adopted in
other overseas territories and has enabled Anpario to position
itself ahead of the transition away from harsher chemical
treatments used in agriculture towards sustainable and
environmentally friendly products. Key product brands such as
Orego-Stim(R), Optomega(R) Algae, pHorce(R) and Mastercube(TM)
exemplify our safe and sustainable product range.
Anpario has historically been focused on the monogastric market
with up to 80% of sales in poultry and swine species. However, in
recent years we have developed the product range and invested in
scientific trials to support business development in the ruminant
and aquaculture markets which is starting to gain momentum as we
develop the appropriate sales channels. Diversifying into broader
species segments will help build resilience in our business,
reducing reliance on any one species especially at times when, for
example, the poultry industry is facing challenges from avian
influenza or pork producers are struggling to be viable.
Pursuing suitable acquisition opportunities will remain a
priority for the Group where we can play a role in consolidating a
fragmented market to enhance shareholder returns through
operational synergies and expanding the product, species or
geographic portfolio.
Richard Edwards
Chief Executive Officer
22 March 2023
Key performance indicators
Financial
2022 2021
Note GBP000 GBP000 change % change
------------------------------------- ----- ---------- ------- ------- ---------
Revenue 3 33,103 33,367 -264 -1%
Gross pro t 14,136 16,261 -2,125 -13%
Gross margin 42.7% 48.7% -6.0%
Adjusted EBITDA 6 5,208 6,977 -1,769 -25%
Pro t before tax 3,681 5,701 -2,020 -35%
Basic earnings per share 12 16.13p 22.92p -6.79p -30%
Diluted adjusted earnings per share 12 16.67p 23.01p -6.34p -28%
Total dividend for the year 11 10.50p(1) 10.00p +0.50p +5%
Cash balances 20 13,567 15,545 -1,978 -13%
Net assets 41,311 40,302 +1,009 +3%
(1) Includes both the interim dividend paid during the year and
the proposed final dividend which is subject to approval by the
shareholders at the AGM.
Non-financial
2022 2021 change % change
---------------------------------------------- ----- ----- ------- ---------
GHG emissions(1) (tCO(2e) 77 129 -52 -40%
Carbon intensity(1) (tCO(2e) per GBPm sales) 2.3 3.8 -1.5 -39%
Major accidents reportable to the Board nil nil
(1) Scope 1 and 2 Carbon emissions and defined by the GHG
protocol, for more information see the environment and social
responsibility report.
Anpario have begun to monitor and report on Scope 1 and 2 carbon
emissions as part of its goal to achieve net-zero carbon emissions
by 2030. As such we are introducing two new related performance
indicators, total carbon emissions and carbon intensity. Anpario is
expected to grow as a Company and as a result total carbon
emissions may increase, as such our carbon intensity, defined as
carbon emissions divided by sales, will be a key measure in
tracking our progress towards our net-zero goals.
The Group also regards growth of business in key target markets
and the on-going achievement of product registrations and quality
assurance accreditations as other KPIs.
Financial review
Revenue and gross profits
Revenues for the year declined by 1% to GBP33.1m (2021:
GBP33.4m) as a result of the difficult market conditions
highlighted in the Chief Executive Office Statement. Three of the
four operating segments achieved sales growth, with the Americas
growing the strongest with a GBP0.9m increase in revenue, followed
by Asia GBP0.5m and MEA GBP0.3m. However, this was offset by a
large decline in European sales of GBP2.1m which suffered due to
the significant increase in organic acid costs which resulted in
lost revenues from price sensitive feed hygiene business. This lost
business contributed the majority of an 11% reduction in overall
sales volumes.
Gross profit for the year declined by 13% to GBP14.1m (2021:
GBP16.3m), and gross margins were 42.7% (2021: 48.7%). The most
significant factor reducing margins has been the continuation of
raw material price inflation pressures outlined at the end of last
year, in particular the significant cost increases for organic
acids products used predominantly in our ABE range. As well as
lower sales of Orego-Stim(R) which is a lower volume, higher value
product than other ranges and so this product mix change has a
larger impact on gross margins.
We have continued to react as quickly as possible and implement
successive prices rises in response to cost pressures and margins
have improved through the second half of the year. As we enter
2023, there are signs that raw material prices and availability
have stabilised and in some cases there are we are expecting slight
reductions in input costs which, alongside a drive to increase
Orego-Stim(R) sales, should help gross margins.
Administrative expenses
Administrative expenses were overall unchanged in the year,
despite high levels of inflation, at remained at GBP10.6m. This
includes non-recurring costs of GBP0.2m on due diligence fees
related to an acquisition opportunity that was unfortunately
unsuccessful.
Employment costs, excluding bonuses and R&D staff
capitalisation, increased by GBP0.3m (4%) in the year through
inflationary rises and also an increase in the number of sales
managers. In light of the financial performance there was a GBP0.8m
reduction in bonus costs.
Travel and marketing costs increased by GBP0.3m, now reflecting
a full-year normalised rate following the impact of Covid-19, this
new level is materially down on pre pandemic rates as we operate
with new business practices and tools allowing for more optimised
travel and marketing expenditure.
Establishment costs increased by GBP0.2m as a result of
inflationary pressures and in particular increases in insurance
costs, IT expenditure on new risk management tools and expenditure
on the new CRM system currently being implemented.
Profitability and earnings per share
As a result of the decline in gross profits, Adjusted EBITDA(1)
for the year decreased by 25% to GBP5.2m (2021: GBP7.0m) and
diluted adjusted earnings per share fell by 28% to 16.67p per share
(2021: 23.01p). These measures exclude the non-recurring
acquisition costs mentioned previously.
Pro t before tax fell by 35% to GBP3.7m (2021: GBP5.7m). Basic
earnings per share fell by 30% to 16.13p (2021: 22.92p).
Foreign exchange
The Group's primary foreign currency exchange rate risk relates
to both sales and related receivables denominated in US Dollars,
for which there has been significant movement in the year. The
average rate experienced for GBP/USD has reduced from 1.376 in the
prior year to 1.237 in the current year, with a rate at 31 December
of 1.210. As such there has been a beneficial impact, both in terms
of USD sales being converted at a more favourable rate, but also
through the revaluation of receivables denominated in that
currency.
As previously discussed, we actively take steps to mitigate the
downside-risks related to adverse GBP/USD exchange rate movements
through the use of hedging contracts. These protect a large portion
of the forecasted net US Dollar cash flows over the next three
years. The contracts protect cash flows at a higher rate than those
at the end of the period, and as such currently have a net fair
value of a GBP1.3m liability. Of this amount, GBP0.2m has been
recognised in the income statement, with GBP1.1m deferred in equity
in accordance with cash-flow hedge accounting. This accounting
treatment means that any potential charge unwinds at the same time
as the future USD cash flows which it protects, which is over the
next three years.
Despite this potential charge, which is dependent on future
rates experienced, lower GBP/USD rates should be net beneficial
overall in context of the wider gains made on USD denominated
sales. Our hedging strategy is in place to mitigate adverse risk
and improve certainty about the value of future USD cash flows to
aid in matters such as pricing strategies.
Taxation
The effective tax rate for the year was 10.3% (2021: 17.9%). The
prior year charge including both an exceptional deferred tax charge
relating to changes in Corporation Tax rates from April 2023 and
the prior year tax benefit from Patent Box. Excluding these factors
for the prior year the underlying effective tax rate for the year
was similar to last year at 10.3% (2021: 10.8%).
As previously announced following the successful granting of our
first patent for our market leading phytogenic product
Orego-Stim(R), we expect a tax benefit to the Group via the UK
Patent Box scheme which allows companies to apply a lower rate of
corporation tax to profits attributable to qualifying patents. The
scheme was first applied to our 2021 tax return and at the current
reporting date we are still in the window for HMRC to review this
first submission.
Cash flows and balances
Operating cash flows before changes in working capital were
GBP5.4m (2021: GBP7.5m). Changes in working capital absorbed
GBP3.6m (2021: GBP3.3m), this was mainly due to a GBP1.7m increase
in inventories and a GBP2.2m decrease in trade and other payables.
The trade and other payables declined in part due to the completion
of outstanding CAPEX projects from the end of the prior year and
lower provision levels.
Higher overall inventory balances are partly the result of price
inflation but also additional factors. Raw material holdings
increased over the prior year as a result of both higher onsite
storage to manage supply chain risks and strategic purchasing
decisions at the end of the year. Concerns over both supply chain
risks and logistics delays and constraints have began to ease and
we expect to be able to reduce inventory levels through the coming
year. Finished good levels were flat compared to last year, with a
reduction of GBP1.6m through the second-half of the year. Finished
good levels across most subsidiaries have started to reduce in the
year, however, these reductions were offset by an increase in USA
for certain product lines to support sales growth and additional
stock held to support the recently established Mexican
subsidiary.
Net cash used in investing activities was flat versus the prior
year at GBP1.4m. Of which, GBP0.6m related to the capital
commitments at the end of the prior year to conclude a number of
projects such as the solar panel investment. Net cash used in
financing activities was also the same as in the previous year at
GBP2.0m. Cash and cash equivalents decreased by GBP2.3m in the
period.
Anpario seeks to maximise the interest received on cash held by
the Group and as such utilises a number of notice deposit accounts
which give a higher rate of interest. During the preparation of the
financial statements, it was identified that some balances are held
in accounts with a notice period of greater than three months and
less than six months, and as such they should be classified as
short-term investments in accordance with IAS 7. Consequently, the
prior year statement of financial position and cash flow statement
have been restated to show the split between the overall balances
into cash and cash equivalents and short-term investments. More
information is available in note 20.
Including these short-term investments, the overall cash and
bank deposit balances held by the Group at the end of the year was
GBP13.6m (2021: GBP15.5m). The primary purpose of holding these
resources is to fund future acquisitions and we continue to explore
suitable opportunities.
Dividends
The Board is recommending a nal dividend of 7.35 pence per share
(2021: 7.00 pence) payable on 28 July to shareholders on the
register on 14 July. In addition to the interim dividend already
paid, this represents an increase to the total dividend for the
year of 5% to 10.5 pence per share (2021: 10.0 pence).
Marc Wilson
Group Finance Director
22 March 2023
Our business model and strategy
Business model
Anpario is an independent manufacturer of natural sustainable
animal feed additives for health, nutrition and biosecurity. Our
products work in harmony with the natural aspects of the animal's
biology and Anpario's expertise is focused on intestinal and animal
health, and utilising this understanding to improve animal
performance and customer pro tability.
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 bene t from the trends in growth
of the world's population, the increasing demand for meat and sh
protein in developing countries and the tightening of global
regulation which favours more natural feed additive solutions.
Seizing these opportunities is how Anpario intends to deliver
long-term shareholder value.
Anpario acknowledges the challenges facing livestock producers
in meeting environment and sustainability targets. Anpario is
contributing to the research and development progress that the
agricultural livestock industry is achieving in improving its
carbon footprint and GHG emissions. Anpario prides itself on being
a low carbon manufacturer of animal feed additives, with two thirds
of sales from products which can be described as from sustainable
sources and from non-carbon derived raw materials.
Our business model is based on:
Products High quality efficacious products presented well that meet the needs of our customers both
now and through changes in the regulatory environment.
----------------------------------------------------------------------------------------------------
Story Powerful value add proposition demonstrating the nancial, performance and sustainability bene
ts of our product solutions;
--------------- ----------------------------------------------------------------------------------------------------
Quality Quality in both manufacturing processes and through the supply chain to provide consistent
products that perform in a reliable manner;
--------------- ----------------------------------------------------------------------------------------------------
Branding Build an impeccable Anpario brand which global customers can trust as having innovative, high
quality and effective solutions for customers;
--------------- ----------------------------------------------------------------------------------------------------
Channel Control the sales channel to ensure we develop strong technical and commercial relationships
with the end users of Anpario products.
--------------- ----------------------------------------------------------------------------------------------------
Efficiency Efficient automated production and effective operations that can met the service level requirements
of our customers.
--------------- ----------------------------------------------------------------------------------------------------
Sustainability Our natural products help to reduce our customers carbon footprint by improving the animal
feed conversion rates, and we also have a focus on reducing our own environmental impact.
--------------- ----------------------------------------------------------------------------------------------------
Strategy
Regional focus
Developing local commercial and technical relationships across the world.
Delivered through:
* regional sales structure;
* local language speakers;
* resource that understands local market needs and
challenges; and
* closer relationships with key end customers.
Actions in 2022:
* sales growth achieved in all most geographic
operating segments, excluding Europe;
* expansion of sales resource in key target markets;
* continued growth of direct sales channel;
* first local sales by our Mexican subsidiary; and
* establishment of subsidiary and operations in
Vietnam.
Future plans:
* We now have operations and personnel in our key
markets, and as such the focus now is on developing a
stronger market position through increased resource
and presence in these territories.
Technical & products
Add value by developing products that help overcome the challenges of
modern day farming.
Delivered through:
* scienti c research and development, working closely
with the end customers' meat protein operations, to
help improve gut function leading to improved animal
performance;
* support the producer through prevention rather than
treatment; and
* help the customer meet disease and regulatory
challenges.
Actions in 2022:
* zinc-oxide replacement campaign following banning of
their use in the UK and EU;
* launch of Orego-Stim(R) Forte to defend against
infectious pathogens and support performance of
aquatic species; and
* continued development of new products and
applications to drive future growth, with GBP0.5m
capitalised on these projects in this year.
Future plans:
* continue to retain and recruit technical and animal
production experts;
* continued investment in research and development
working closely with key global customers and
respected institutions; and
* look for product opportunities which broaden our
range and species opportunities.
Acquisitions
Growth through complementary and earnings enhancing acquisitions.
Delivered through:
* successful integration to derive both operational and
nancial synergies;
* speci c searches to identify suitable targets in the
specialty feed additive market; and
* applying strict acquisition and valuation criteria;
targets must either complement our current product
range, offer market consolidation opportunities, or
strengthen our sales and distribution channels.
Actions in 2022:
* further discussed and reviewed the acquisition
strategy as part of our Strategic Review process;
* conducted due diligence and prepared a Sale and
Purchase Agreement for a UK-based high-value add
company, however we were unsuccessful with this
opportunity; and
* engaged with and evaluated a number of other
acquisition targets through both formal and informal
sale processes.
Future plans:
* continued active search for acquisition opportunities
within de ned criteria.
Operations
High quality, consistent and efficient manufacturing.
Delivered through:
* further automation of production facilities;
* key industry quality accreditations; and
* quality supply partners.
Actions in 2022:
* expanded on-site storage for powdered products,
reducing requirements for third-party warehousing;
and
* several smaller CAPEX investments to expand the range
of presentations of our product that can be prepared
through the production site.
Future plans:
* automated palletiser project approved to reduce
manual handling requirements and increase automation;
and
* continued evaluation of further production investment
opportunities;
Environmental, Social and Governance
Anpario seeks to ensure a sustainable future, conducting business in
a socially, ethically and environmentally responsible manner engaging
with all our key stakeholders, including the communities in which we
operate.
Delivered through:
* our three-pillar framework, 'People; Planet; and
Promise';
* robust governance structures appropriate for our
business size; and
* engagement with our stakeholders.
Actions in 2022:
* launch of our inaugural Sustainability Report;
* achievement of ISO 14001 Certification and
accreditation of three internal auditors;
* 39% reduction in Carbon intensity, representing a
cumulative reduction of 62% since 2019; and
* donation of GBP25,000 towards the Red Cross Ukraine
Humanitarian Crisis appeal.
Future plans:
* continued evaluation of ways to reduce our carbon
emissions;
* continued engagement with our stakeholders, and our
work with our staff chosen Charity of the year,
Dementia UK https://www.dementiauk.org/.
Section 172 Statement
Introduction
As a Board, collectively and as individual Directors, we
recognise our obligations and our duties as Directors. Section 172
of the Companies Act 2006 requires a director of a company to act
in the way they consider, in good faith, would be most likely to
promote the success of the company for the bene t of its members as
a whole. In doing so, each Director has regard, amongst other
matters to:
- the likely consequences of any decision in the long term;
- the interests of the Company's employees;
- the need to foster the Company's business relationships with
suppliers, customers and others;
- the impact of the Company's operation on the community and the environment;
- the desirability of the Company maintaining a reputation for
high standard of business conduct; and
- the need to act fairly as between members of the Company.
How the Board fulfils its Section 172 duties
We ensure that the requirements of section 172 are met and the
interest of our stakeholder groups are considered through, amongst
other means, a combination of the following:
- review of strategic objectives and achievement thereof;
- annual budgets and review of resource allocations;
- results presentations to shareholders and staff;
- audit and risk management processes conducted through the year;
- health and safety reports;
- reviews of employee matters;
- annual performance appraisals for all staff including personal development reviews;
- consideration of these matters in relation to major decisions made within the year;
- regular meetings with customers and key suppliers; and
- other ad-hoc engagement with stakeholders.
Stakeholders and their key interests
The table below outlines the key stakeholders the Company has
identi ed, their key interests and where in this annual report that
further details on matters such as engagement and key decisions
made in the year in relation to each stakeholder group can be
found.
Shareholders
Anpario recognises the importance of engaging with existing and potential investors to understand
their views and objectives. This can enhance strategic and governance decision making processes
of the Board. We welcome investor contact and those wishing to engage with us can email on
investor@anpario.com.
Key interests
* Delivering sustainable, pro table growth over the
long-term.
* Robust governance and appropriate controls to
mitigate risk.
* ESG initiatives and responsible management practices.
Key actions and decisions in the year relevant to this stakeholder group
* Increase in dividend per share proposed in light of
results (see Chairman's statement).
* Launched a new board-evaluation process to ensure
effectiveness and alignment with shareholder values.
* Launched a new strategic review process alongside
members of the Executive Management team to evaluate
current strategy and the opportunities and challenges
arising from changes in the industry and our customer
base.
* Evaluated a number of acquisition opportunities,
making offers on a select few that met our criteria,
albeit these were unfortunately unsuccessful.
---------------------------------------------------------------------------------------------------------------
Customers
Anpario values our customers and has extensive long-term relationships across the world. Our
network of local and regional account management teams are in place to understand the needs
and challenges faced by our customers so that we as a Group can deliver the product and service
solutions that they require.
Key interests
* Innovative, high-quality products that help overcome
the challenges of modern-day farming.
* Reliable logistics networks with good stock
availability and timely delivery.
Key actions and decisions in the year relevant to this stakeholder group
* Launched new products to help customers comply with
changes in EU regulation.
* Continued to ensure supply to global customers of our
products during a period of logistical constraints
and challenges. Albeit these pressures have now
started to ease.
---------------------------------------------------------------------------------------------------------------
Employees
Anpario has over 120 employees across the world in a range of different roles. All staff are
key to delivering on the strategic plans and success of the Group and we continue to develop
our HR strategy and policies.
Key interests
* Fair and equitable recruitment and remuneration
practices and policies.
* Safe working environments.
* The opportunity for personal growth and career
progression.
Key actions and decisions in the year relevant to this stakeholder group
* Welcomed all staff back to working at our UK
Headquarters, following Covid-19 restrictions.
* Continued to evaluate and offer flexible home-working
policies following this return, ensuring a balance
between the benefits of both working from home and
alongside colleagues on-site.
* Launched an internal coaching programme, initially
supporting six staff to become qualified coaches, and
through a continual programme making their services
available to all staff.
---------------------------------------------------------------------------------------------------------------
Community and Environment
Anpario seeks to ensure a sustainable future, conducting business in a socially, ethically,
and environmentally responsible manner. Anpario's team seek to meet environmental challenges
with sustainability at their heart and progressing on a journey of continuous evolution and
progression. Further information to the below can be found in the Environment and Social Responsibility
Report.
Key interests
* Conducting business in an ethically and
environmentally responsible manner.
Key actions and decisions in the year relevant to this stakeholder group
* Launched our inaugural Sustainability Report to
demonstrate our commitment to sustainable development
of our business operations.
* Awarded ISO 14001 certification which sets out the
requirements for an environmental management system
and helps improve environmental performance,
efficient use of resources and the reduction of
waste.
* Donated GBP25,000 to the British Red Cross -Disasters
Emergency Committee (DEC) to help towards the Ukraine
Humanitarian Appeal
* Employees vote for the annual charity of the year.
For 2022 the Charity chosen by staff was a local
cancer support charity, Weston Park Cancer Charity,
https://www.westonpark.org.uk/
---------------------------------------------------------------------------------------------------------------
Suppliers
Our external supply chains are critical to the success of the business and integral in our
ability to deliver high-quality and consistent products to our customers.
Key interests
* Mutually bene cial relationships with fair business
practices.
* Supply chain resilience.
* Prompt payment.
Key actions and decisions in the year relevant to this stakeholder group
* Ensuring that in the current difficult economic
conditions we have continued to support our supply
chain by making prompt payment for supplies to ease
any working capital pressure on our suppliers.
---------------------------------------------------------------------------------------------------------------
Key decisions affecting multiple stakeholders
The table below outlines the key decision which affect more than
one stakeholder group and outlines the actions taken and the groups
considered as part of the decision-making process.
Updating the strategic plan and priorities
Actions taken
* Held a strategy review meeting including the Board
and Executive Management Team.
* Reviewed market developments and opportunities.
* Evaluated internal processes and resource
requirements.
* Updated the strategic plans and focus following these
discussions.
Key stakeholder groups considered
* Updating the strategic plan ensures that priorities
are aligned with the business opportunities available
and the right resources are in place to deliver
enhanced shareholder value.
* A key part of this process relates to our customers
and ensuring that Anpario's product range and service
meets their needs and requirements both now and into
the future.
* This process also highlights areas of internal
training and progression available for employees.
* With the launch of our ESG Three Pillars we can
evaluate our future strategy to ensure alignment
between this framework and the growth opportunities
available.
-------------------------------------------------------------------
Risk management
Risk Register and Management Process
We continually examine in detail the key risks facing our
business in the context of our overall business strategy and
evaluate their likelihood and potential impact. The risks we have
examined are the most signi cant but not necessarily the only ones
associated with the Group and its businesses. In common with all
businesses, we face risks of a generic nature for example failure
of projects, foreign exchange impacts and the recruitment,
development and retention of employees. In considering our risks
during the year we have performed detailed assessments at a global
and regional level. We assess the likelihood of their occurrence
and potential impact and implement appropriate and proportionate
risk mitigation measures.
As part of our continual risk management process we consider new
and emerging risks.The Russian invasion of Ukraine and resulting
impact on energy costs and agricultural supply chains has been the
most significant across our industry in 2022. Price inflation and
recessionary factors will continue to depress worldwide economies
and agriculture.
We have continued to monitor residual Covid-19 and Brexit
related risks which caused supply chain disruption including force
majeure being declared by key raw material suppliers. These were
all successfully managed without serious detriment to our customers
or operations. As part of our continual risk management process we
consider new and emerging risks. We have also continued our focus
on sustainability and climate change related issues which has seen
a substantial increase in consumer and investor focus on climate.
In addition we consider global meat consumption patterns and the
potential impact on our operations.
The Group's risk management process through engagement of the
Executive Management team and global management team is conducted
on at least an annual basis and reviewed by the Board, as
follows:
- Identify the risk and likelihood for each function and regional operation;
- Analyse and assess the risk, its potential severity and the
impact and priority for the business;
- Consider risk rating and trends on a low to high scale;
- Plan to mitigate or treat the risk and identify resources or investment required;
- Implement mitigation procedures by obtaining resources and
approvals necessary and put in place necessary actions; and
- Monitor, measure and control the risk and its likely impacts
which will change and evolve so that you we can respond and react
in a timely efficient manner.
The Risk Framework below shows those risks that are more speci c
to our business together with details of the controls and
mitigation in place to manage our exposure. More information on our
approach to effective risk management can be found in the Corporate
Governance section, Principle 4.
What has been successful?
Key successes include:
- conducted an assessment and review of Board risk appetite;
- reviewed IT risk management policies and procedures;
- implemented enhanced IT security systems;
- launch of new products such as aqua product Orego-Stim Forte;
- Zinc Oxide replacement campaign in response to industry regulatory changes;
- responded to market conditions with 'More for Less' campaign
focused on improved feed efficiency and supporting producers with
rising global feed costs;
- membership of SEDEX (Supplier Ethical Data Exchange) to give
supplier chain transparency on a global platform; and
- internal development training and coaching of key managers across all disciplines.
What can be improved?
We continually endeavour to improve our key control framework
and processes and improve our risk management capabilities. In
response to new or emerging risks and to any improvements
recommended by management, external auditors and advisors we will
implement appropriate measures. For 2023 our key areas of focus
include:
- implement planned changes to internal review and audit of
controls and processes in subsidiary entities; and
- further review and updating of business continuity plans and procedures.
Risk framework
Market Risk Political and Economic Risk
Risks Risks
---------------------------------------------------------------
* Gaining market entry for products and access to end * Russian invasion of Ukraine.
users.
* Interest and Inflationary pressures.
* Competition from global operators.
* Customer pressures to reduce costs.
* M & A activity resulting in market consolidation.
* Residuary Brexit consequences.
* Human movement restrictions e.g. Covid-19, SARS.
* Exchange rate fluctuations.
* Animal diseases e.g. African Swine Fever, Avian
Influenza, PEDV.
* Geopolitical risks including political and economic
instability.
* Global commodity prices affecting both supply of
inputs and demand for our products.
* International and individual targeting sanctions.
* Climate and environmental changes.
* Bad debts or trade disputes.
* IP theft e.g. trademark infringements.
---------------------------------------------------------------
Potential impact Potential impact
---------------------------------------------------------------
* Lower sales revenue and profit. * Volatility in markets. Supply chain: delays,
additional costs, tariffs or lack of continuity.
Regulatory changes.
* Reduction in customers or target customers.
* Unable to sell or transport finished goods to EU.
* Loss of market share. Unable to import goods from EU.
* Loss of market. * Border delays.
* Reduced revenue, increased costs and lower
profitability.
---------------------------------------------------------------
Control and mitigation Control and mitigation
---------------------------------------------------------------
* Establishing a global marketing strategy with clearly * Proactive and continual management of pricing.
defined product and species related goals for each
region.
* Close communication with customers on key pricing and
supply issues.
* Regular monitoring of sales budgets and sales
prospects by the management and the Board.
* Increased inventories of EU sourced raw materials.
* Effective disaster planning communicated on a timely
basis. * Established a warehouse and distribution facility in
the EU.
* Regional and species diversity and an extensive range
of products with new product development and * Limiting and hedging of foreign currency exposure.
launches.
* Wide geographic diversity reduces dependency in a
* A clear and effective marketing strategy single country or region.
communicating the benefits of Anpario sustainable
solutions.
* Rigorous customer and supplier due diligence and
monitoring of regional and customer exposures.
* Close customer engagement, relationships to
understand and address their needs.
* Use of credit insurance and letters of credit.
* Global trademark watches and pre-emptive legal
action.
* Ensuring our trademark portfolio supports and is
reflective of our marketing strategy.
---------------------------------------------------------------
Risk rating Trend Risk rating Trend
------------------------- ------------------------------------ -------------------------
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: Medium Impact: Medium
------------------------- ------------------------------------ -------------------------
Product Development Risk Production, Quality and Logistics Risk
Risks Risks
---------------------------------------------------------------
* Failure to deliver new products due to lack of * Failure to source supply of raw materials.
innovation, pipeline delays or products not meeting
commercial expectations.
* Inadequate or poor adherence to quality systems allow
faulty product to reach customer.
* Failed or aborted trials during development or
customer acceptance stages.
* Sub-standard raw materials.
* Lack of significant financial, R&D and other
resources. * Failure to secure timely shipping of goods to
customers.
* Plant closures due to major accident or incident or
disaster.
* Defective plant and equipment in our manufacturing
facility.
---------------------------------------------------------------
Potential impact Potential impact
---------------------------------------------------------------
* Reduction in competitiveness in the market. Lost * Failure or Increased lead-time to supply customers.
opportunities.
* Loss of production for a significant period e.g.,
* A succession of trial failures could adversely affect more than one month potentially leading to loss of
our ability to deliver shareholder expectations. sales.
* Our market position in key areas could be affected, * Accidents, fatality leading to possible closure or
resulting in reduced revenues and profits. fine.
* Where we are unable to develop and launch a product * Poor product quality or product contamination.
this would result in impairment of intangible assets.
* Damage to customer relationship, reputation and
* Valuable resources may be wasted. financial loss.
---------------------------------------------------------------
Control and mitigation Control and mitigation
---------------------------------------------------------------
* Continual monitoring and review of the lifestyle and * Planned increase in raw material and finished good
potential return from current products. Different storage facilities.
regions have markets that are at different points in
development.
* Rigorous planning of production runs and shipping
container requirements.
* Potential new development projects are evaluated from
a commercial, financial and technical perspective.
The pipeline is reviewed regularly by the Board. * All products can be produced at approved toll
manufacturers in the UK. Business interruption and
property insurance policies arranged.
* Each research project or trial is managed by
qualified technical managers. Projects and trials are
monitored to ensure that they are completed on time, * Business Continuity Plan in place.
deliver expected outcomes and provide useable data.
Final review and evaluation to ensure learning.
* Third party advisor utilised and strict management
controls enforced. Employers' liability insurance
* Multiple studies are conducted to assess the effects arranged.
of a product on target species.
* Supplier accreditation, UFAS and FEMAS certification,
* In respect of all new product launches a detailed HACCP and Trading Standards compliance. Public and
marketing plan is established and progress against product liability insurance arranged.
that plan is regularly monitored.
* SEDEX membership increasing transparency of supplier
standards and ethics.
---------------------------------------------------------------
Risk rating Trend Risk rating Trend
------------------------ ------------------------------------- ------------------------
Likelihood: Medium No change Likelihood: Medium Decreasing
Impact: Medium Impact: Medium
------------------------ ------------------------------------- ------------------------
Climate Change Risk Environmental, Social and Governance (ESG) Risks
Risks Risks
---------------------------------------------------------------
* Lack of Board approved strategy to meet our specific * Failure to lead the feed additive market in
challenges. supporting our customers producing sustainable animal
protein production.
* Lack of tangible verifiable measures and target.
Failure to achieve carbon zero targets in line with * Breach of bribery and/or corruption laws or
government and or industry requirements. international sanctions.
* Failure to make required disclosures in line with * Failure to adhere to labour laws and standards
TCFD and regulatory bodies. globally.
* Impact of climate change on suppliers key raw * Poor ESG ratings leading to failure to attract high
materials, agricultural commodities and markets. quality employees.
* Unsafe, inadequate or non-compliant health and safety
issue or response to environmental, infrastructure or
other significant corporate failures.
---------------------------------------------------------------
Potential impact Potential impact
---------------------------------------------------------------
* Loss of key customers, suppliers, investor base. * Loss of and negative Investor sentiment and
withdrawal of support.
* Loss of raw material sources and potential income
stream. * Shareholder action and votes against Board
re-election.
* Lower sales revenue and profit.
* Fines, criminal action against the Company, Directors
or employees.
* Failure to attract, recruit and retain high quality
and skilled employees.
---------------------------------------------------------------
Control and mitigation Control and mitigation
---------------------------------------------------------------
* Board approved global sustainability strategy and * Board level role responsibility with the Corporate
implementation plan. Responsibility Director specifically focused on the
risks and leading appropriate action plans.
* Engagement of all senior management in understanding
and implementing operational and reporting * Attainment of ISO 14001 accreditation and training
obligations. internal auditors;
* Executive and management performance related targets * Roll out of 3 Pillars: People, Planet and Promise
in line with Group strategic objectives. platform for action plans and communication.
* Investment and research on emissions reduction in * Specific ESG targets for all key Executive and group
animal production. management.
* Collaboration with suppliers and other third parties * Established policies, procedures and training to
with common goals relating to climate change ensure awareness of obligations and compliance.
challenges.
* High standards of working conditions and market
* Executive workshops to review key climate change benchmarked pay exceeding the living wage.
risks and opportunities.
* Code of Conduct requiring internal and third-party
acceptance and anti-bribery and anti-corruption
guidance issued for business partners.
* SEDEX membership increasing transparency of own and
business partners' standards and ethics.
---------------------------------------------------------------
Risk rating Trend Risk rating Trend
------------------------ ------------------------------------ -------------------------
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: High Impact: Medium
------------------------ ------------------------------------ -------------------------
Systems Risk Legislation, Regulatory and Non-compliance Risk
Risks Risks
---------------------------------------------------------------
* IT or communications failure, due to, accident or * Changing market, legislative and regulatory needs.
sabotage.
* Failure to comply with export controls and sanctions.
* Cyber-attack.
* Failure to comply with anti-bribery and corruption
* Data breach. legislation.
* Non-compliance with tax, legal or regulatory
obligations.
* Failure to comply with regulatory requirements.
---------------------------------------------------------------
Potential impact Potential impact
---------------------------------------------------------------
* Unable to operate. * Loss of market presence and or share.
* Criminal attack could be aimed at stealing money, * Litigation against Anpario, potential fines and
extortion, fraud, data theft etc. reputational damage.
* GDPR imposes heavy financial penalties, plus * Financial penalties, reputational damage, unable to
reputational damage. operate in certain jurisdictions.
* Prevented from trading with countries even though our
products are exempt from sanctions.
---------------------------------------------------------------
Control and mitigation Control and mitigation
---------------------------------------------------------------
* Internal review and implementation of enhanced * Vigilance and monitoring of all appropriate
digital security measures to detect and prevent notifications to ensure compliance and pre-emptive
possible cyber attacks. actions.
* Regular back up of data, third party provider for * Clear communicated policies and Code of Conduct
storage and system support. issued to all employees and partners.
* Firewall, regular back up of data, crime and cyber * Internal training and awareness communications.
insurance in place.
* Support from external experts in all countries in
* Continual review and strengthening of processes, which we operate.
controls and security.
* Reasonable due diligence is carried out on all
* Information Policy, Privacy Policy, Breach customers and end users.
Notification Policy and Disaster Recovery Plan in
place.
* Sanction checking processes are implemented and
documented.
* Staff and partner awareness communication and
training.
---------------------------------------------------------------
Risk rating Trend Risk rating Trend
--------------------- ------------------------------------ -------------------------
Likelihood: Medium Increasing Likelihood: Medium Increasing
Impact: High Impact: Medium
--------------------- ------------------------------------ -------------------------
The strategic report was approved by the board and signed on its
behalf by:
Richard Edwards
Chief Executive Officer
22 March 2023
Board of Directors
Non-Executive Directors
Kate Allum, BSc.
Non-Executive Chairman
(A,N,R)
Kate has an extensive track record of senior executive and Non-Executive leadership roles
in the food supply chain and agriculture industries. Her previous executive roles include
Head of European Supply Chain at McDonald's Restaurants, CEO of First Milk, the British farmer-owned
dairy co-operative, and CEO at Cedo Ltd, a plastic recycler and manufacturer of household
disposables. She is also the Chair of the Court of the University of the West of Scotland.
Kate is currently a Non-Executive Director of Billington Food Group, Co-Op plc and Eurocell,
the UK's leading manufacturer, distributor and recycler of UPVC window, door, conservatory
and roofline systems. Kate previously held Non-Executive roles at Cranswick plc, Stock Spirit
and Origin Enterprises plc.
Kate became Non-Executive Chair in 2021.
------------------------------------------------------------------------------------------------------
Matthew Robinson, MA, ACA.
Non-Executive Director
(A,N,R)
Matthew Robinson was appointed to the Board in January 2021. Matthew has spent much of his
career working with and advising growth companies and is currently Chairman of Inland Homes
plc, having previously been Non-Executive Chairman of AIM listed Goldplat plc. Matthew started
his career as a Chartered Accountant and was previously a Corporate Finance Director at finnCap
and Panmure Gordon.
------------------------------------------------------------------------------------------------------
Executive Directors
Richard Edwards, B Eng (Hons), C Eng, MBA.
Chief Executive Officer
(N)
Richard Edwards joined the Board in November 2006 as Chief Executive following the acquisition
of Agil. He was appointed Executive Vice-Chairman in April 2011 with specific responsibility
for implementing acquisition strategy. In January 2016, Richard was appointed to the position
of CEO.
Richard has extensive general management and corporate strategy experience gained in the sales
and distribution sector both in the UK and internationally. Previously he was Director and
General Manager of WF Electrical, a 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.
--------------------------------------------------------------------------------------------------
Marc Wilson, BA (Hons), ACMA.
Group Finance Director
Marc is a member of the Chartered Institute of Management Accountants and currently Group
Finance Director as part of the Executive Management team for Anpario. Marc joined Anpario
in 2010 and his responsibilities have included the development and rollout of Anpario's global
ERP system along with the accounting and integration of acquisitions during this time.
Marc Wilson joined the Board as Group Finance Director with effect from 1 July 2021.
--------------------------------------------------------------------------------------------------
Karen Prior, BSc (Hons), FCA.
Corporate Responsibility Director & Company Secretary
Karen joined the board in October 2009, originally as Group Finance Director until 1 July
2021 when she relinquished the role and became Corporate Responsibility Director. Previously,
Karen has had roles as Finance Director of Town Centre Securities PLC, a listed property group
and UK Finance Director of Q-Park, where she was instrumental in its establishment and growth
in the UK.
Karen spent 10 years of her early career with Ernst and Young specialising in providing audit
and business services to entrepreneurial businesses.
--------------------------------------------------------------------------------------------------
Key
A: Audit Committee N: Nomination Committee R: Remuneration
Committee
The Terms of Reference of the Audit, Nomination and Remuneration
Committees are available on the Company's website:
www.anpario.com/aim-26/.
Corporate governance
Chairman's introduction
The Company's shares are traded on the Alternative Investment
Market ("AIM") of the London Stock Exchange. Anpario applies the
Quoted Companies Alliance Corporate Governance Code ("QCA
Code").
Anpario offers natural solutions to the food farming industry
which work in harmony with the natural aspects of an animal's
biology to promote healthy growth at the least cost to the
environment and the producer. Our products enable the production of
top-quality protein that partners future farming practice around
the world. This objective and our engagement with stakeholders,
ensures that we act in a manner that is responsible and bene cial
to all.
The board and staff at the Company are committed to behaving
professionally and responsibly to ensure that the highest standards
of honesty, integrity and corporate governance are maintained.
Enshrining these values through the Company's culture, objectives
and processes is essential to support the success of the Company in
creating long-term shareholder value.
Anpario is committed to conducting business in a socially,
ethically and environmentally responsible manner. We do this by
focusing on a 3 Pillars framework: 'People; Planet; and
Promise'.
Principle 1: Our strategy and business model to promote
long-term value for shareholders
Anpario is well positioned to bene t from the trends in growth
of the world's population, the increasing demand for meat and sh
protein in developing countries and the tightening of global
regulation favouring more natural feed additive solutions. Seizing
these opportunities is how Anpario intends to deliver long-term
shareholder value. More information is included in the Strategic
Report.
Anpario has speci c 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 speci c nancial and non- nancial risks and
uncertainties facing the business and measures in place to mitigate
them.
Principle 2: Understanding and meeting shareholder needs and
expectation
Communications with shareholders are given high priority and
Anpario recognises the importance and value in reciprocal and open
communication with its many investors. This is key to ensure
alignment between the motivations and expectations of our
shareholders and our strategy and business model.
This communication takes place in many forms to serve different
purposes. Our Interim Statements and Annual Reports contain
detailed information for shareholders to understand our
performance, strategy and future plans. Between these disclosures,
the Company also issues RNS announcements, as required, which serve
to keep shareholders updated about regulatory matters or changes
that they should be noti ed of. These RNS announcements, as well as
wider news articles about the Company, are available on our website
www.anpario.com/investor/.
The Annual General Meeting ("AGM") is the main opportunity for
all shareholders to engage with Anpario. Shareholders are noti ed
in advance of the date and location of the meeting as well as the
resolutions that are to be voted on. At the meeting, the Board and
key personnel give a presentation about the most recent published
results and our strategy. They are also available to answer any
questions that shareholders may have. The Company's articles have
been updated to enable the holding of virtual meetings in
future.
The Directors actively seek to build strong relationships with
institutional investors and investment analysts. Presentations are
given immediately following Interim Statement and Annual Report
announcements. Feedback directly from shareholders via the
Company's advisers after these regular analyst and shareholder
meetings ensures that the Board understands shareholder views. The
Board as a whole are kept informed of the views and concerns of
major shareholders and are made aware of any signi cant 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 speci
c matters with which we may be able to help. The Chairman and other
Directors will meet or have contact with major shareholders as
necessary. Where appropriate on specific matters the Board or its
Committees will conduct shareholder consultations.
The Executive Directors, management and staff as appropriate
hold shares and participate in incentive plans in the Company which
ensures that their interests are fully aligned with those of other
shareholders.
Principal 3: Corporate social responsibilities and wider
stakeholders
Anpario seeks to ensure a sustainable business, behaving with
social, ethical and environmental responsibility and engaging with
all of its key stakeholders, including the communities in which the
Group operates, its people and the environment. As noted we have
launched the 3 Pillars: 'People, Planet and Promise' as a framework
to focus our behaviours with respect to sustainability and our ESG
objectives. Full details of the Group's approach to these matters
are included in a new Environmental and Social Responsibility
Report later in this annual report and on the website:
www.anpario.com/about/sustainability/.
Principle 4: Effective risk management
Anpario has speci c resource and processes in place to
proactively identify and manage risk to protect its continued
growth and long-term future. However, any such system of internal
control can provide only reasonable, but not absolute, assurance
against material misstatement or loss. The Board considers that the
internal controls in place are appropriate for the size, complexity
and risk pro le of the Company and that they balance exploiting
opportunities and protecting against threats. The Risk management
section of this annual report details speci c nancial and non-
nancial risks and uncertainties facing the business and where
possible the measures in place to mitigate them.
Risk management and control
Effective risk analysis is fundamental to the execution of
Anpario's business strategy and objectives and our risk management
and control processes are designed to make management of risk an
integrated part of the organisation. The framework is used to
identify, evaluate, mitigate and monitor signi cant risks and to
provide reasonable but not absolute assurance that the Group will
be successful in achieving its objectives. The focus is on signi
cant risks that, if they materialise, could substantially and
adversely affect the Group's business, viability, prospects and
share price.
A formal Internal Audit function is not felt to be suitable for
the Group at the current time due to its size, however this is kept
under review alongside an appropriately robust internal control
system.
Risk management process
We recognise that a level of risk taking is inherent within a
commercial business. Our risk management process is designed to
identify, evaluate and mitigate the risks and uncertainties we
face.
The CEO is the ultimate Risk Manager. The Board establishes our
risk appetite, oversees the risk management and internal control
framework and monitors the Group's exposure to principal risks.
The Executive Management Board (EMB) owns the risk management
process and is responsible for managing speci c 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 nancial reporting;
- compliance with all applicable laws and regulations; and
- assignment of Authority and Responsibility.
Anpario's values underpin the control framework and it is the
Board's aim that these values drive the behaviours and actions of
all employees. The key elements of the control framework are:
Management structure
The Board sets formal authorisation levels and controls that
allow it to delegate authority to the EMB and other Managers in the
Group. The management structure has clearly de ned reporting lines
and operating standards.
Strategy and business planning
- Anpario has a strategic plan which is developed by the EMB and endorsed by the Board;
- Business objectives and performance measures are de ned
annually, together with budgets and forecasts; and
- Monthly business performance reviews are conducted at both Group and business unit levels.
Policies and procedures
Our key nancial, legal and compliance policies and procedures
that apply across the Group are:
- Code of Conduct;
- Designated authorities and approvals;
- ISO 14001 Environmental Management Systems accreditation;
- Anti-Bribery and Corruption Policy;
- Modern Slavery Policy;
- GDPR and Privacy Policy; and
- Due diligence processes including rigorous sanctions checks.
Technical standards and operational controls
Our operational control processes include:
- Product pipeline review: product pipeline is reviewed
regularly to consider new product ideas and determine the t with
our product portfolio. We assess if the products in development are
progressing according to plan and evaluate the expected commercial
return on new products;
- Lifecycle management: lifecycle management activities are
managed and reviewed for our key products to meet the changing
needs of our customers, environmental and regulatory standards;
- Quality assurance: a manufacturing facility with an
established Quality Management System operating under FEMAS and
UFAS and designed to ensure that all products are manufactured to a
consistently high standard in compliance with all relevant
regulatory requirements;
- Product registration: a robust system operated by our
regulatory team to ensure all products are correctly registered
within the jurisdiction in which they are sold; and
- Pricing: a pricing structure which is managed and monitored to
provide equitable pricing for all customer groups and compliance
with regulatory authorities.
Financial controls
Our nancial controls are designed to prevent and detect nancial
misstatement or fraud. This provides reasonable, but not absolute,
assurance against material misstatement or loss. They include:
- a formalised reporting structure which incorporates the
setting of detailed annual budgets and key performance indicators
which are updated on a regular basis to form forecasts;
- management and Board meetings where all key aspects of the
business are presented, reviewed and discussed including comparison
of current and historical performance as well as budgets and
forecasts;
- de ned authorisation levels for expenditure; the placing of
orders and contracts; and signing authorities;
- transactional level controls operated on a day-to-day basis;
- daily reconciliation and monitoring of cash movements by the
nance department and the Group's cash ow is monitored;
- segregation of accounting duties;
- reconciliation and review of nancial 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 nancial and human resources are in
place in order to meet the Company's objectives. The Board also
sets the Company's values and standards, mindful of its obligations
to shareholders and other stakeholders.
Full details and biographies of the Board are available on our
website, the Board comprises of four independent Non-Executive
Directors and two Executive Directors.
Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
--------------- --------------------------------- ------------------------- ------ ---- ----
Richard Edwards Chief Executive Officer B Eng (Hons), C Eng, MBA. M
Marc Wilson Group Finance Director BA (Hons), ACMA.
Karen Prior Corporate Responsibility Director BSc (Hons), FCA.
--------------- --------------------------------- ------------------------- ------ ---- ----
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
---------------- --------------------------- -------------- ------ ---- ----
Kate Allum Non-Executive Chairman BSc. M C M
Matthew Robinson Senior Independent Director MA, ACA. C M C
---------------- --------------------------- -------------- ------ ---- ----
Audit = Audit Committee, Nom. = Nomination Committee, Rem. =
Remuneration Committee
C = Chair, M = Member
The Board considers that the Non-Executive Directors are
independent.
All Directors are subject to reappointment by shareholders at
the rst AGM following their appointment and thereafter by
rotation.
The Board delegates its authority for certain matters to its
Audit, Remuneration and Nomination Committees. The Board approves
and reviews the terms of reference of each of the Committees which
are available on the Company's website,
www.anpario.com/aim-26/.
The Board meets formally at least four times per annum. All
Board members receive agendas and comprehensive papers prior to
each Board meeting. The Corporate Responsibility Director is also
the Company Secretary and is responsible to the Board for ensuring
that Board procedures are followed and that applicable rules and
regulations are adhered to.
In addition to formal Board and Committee meetings, ad hoc
decisions of the Board and Committees are taken after discussion
throughout the nancial year as necessary through the form of
written resolutions.
All Directors in office at the time of the various committee
meetings were in attendance for all of the meetings convened during
2022. A list of the meetings convened during the year is set out
below.
Number of meetings convened Full attendance of meeting
------------------------------- --------------------------- --------------------------
Board meetings 6 Yes
Audit Committee meetings 2 Yes
Remuneration Committee meetings 2 Yes
------------------------------- --------------------------- --------------------------
The Chief Executive Officer and Group Finance Director work full
time for the Group. The Corporate Responsibility Director works two
days a week in the year and ensures the roles and responsibilities
of the position are fully met. The Non-executive Directors have
commitments outside of Anpario plc. They are summarised on the
Board biographies available from www.anpario.com/investor/aim-26/.
All the Non-Executive Directors give the appropriate amount of time
required to ful l their responsibilities to Anpario. During the
year, following the resignation of Ian Hamilton, the number of
Non-Executive Directors reduced to two. The Board is currently
evaluating the needs of this role and potential candidates for the
position.
Principal 6: Ensuring Directors have between them the necessary
up-to-date experience, skills and capabilities
The Nomination Committee aims to ensure that composition of the
Board re ects 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 nalisation
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
nancial 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 con rm that members
have maintained their independence.
The Nomination Committee is responsible for determining Board
level appointments, details of its role and terms of reference are
provided later in this document. The Executive Board members
determine the appointments to the Executive Management team, in
line with Board approval procedures.
Succession planning is a key part in ensuring the long-term
success of the Company. The Executive team ensure that potential
successors are in place within the business and are given the
required support and guidance to develop further. At the required
time, it is the Nomination Committee's role to make decisions about
future appointments to the Board.
Principle 8: Promoting a corporate culture based on ethical
values and behaviours
Anpario has a strong ethical culture, the Board is responsible
for setting and promoting this throughout our processes and
behaviours. The policies related to these matters are regularly
reviewed and updated and distributed to employees and other
stakeholders as appropriate. Further, speci c training is given to
keep staff updated on relevant changes, these sessions are often
recorded for future reference and new staff induction.
A copy of our Code of Conduct is available on our website,
www.anpario.com/code-of-conduct/. Anpario has stated policies on
Corporate Social Responsibility, Anti-Bribery and Corruption,
Modern Slavery Policy and Whistleblowing Policy that are applicable
to all our employees, other workers, suppliers and those providing
services to our organisation.
The Company has achieved ISO 14001 standard on Environmental
Management Systems accreditation along with a qualified internal
audit function.
Anpario published its inaugural Sustainability Report and
accompanying video which is available on the website
https://www.anpario.com/about/sustainability/.
Principal 9: Maintaining governance structures
Anpario is con dent that the governance structures in place in
the Company are appropriate for its size and individual
circumstances whilst ensuring they are t for purpose and support
good decision making by the Board.
The Board de nes a series of matters reserved for its decision.
These include strategy, nance, corporate governance, approval of
signi cant 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 nancial guidance and
to develop the necessary policies and procedures to ensure sound
nancial management and control of the Company. The Corporate
Responsibility Director also acts as Company Secretary and is
further responsible for advising on corporate governance matters
and ensuring compliance with relevant legislative and legal
requirements.
Details of the key committees are set out below, the terms of
reference for each are available on our website as part of the
committee section of the AIM 26 disclosures
www.anpario.com/aim-26/.
Audit Committee
Details are contained within the Audit Committee Report section
of this Annual Report.
Remuneration Committee
Details are contained within the Remuneration Committee Report
section of this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the two Non-Executive
Directors and the Chief Executive Officer and is chaired by Kate
Allum. Meetings are held as required by the Chairman. The role of
the committee is as follows:
- regularly review the structure, size and composition
(including the skills, knowledge, experience and diversity) of the
Board and make recommendations to the Board with regard to any
changes;
- give full consideration to succession planning for Directors
and other senior executives taking into account the challenges and
opportunities facing the Company, and the skills and expertise
needed on the Board in the future;
- keep under review the leadership needs of the organisation,
both executive and non-executive, with a view to ensuring the
continued ability of the organisation to compete effectively in the
marketplace;
- keep up to date and informed about strategic issues and
commercial changes affecting the Company and the market in which it
operates;
- review and approve selection procedures for potential Board
members, whether executive or non-executive, whether for immediate
appointment to the Board or after a probationary period;
- be responsible for identifying and nominating for approval of
the Board, candidates to ll Board vacancies as they arise;
- ensure that on appointment to the Board, non-executive
Directors receive a formal letter of appointment setting out
clearly what is expected of them in terms of time commitment,
committee service and involvement outside Board meetings;
- ensure that following appointment to the Board, Directors
undergo an appropriate induction programme; and
- make recommendations to the Board on membership of the Board's
committees, in consultation with the chair of such committees, the
reappointment of any non-executive at the conclusion of their speci
ed term of office, the reappointment by shareholders of Directors
under the Company's rotation requirements taking into account the
need for progressive refreshing of the Board.
Before any appointment is made by the Board, evaluate the
balance of skills, knowledge, experience and diversity on the
Board, and, in the light of this evaluation, prepare a description
of the role and capabilities required for a particular
appointment.
For the appointment of a Chairman or other Non-Executive, the
committee shall produce a job speci cation, including the time
commitment expected. A proposed Non-Executive's other signi cant
commitments should be disclosed to the Board before appointment and
any changes to commitments should be reported to the Board as they
arise.
Prior to the appointment of a Director, the proposed appointee
should be required to disclose any other business interests that
may result in a con ict of interests and be required to report any
future business interests that could result in a con ict of
interest. Full due diligence is undertaken by the Company and
NOMAD.
New appointments made in the year have gone through the
processes as described above and more information can be found in
the Board Changes section of the Chairman's Statement.
Principal 10: Communicating governance and performance matters
with shareholders and wider stakeholders
Communications with shareholders are given high priority and we
proactively promote engagement through a range of measures. More
details of which are provided earlier in this document about how
Anpario seek to engage with and understand Shareholders and wider
Stakeholders.
The most recent AGM took place on 16 June 2022, full details of
which are included on our Website. The results of the AGM are set
out below. None of the resolutions had a signi cant number of votes
cast against it.
No Resolution Result
----------------------------------------------------------- ------
1 Accept Financial Statements and Statutory Reports Passed
2 Approve Final Dividend Passed
3 Re-elect Karen Prior as Director Passed
4 Re-elect Marc Wilson as Director Passed
5 Re-appoint BDO LLP as Auditors Passed
6 Authorise the Directors to agree the auditors' remuneration Passed
7 To adopt new Articles of Association Passed
8 Authorise Issue of Equity with Pre-emptive rights Passed
9 Authorise Issue of Equity without Pre-emptive rights Passed
10 Authorise Market Purchase of Ordinary Shares Passed
----------------------------------------------------------- ------
Our Company website includes historical Annual Reports and
Interim Statements; both in RNS format as part of its News section,
and the published documents are available from
www.anpario.com/investor/annual-reports/. Included within these
documents are the notices of previous AGMs, the results of which
are released as RNS announcements and can be found in the News
Releases section of our website www.anpario.com/investor/.
Environment and Social Responsibility Report
Environmental responsibility
Anpario seeks to ensure a sustainable future, conducting
business in a socially, ethically and environmentally responsible
manner engaging with all our key stakeholders, including the
communities in which we operate. The key issue of climate change
has highlighted the critical part played by agriculture and food
production and the necessity for collective action to achieve a
net-zero emissions economy for a world that prioritises the health
of people and our planet.
Anpario's team seek to meet environmental challenges with
sustainability at their heart and pursuing a journey of continuous
evolution and progression. We recognise that it is our
responsibility to identify problems faced by producers globally and
find effective sustainable solutions and as we continue to grow on
the strong foundations built over past decades. We aim to be a
leading light now and in the future.
We are leaders in the field of speciality feed additives, our
products capture natures ingenuity and work in harmony with the
animals' biology to deliver sustainable and natural solutions. It
is through our products that we can have the greatest positive
impact, empowering global animal protein producers to produce more
from less, preserving vital resources, safeguarding food production
and human health, whilst protecting the planet. We promise to seek
new ways of operating that protect valuable resources and remain
committed to high environmental standards and robust health and
safety measures.
We believe that through our product innovation, management of
our operations and aligning with stakeholders who share our values
and sustainability objectives, we can help our global customers to
achieve their own sustainable goals faster.
UN Sustainable Development Goals
The UN Sustainable Development Goals (SDG's) provide a globally
accepted roadmap for addressing many of the most urgent global,
economic, environmental and social challenges. Agreed at
international level in September 2015, the achievement of these 17
goals by 2030 requires extensive participation and creates a key
role for businesses in delivering entrepreneurial solutions that
can help meet these challenges. Anpario aligns with several SDG's
and the goals highlighted below are those where we recognise that
we can play our part in creating positive impact for people and the
planet, now and into the future.
SDG 2: Zero hunger - end hunger, achieve food security and
improved nutrition and promote sustainable agriculture
Agriculture and sheries can provide nutritious food for all and
generate decent incomes, while supporting people-centred rural
development and protecting the environment. Anpario's products work
in tune with nature's inherent processes within each of the animal
species to support production of safe and affordable food for a
growing population and can help to:
- conserve, protect and enhance natural resources;
- improve rural livelihood, equity and social well-being through productive farming; and
- enhance resilience of people, communities and ecosystems.
SDG 3: Good health and well-being - ensure healthy lives and
promote wellbeing for all at all ages
We are leading work in collaboration with major feed producers
to successfully reduce the unnecessary use of antibiotics and other
substances such as zinc oxide and urea-formaldehyde. The misuse of
antibiotics in agricultural production is a signi cant threat to
animal and human health. Anpario provides products and guidance to
support farmers to:
- improve animal gut health;
- defend against mycotoxins;
- reduce and where possible remove the unnecessary use of antibiotics; and
- safeguard the use of antibiotics for effective treatment of sick animals and humans.
SDG 12: Responsible consumption and production - ensure
sustainable consumption and production patterns
Anpario's phytogenic and organic acid products help improve
biosecurity and prevent animal diseases, which can eliminate signi
cant animal populations, leading to devastating losses of food
producing animals (e.g. Coccidiosis, Necrotic Enteritis, Porcine
Epidemic Diarrhoea (PEDv), and African Swine Fever (ASF). Anpario's
products are proven to work effectively alongside vaccines to aid
in disease control.
SDG 13: Climate action: take urgent action to combat climate
change and its impacts
Anpario is tackling climate change through establishing energy
reduction initiatives and making renewable energy investments and
commitments including Net Zero Carbon by 2030. Our products help
farmers to feed more nutritious diets with a lower environmental
footprint to their animals which reduces negative environmental
impacts such as:
- nutrient loss;
- greenhouse gas and ammonia emissions; and
- degradation of ecosystems.
SDG 14: Life below water - conserve and sustainably use the
oceans, seas and marine resources for sustainable development
Anpario works to protect and enhance marine life by working with
aquaculture producers globally to improve production systems,
sourcing responsibly and reducing marine waste. Our 100% natural,
aquaculture products work on the same principles as for land
animals and are effective for shrimp and other farmed sh such as
salmon and tilapia. We are progressing with aquaculture experts new
formulations for sustainable and antibiotic free sh production.
SDG 17: Partnerships for the Goals: strengthen the means of
implementation and revitalise the global partnership for
sustainable development
Anpario works collaboratively with other organisations and
stakeholders with the common goal of sustainable food production.
To achieve optimal circular sustainability means educating
distribution networks, employees, partners and working with
customers, our supply chain and leading global universities who
share our goals to lead initiatives to replace unsustainable
practices. It means leading by example and actively demonstrating
how we apply and achieve sustainable objectives to our partners to
inspire positive change.
Our Commitment and 3 Pillars
Anpario is committed to conducting business in a socially,
ethically and environmentally responsible manner. We will do this
by focusing on 3 Pillars: 'People; Planet; and Promise'.
Sustainability is a core focus for Anpario and driven by our
people to deliver leading product innovations, operational
excellence and engagement with key stakeholders. We are building on
strong foundations and are committed to continuous responsible
development that will help to safeguard the planet now and for
future generations. Alongside our customers we work responsibly to
identify problems faced by protein producers globally and we
collaborate with leading industry and research partners to find
effective sustainable solutions.
People
Anpario is committed to:
- protecting and empowering employees;
- embracing diversity, equality and inclusion of our employees and their communities; and
- working with our customers, suppliers and other stakeholders for a better tomorrow.
At Anpario we recognise the importance of nurturing and
developing lasting relationships with customers and suppliers.
Building and continually developing a stable, highly motivated and
skilled workforce is key to our approach. Anpario is an inclusive
organisation where everyone is treated equally irrespective of
gender, nationality, marital status, colour, race, ethnic origin,
creed, sexual orientation or disability. Together we drive a
positive culture with employee well-being prioritised and setting
high standards to ensure we effectively manage risk and health,
safety and ensuring a safe working environment. Our employees
embody Anpario's key values of "Integrity, Teamwork, Innovation and
Leadership".
It is Anpario's policy to involve colleagues in the business and
to ensure that matters of concern to them, our aims, objectives and
nancial performance are communicated in an open way. As far as
possible, employees are offered the opportunity to become
shareholders to promote active participation and commitment to our
success.
The Employee handbook applies globally and includes detailed
policies and guides for employees which cover:
- Behaviour: Equal Opportunities and Dignity at Work,
Anti-Bribery and Anti-Corruption, Modern Slavery, Communications
and Privacy.
- Family: Parental, Dependents, Maternity, Paternity, Flexible working, Adoption.
- General: Grievance, Whistle blowing, Discrimination and Bullying, and Disciplinary.
- Safety: Health and Safety handbook, Occupational Health Policy, Drug and Alcohol abuse.
Gender and diversity
128 employees work for Anpario in the UK and its global
operations. Employees are recruited from local communities which
has helped us build a very ethnically diverse team of which we are
very proud. The team includes 18 nationalities speaking 19
languages with 22 of positions of manager and above being held by
non-white. Females represent 3 out of 7 the Executive Management
team and 2 out of 5 of the Board are women including the role of
Chairperson. Speci c training is given to all employees in respect
of key policies including online training videos and in person
equal opportunities and diversity and health and safety training.
An analysis of Directors, managers and other employees by gender as
at 31 December 2022 is as follows:
Male Female
-------------------- ---- ------
Directors 3 2
Group Management 17 13
Production 24 2
Administration 5 12
Sales and Technical 26 24
-------------------- ---- ------
Total 75 53
-------------------- ---- ------
Equal opportunities
Anpario is committed to equality of opportunity for all of its
current and prospective employees, and we ensure that we treat
people in a fair and equitable manner.
The Group considers applications for employment from disabled
persons equally with those of other applicants having regard to
their ability, experience, and the requirements of the job. Where
existing employees become disabled, appropriate efforts are made to
provide them with continuing suitable work within the Group and to
provide retraining if necessary.
Training and development
Anpario support a motivated and highly skilled workforce, where
talent is nurtured, and opportunities created for all. Our belief
in solving problems from new perspectives using science, experience
and technology continues to drive positive change to our ways of
working.
We recognise the importance of developing talent within our
business through continuous learning and development. This is a key
part of our succession planning and preparing our business for the
future to ensure that we retain key individuals, develop high
potential and future business leaders. We aim to develop and
promote from within where possible and three members of our
Executive team commenced at Anpario straight from school or
university.
Employees are encouraged to further develop their skills and we
provide appropriate training to support our people and grow our
organisational capabilities. Anpario currently:
- recruits graduates and doctorates in disciplines such as
biosciences, accountancy, law and HR;
- works closely with several global universities on joint scienti c initiatives;
- sponsorship of prestigious Nuffield training for technical and sales staff;
- provides ongoing professional training support, extensive
coaching and management development programmes;
- provides nancial and study leave for professional and work related quali cations; and
- has several apprentice places.
We value long service and retaining staff is fundamental to our
success and the creation of a strong, robust business. Anpario has
a wealth of long serving employees across its global operation,
these key staff continue to advance and develop within the business
and play a major part in nurturing future Anpario talent.
Percentage of Employees with Extended Length of Service:
5 years + 48%
10 years + 19%
15 years + 6%
----------- ---
Community Engagement
We believe in contributing and enriching the communities in the
which we operate by employing and offering development
opportunities to local people. We encourage active participation by
our employees in initiatives that support our local communities,
through social, educational, and charitable contributions. Anpario
supports charities and local communities through donations and
volunteering. We believe it is important to give back and serve
local people and their communities, contributing to positive and
measurable social change.
Anpario and its staff are proud to have been able to support the
local community over the course of the pandemic, having donated
GBP10,000 each to the Nottingham Hospitals Charity "NHS Heroes
Appeal run" and towards Doncaster and Bassetlaw Teaching Hospitals
Rainbow Garden Appeal. The latter has now created a memorial garden
in honour of those lost to Covid-19, providing a place of comfort
and contemplation for its visitors. Anpario staff volunteered their
time to work on the Rainbow Garden Memorial during the build,
creating a valuable outdoor space for the friends, family and loved
ones of those who sadly passed away, as well as for staff working
within the hospital.
During the height of the PPE shortages, Anpario were able to use
their logistics expertise and business contacts to source 50,000
medical grade face masks. These were donated and distributed, with
the help of staff volunteers, to more than 12 local care homes,
hospices and community care providers surrounding our Manton Wood
head office.
In recognition of the community work undertaken Anpario was
awarded the "Giving Back: Community Business Hero Award" at the
Sage Impact Awards. In 2022 Give Something Back Volunteer Days
Scheme was introduced globally, with all employees entitled to one
paid day release a year to volunteer at a charity of their
choice.
Our staff supported Weston Park Cancer Charity in 2022 with
several fund raising events. This local charity provides financial,
physical, and emotional support to patients and families facing a
cancer diagnosis and an experimental cancer research centre which
conducts vital research and clinical trials run by exceptional
medical experts every year. The results are shared, helping to
influence cancer treatments both nationally and globally.
Our charity of the year chosen for 2023 is Dementia UK support
and provide life-changing care for families affected by all forms
of dementia, including Alzheimer's disease. Anpario will work to
raise awareness and funds for this cause.
The Anpario Green Team
Our staff are key to advancing processes and initiatives that
improve our ways of working and protect the planet. Through our
"Green Team" activities we encourage participation and raise
awareness across our entire workforce to initiate more sustainable
ways of working throughout the business. Through ongoing commitment
of our team and cross functional projects we aim to improve our
sustainable practice with current objectives including: production
efficiency improvements, identify new "Ways of Working" to reduce
waste in manufacturing our products and office wastage
reduction.
Planet
In aligning with UN SDG's Anpario is committed to:
- driving global protein production and support our customers to
build strong sustainable businesses, without negatively impacting
future generations;
- minimise impact of our global operations on the environment;
- continuous product innovation; and
- improving our supply chain's environmental, social and ethical practices.
Anpario seeks to optimise animal protein production by using
sustainable natural resources for the benefit of animals, our
customers and human health. Our ongoing commitment is to support,
influence, and assist farmers and food chain producers to switch to
healthier more sustainable feed ingredients, which will deliver
greater global food security and a reduction in feed poverty. We
partner with government, industry and leading research bodies
globally. Together we advance product innovation and create
long-term sustainable solutions, helping to maintain animal health
and optimise nutrition throughout the supply chain. Combatting
diseases that can destroy animals, impact welfare and livelihoods,
without negatively impacting the environment, is key to our
approach.
Our innovative products work in harmony with the animals'
biology to promote healthy growth and demonstrate value to the
animals fed directly throughout all life stages and indirectly to
their progeny; and ultimately within the human food chain. This
contributes to the more efficient use of feed ingredients, reduces
environmental impact and supports responsibly produced food.
Underpinning Planet objectives is a core strategy "Anpario's
4R's" a programme to reduce antibiotic use in animal production
through "Review, Reduce, Replace, Responsibly" which supports our
customers to reduce reliance on antibiotics, whilst maintaining
efficient production using natural sustainable solutions. Our
products replace harmful applications such as formaldehyde and zinc
oxide used for antimicrobial control in the feed, and help reduce
antibiotic use in animal production thus improving and safeguarding
both animal and human health. The patent attained for Orego-Stim(R)
in reducing the proportion of bacteria and antimicrobial
resistance, when added to the diets of young cattle, is just one
example of how Anpario is providing environmentally safe and
sustainable solutions for the world's population.
Helping Customers to Reduce Carbon Footprint
Anpario is one of the leading companies helping global livestock
producers to meet environmental and sustainability challenges and
contributing to the research and development progress that the
agricultural livestock industry is achieving in improving its
carbon footprint and greenhouse gas emissions (GHG's). Anpario
prides itself on being a low carbon manufacturer of animal feed
additives, with two thirds of sales from products which can be
described as from sustainable sources. These products are also the
Group's fastest growing product categories. Furthermore, our
products help producers to be more efficient in the resources they
use by improving feed efficiency by supporting gut health thus
optimising nutrient utilisation. Use of Orego-Stim(R) in chicken
meat production Anpario led trials have shown on average a 7%
improvement in feed conversion efficiency.
Anpario's 100% natural oregano essential oil product,
Orego-Stim(R), has also been shown to support greener egg
production by improving overall egg production, hen liveability and
feed efficiency. Meta-analysis from global trials show on average
'8 Extra Eggs' per hen improvement (2.2% per hen) when fed
Orego-Stim(R). Optomega(R) Algae is a new, micro-algae derived,
Docosahexaenoic acid (DHA) supplement for use in all species
including aquaculture, targeted at breeding animals and producers
supplying enriched meat, milk and eggs containing higher levels of
omega-3 fatty acids. The product is 100% natural, from a
sustainable source. Furthermore, preliminary data from an in vitro
study at the University of Reading suggests that dairy cows fed
Optomega(R) Algae can reduce methane output by 7% in 24-hour
period. It is well known that supplementing dairy rations with DHA
supports cow fertility, reducing replacement frequency in the dairy
herd supporting lifelong milk production and contributing to carbon
footprint reduction.
Orego-Stim(R) Forte a proprietary blend of active ingredients
including Orego-Stim(R) for use in aquaculture, has been shown to
benefit producers of both shrimp and fish through improvement of
gut health and reduction in pathogens leading to improved
liveability and growth performance. Orego-Stim(R) Forte is proven
to support producers wishing to reduce reliance on antibiotics in
production.
Partnerships and Accreditations
Anpario partners with organisations that work to inspire and
enable cutting edge science and sustainable farming that is
prosperous, enriches the environment and engages communities. These
partnerships help to assist with our goals and work with our
customers to achieve optimum animal performance through
sustainable, natural solutions.
We hold organic farming approvals in numerous global
territories, required by regional certifying bodies to permit the
use of several of our key products in organic production
systems.
Work is progressing alongside industry bodies and peers to
enable us to seek a recognised measure of product carbon footprint.
We are a member of LEAF (Linking Environment and Farming) seeking
circular approaches to farming and food through integrated
solutions.
In 2022 Anpario:
- Achieved ISO14001 internationally recognised standard for
Environmental Management Systems which provides a framework to
identify, manage, monitor and control environmental processes.
- Vecame a member of Supplier Ethical Database (SEDEX) providing
a high level transparency of operational standards, employment
practices and corporate ethics.
- Joined Centre for Innovation Excellence in Livestock (CIEL) a
collaboration of major industry players in livestock
production.
Anpario continues to support Vision 365, which is the new
10-year plan for the International Egg Commission (IEC) and
supported by the United Nations and aligned with SDG's. Eggs are an
affordable, nutritious, and low impact food source and the plan
aims to develop the nutritional reputation of the egg on an
international scale and to accelerate global average egg
consumption per capita to 365 eggs per annum from 165 today.
We work with suppliers who share our aspiration to deliver high
quality, economic products without exploiting or damaging the
environment. Our key partners share the same ethos and commitment
to natural based farming solutions, including circularity in
production with no use of external resources except rainwater,
green energy and zero use of chemical pesticides. Anpario's
ambition is to cease to consume finite materials that cannot be
renewed or replenished, using only raw materials from common
minerals and plants with plentiful natural resources. For
example:
- Oregano oil used in the production of Orego-Stim(R) is unique
to Anpario and grown using organic, pesticide-free principles.
- Microalgae used in the production of Optomega(R) Algae is
grown using sustainable principles from natural waste of existing
sugarcane production processes. The waste sugarcane is also used to
produce energy to power the factory.
Anpario will only engage with suppliers operating within
international regulations who are capable of meeting our high
specification and operate rigorous quality standards quality
standards. Due diligence is undertaken for assurance that all
applicable ethical labour, trade laws and regulations are complied
with including the requirements of the UK Bribery and Modern
Slavery Acts. Anpario's employees and partners are contractually
bound by its Code of Conduct.
Operational Impact
We are focused on minimising the impact of our operations on the
Planet and aim to reduce our own carbon emissions, whilst also
helping our stakeholders to do the same. Working with the UK
Government and the Environment Agency our industry trade
association, Agricultural Industries Confederation (AIC), has set
out a road map for a sustainable food chain and an open partnership
across the industry to achieve the transition to Net Zero Carbon
(NZC) by 2050. Anpario's ambition is even more ambitious to achieve
NZC by 2030* and have started to implement plans to achieve
this.
Operational practices are kept under continuous review to drive
further improvements in efficiency, to eliminate waste, reduce
energy consumption and our carbon footprint. Examples include:
- the installation of solar panels generating electricity for
use at our plant in Nottinghamshire reducing our reliance upon
fossil fuels;
- almost all of our carrier materials are supplied in bulk and
directly added from silos to minimise packaging waste;
- liquid ingredients are stored in bunded storage silos;
- pre-used reconditioned and cleaned intermediate bulk
containers (IBC's) used for packaging and supply of bulk
liquids;
- product and material waste is collected by a waste contractor and environmentally recycled;
- our bottling plant produces liquids in 100% recyclable plastic bottles;
- packaging design is constantly reviewed resulting in
improvements such as a recent reduction box size;
- dust extraction system minimises dust in the production area
and prevents emission into the environment;
- automated palleting system has reduced forklift movements; and
- investment in additional warehousing on site to reduce
packaged raw material movements in and out of third party
storage.
We are dedicated to driving continuous improvement and targeting
operational efficiency though our production facility and committed
to developing and monitoring carbon reducing measures throughout
our operations, benchmarking to reduce waste, and emissions to
land, air and water. Positive environmental impact assessments are
expected for any new operational investments submitted for approval
and alignment with our clear goals and ESG strategy which is
focused on Net Zero Operations by 2030*;
*Scopes 1 and 2 plus Scope 3 relating to group business travel
& waste.
Energy Consumption & Carbon Emissions
Measurement of energy consumption & carbon emissions by
businesses is made universal by categorising into 3 areas:
Scope 1 - This relates to emissions relating to: stationary
consumption i.e. fuel consumption used in our operations (to
produce electricity, steam, heat or power) and mobile consumption
by our own vehicles, and emissions to the air.
Scope 2 - These are the emissions we create indirectly - like
the electricity or energy use for heating and cooling buildings,
being produced on our behalf by energy suppliers.
Scope 3 - In this category go all the emissions associated, not
within the business itself, but those emissions for which the
organisation is indirectly responsible in its supply chain. e.g.,
associated with the products from our suppliers and to the use of
our products by our customers. This is an area in which we are in
the process of gathering data and setting targets in collaboration
with our stakeholders.
baseline year prior current year
year year-on-year cumulative
2019 2021 change % change 2022 change % change
------------------------------- -------------- -------- ---------- --------- ------------- ---------- ---------
Scope 1 15.3 9.8 (5.3) (54%) 4.5 (10.8) (71%)
Scope 2 163.9 118.8 (46.0) (39%) 72.8 (91.1) (56%)
------------------------------- -------------- -------- ---------- --------- ------------- ---------- ---------
GHG emissions in tCO(2) e 179.2 128.6 (51.3) (40%) 77.3 (101.9) (57%)
Group sales GBPm 29.1 33.4 (0.3) (1%) 33.1 4.1 14%
------------------------------- -------------- -------- ---------- --------- ------------- ---------- ---------
Intensity (t tCO(2) e: per
GBPm sales) 6.2 3.8 (1.5) (39%) 2.3 (3.9) (62%)
------------------------------- -------------- -------- ---------- --------- ------------- ---------- ---------
Energy use in kWh:
Natural Gas 51,433 40,602 (23,285) (57%) 17,317 (34,116) (66%)
Electricity 641,366 559,583 (182,964) (33%) 376,619 (264,747) (41%)
Business Travel
Whilst we have always sought to minimise travel and flights to
essential multi-purpose trips, Covid-19 restrictions have taught us
valuable lessons in how much more we can do to reduce our carbon
footprint by adapting our ways of working through homeworking,
e-conferencing, internet based training, a significant reduction in
physical visits and movements, and a paperless office becoming our
new normal.
Waste and packaging
Our aim is to maximise the value of the resources we use and
rely on, reduce all waste being generated across the Group and
divert waste away from landfill. We place specific emphasis on the
type of packaging used to protect our products and ensure as far as
possible the use of recyclable materials. The Group continues to
invest in infrastructure and management systems to reduce waste and
packaging.
There was a reduction in the amount of waste produced in the
year of 120 Tons (28%), with a cumulative reduction from the 2019
baseline year of 165 Tons (34%).
Water
Our water consumption is low compared to manufacturing
industries due to the nature of our formulations and production
systems. With increasing pressure on this shared resource, we are
mindful of the importance of protecting water sources and are
committed to using water as efficiently as possible. We exercise
extreme care to ensure that all waste water complies with relevant
legislation and the Group continues to invest in infrastructure and
management systems to minimise potential spillages or other forms
of water contamination. We continuously look for ways to conserve
and re-use our water volumes and are currently investigating
initiatives to further reduce our reliance on water resources.
There was a reduction in the amount of water consumed in the
year of 408 cubic metres (27%), with a cumulative reduction from
the 2019 baseline year of 877 cubic meters (44%).
Delivery and Freight
Anpario's products are delivered through distribution channels
and direct to customer's using third party haulage and global
freight services. We note that there are carbon emissions
associated with the delivery of our products, however, this is
offset by the feed efficiency and improved liveability gains that
our products make for our customers.
Promise
Anpario is committed to:
- honest, ethical, and responsible practice;
- positive engagement and partnerships;
- best practice, governance and stewardship; and
- helping customers build strong and sustainable businesses.
Anpario recognises the importance of corporate social
responsibility. It is essential to our reputation that our team
offer honest and open advice, matched by the integrity and
provenance of our products. Anpario's positive culture ensures
honesty, ethical practice and responsibility is instilled into all
activity across the business. "Do the Right Thing" is a fundamental
message that creates a sound base to communicate our cultural
guidance and code of conduct throughout the entire group. Our Code
of Conduct represents our commitment to our values, to doing the
right thing, personally and professionally, and outlines the
expected standards by which Anpario leaders and employees should
work in the delivery of their duties, across all job functions,
departments, and global locations in which we operate.
Policies and guidance are provided to all staff on expected
behaviours at the point of induction and fortified through training
and appraisal procedures. Compliance to the Anpario Code of Conduct
is required from all employees and businesses partners alike with a
zero-tolerance policy to transgressions whilst also facilitating
whistleblowing internally and externally.
Anpario assures safety of its products, absolute transparency
and traceability of raw materials, and compliance with
international regulations through rigorous internal control
processes and quality standards. We retain key industry quality
accreditations in particular, UFAS and FEMAS certifications.
Leadership
Anpario promises to lead by example and consistently promote a
culture of integrity by making ethical decisions and acting
responsibly and honestly in everything we do whilst striving for
excellence in our business objectives. Our leaders understand the
importance of our ethics framework to safeguard best practice and
excellence in governance and stewardship. The following measures
help to ensure compliance:
- the Board sets overall business strategy and plans which include key ESG initiatives;
- the Board identifies key risks and opportunities which are regularly reviewed and updated;
- Anpario's Board structure is in line with best practice and
Corporate Governance Codes, including independent Chair and Senior
Independent Director;
- the Board has clear and transparent division of roles;
- performance related incentives are dependent on achievement of
strategic business and ESG objectives; and
- business continuity and emergency response plans are in place
and regularly reviewed by the Board to ensure effective action and
communications.
Shareholder Delivery and Stewardship
We maintain strong relationships with shareholders, ensuring
they understand our strategy, progress and performance and that we
understand their views and address any concerns. Anpario's Promise
to our shareholders is to consistently strive to increase corporate
value via best business practices and to produce healthy returns
and profit growth and ensure:
- regular informative communication through investor roadshows, meetings and presentations;
- regular news flow on key developments in the business;
- engagement with investors regarding executive remuneration,
sustainability issues and Board changes;
- adherence to Aim Rules for Companies and compliance with
Quoted Companies Alliance Corporate Governance Code;
- appointment of external auditors who are tendered on a
periodic basis and report to the Audit Committee;
- Anpario's Board and its committees are chaired by independent non-executive directors; and
- regular Board training on AIM Rules and Market Abuse Regulation.
Group Policies
We establish and communicate our policies to all staff
throughout the group through induction training using video and
provide regular updates for all staff.
Anti-Bribery and Corruption policy
We are transparent and compliant with all applicable laws and we
ensure that our employees and our external business partners are
aware of their responsibilities, this includes providing
appropriate training and guidance. We expect each individual acting
on Anpario's behalf to be responsible for maintaining our
reputation by conducting business honestly, transparently,
professionally and ethically. Our Anti-Bribery and Corruption
policy and training outlines our zero tolerance and articulates
that no employee or representative of any Group business is to
offer or accept any bribe, including facilitation payments, or
engage in any form of corrupt practice.
Human Rights
We are committed to respecting human rights and labour practices
in our operations and supply chains and recognise the importance of
operating in an ethical and responsible manner. The Group has
procedures including a requirement for suppliers to accept our
stance in relation to preventing Modern Slavery. Employees are
given awareness training as part of their induction programme with
updates provided to all employees as appropriate. We do not
tolerate the use of forced or child labour, in any operations
connected with the Group.
Whistle-blower facilitation
It is our policy to encourage colleagues or external business
partners to speak up if they have any concerns about wrongdoing in
the workplace. Any employee who raises their concerns in good faith
will be supported for doing so and will be protected from
retaliation. We have a number of reporting channels through which
concerns can be confidentially raised both informally or formally
through our grievance procedure and to our Human Resources Team or
any Board member. In the event of a concern being raised we promise
to take it extremely seriously and carry out an independent
investigation as appropriate to validate the complaint, following
which the relevant process is implemented, with oversight and
reporting through to the case being resolved or closed.
Anpario plc has had no formal whistleblowing cases reported
during the year.
In addition to the Code of Conduct the Group's Policies which
are available on the website and internal server include:
- Sustainability Policy
- Anti-bribery and Anti-Corruption Policy &
- Modern Slavery Policy
- Whistleblowing Policy
- Supplier Selection and Procurement Policy
- Health and Safety Policy
- Equal Opportunity and Dignity at Work
- Dealing with Claims of Unlawful Discrimination Policy.
Directors' report
The Directors present their Annual Report and audited
consolidated financial statements for the year ended 31 December
2022.
The Directors believe that some of the requisite components of
this report are set out elsewhere in the Annual Report and/or on
the Company's website, https://www.anpario.com/. The detail below
sets out where the necessary disclosures can be found.
Incorporation
Anpario plc is a public company traded on the Alternative
Investment Market ("AIM") of the London Stock Exchange and is
incorporated in the United Kingdom and registered in England and
Wales, 03345857. The Company's registered office is Manton Wood
Enterprise Park, Worksop, Nottinghamshire, S80 2RS, England.
Principal activity
Anpario plc ("the Company") and its Subsidiaries (together "the
Group") produce and distribute natural feed additives for animal
health, hygiene and nutrition. A review of the performance and
future development of the Group's business is contained in the
Chairman's Statement, Chief-Executive Officer's Statement and
Financial Review set out earlier in this Annual Report.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
has adequate resources to continue in operation for the foreseeable
future. The Group is profitable and expects to continue to be so,
there has been an increase in working capital through the year to
manage supply-chain risks, however these pressures are now easing
and the Group has significant level of cash resources.
Accordingly, the financial statements have been prepared on a
going concern basis, more detail can be found in note 2.1 of the
Group financial statements.
Results and dividends
The financial results for the year ended 31 December 2022 are
set out in the consolidated financial statements later in this
Annual Report and summarised in the Financial Review earlier in the
Annual Report. The profit for the year after tax was GBP3.3m (2021:
GBP4.7m).
The Directors propose a final dividend of 7.35p per share (2021:
7.00p) making a total of 10.50p per share for the year (2021:
10.00p), amounting to a total dividend of GBP2.3m (2021: GBP2.1m).
More information can be found in note 11 to the financial
statements.
Group research and development activities
The Group is continually researching and developing new
products. Details of expenditure incurred and impaired or written
off during the year are shown in the note 4 of the Group financial
statements. During the year, GBP528,000 (2021: GBP360,000) was
capitalised as development projects with GBP98,000 (2021:
GBP42,000) expensed to the income statement.
Directors
The Directors during the year under review were:
Non-Executive Directors
Kate Allum Non-Executive Chairman
Matthew Robinson Non-Executive Director
-----------------------------------------------
Ian Hamilton Non-Executive Director (resigned 18 April 2022)
-----------------------------------------------
Executive Directors
Richard Edwards Chief Executive Officer
Karen Prior Corporate Responsibility Director and Company Secretary
-------------------------------------------------------
Marc Wilson Group Finance Director
-------------------------------------------------------
The Board regards the Non-Executive Directors as being
independent. The biographies and roles of all Directors and their
roles on the Audit, Remuneration and Nomination Committees are set
out earlier in this report.
Details of the Directors' interests in the shares of the Company
are provided in the Directors' remuneration report.
Employees
Details of how the Directors have engaged with employees are set
out in the Section 172 report. The Group's policies in relation to
equal opportunities are explained in the people section of the
Environment and Social Responsibility Report.
Stakeholder engagement
Details of how the Directors have engaged with it's stakeholder
groups are set out in the Section 172 report.
Indemnities
By virtue of, and subject to, Article 172 of the current
Articles of Association of the Company, the Company has granted an
indemnity to every Director, alternate Director, Secretary or other
officer of the Company. Such provisions remain in force at the date
of this report. The Group has arranged appropriate insurance cover
for any legal action against the Directors and officers.
Share capital
During the year 177,338 (2021: 35,048) Ordinary shares of 23p
each were issued pursuant to the exercise of share options. During
the year the Company issued 600,000 (2021: 50,000) Ordinary shares
of 23p at market price to the Trustees of the Anpario plc
Employees' Share Trust.
A Special Resolution will be proposed at the AGM to renew the
Directors' limited authority last granted in 2022 to make market
purchases of Ordinary shares in the capital of the Company.
As at 31 December 2022, the Company holds 440,388 (2021:
440,388) Ordinary shares of 23p in treasury.
Substantial shareholdings
At 1 March 2023, analysis of the share register showed the
following holdings of 3 per cent or more of its issued share
capital:
Ordinary Shares (000) % held
------------------------------------- --------------------- ------
JTC plc 3,400 14.2
Investec Wealth & Investment 2,539 10.6
Unicorn Asset Management 2,014 8.4
Gresham House Asset Management 1,399 5.8
Interactive Investor 1,212 5.0
Hargreaves Lansdown Asset Management 1,015 4.2
BGF 811 3.4
Columbia Threadneedle Investments 766 3.2
------------------------------------- --------------------- ------
Independent auditor
The auditor, BDO LLP, has indicated its willingness to continue
in office and a resolution seeking to re-appoint BDO LLP as the
Group's auditor will be proposed at the AGM.
Stockbrokers
Peel Hunt LLP are the Company's stockbroker and nominated
adviser.
The closing share price on 31 December 2022 was 500p per share
(2021: 616p per share).
Financial risk management
Details of the Company's financial risk management policy are
set out in note 2.21 of the financial statements.
Statement of Directors' responsibilities
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group financial statements in
accordance with UK adopted International Accounting Standards and
the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the Directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
In preparing these financial statements, the directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- for the Group financial statements, state whether they have
been prepared in accordance with UK adopted international
accounting standards, subject to any material departures disclosed
and explained in the financial statements;
- for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Statement of disclosure to auditor
So far as the Directors are aware:
- there is no relevant audit information of which the Company's auditor is unaware; and
- they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
The Directors' report was approved by the Board of Directors on
22 March 2023 and is signed by order of the board:
Karen Prior
Company Secretary
22 March 2023
Report of the Remuneration Committee
Foreword
On behalf of the Board, I am pleased to present the Remuneration
Committee's report for the year ended 31 December 2022. The
Committee continuously seeks to ensure alignment of the strategy
and values of the Company and the interests of all shareholders.
This includes the need to recruit, retain and appropriately
incentivise high calibre directors and managers to deliver the
Group's strategy.
Membership and attendance in the year
The Committee comprises solely of independent Non-Executive
Directors. Executive Directors and external advisors are invited to
attend meetings as required if thought advantageous for
consideration of a particular agenda item. The Committee is chaired
by Matthew Robinson, Non-Executive Director. The other Committee
member is Kate Allum, Non-Executive Chairman.
The Remuneration Committee meets as necessary to fulfil its
objectives but as a minimum, at least once a year. The Committee
met twice during the year ended 31 December 2022 with full
attendance by the Committee members. In addition, the Committee
chose to consult with shareholders on changes to Remuneration
Policy to ensure alignment with their interest as well as Group
strategy.
Key responsibilities
The Committee is responsible for reviewing the performance of
Executive Directors as well as determining the scale and structure
of their remuneration, their terms and conditions of service and
the grant of share awards, having due regard to the interests of
shareholders.
The Committee is also responsible for reviewing the overall
policy in respect of remuneration of all other employees of the
Company and establishing the Company's policy and operation of
share incentive schemes.
In determining the remuneration of senior executives, the
Committee seeks to enable the Company to attract and retain
executives of the highest calibre. The Committee also makes
recommendations to the Board concerning the allocations of options
to executives under the long-term incentive plan and for the
administration of the scheme.
The terms of reference of the Remuneration Committee can be
found on the Company's website www.anpario.com/aim-26/.
Key activities in the year
During the course of the year, the main activities of the
Committee were:
- implementation of changes outlined in the previous year, in
particular, dilution limits and long-term incentive structures;
- approved awards under the new LTIP policy for new Executive
Board members, Senior Management and other key management;
- review of Director remuneration, following which there were no
changes to base salary or fees; and
- review and evaluation of talent management and succession planning activities.
Remuneration policy for the year in review
As outlined last year, following a review by the Committee and
consultation with external consultants and shareholders, there have
been a number of changes implemented for this year's remuneration
policy. The policy below reflects the changes made on dilution
limits, long-term incentive structures and a number of other minor
policy changes.
The objectives of the remuneration policy are to ensure that the
overall remuneration of senior executives is aligned with the
performance of the Company and preserves an appropriate balance of
annual profit delivery and longer-term shareholder value.
The Committee keeps the remuneration policy, in particular the
need for share ownership guidelines for Executive Directors,
regularly under review and will take action whenever deemed
necessary to ensure that remuneration is aligned with the overall
strategic objectives of the Company.
The Committee seeks advice, if appropriate, from independent
advisors where required on remuneration related matters.
Executive Directors
Element and purpose Operation
--------------------------------------------------- -----------------------------------------------------------------
Base Salary
To provide a competitive base salary to attract Base salaries are usually reviewed on an annual basis and
and retain Executive Directors of a suitable consider:
calibre to deliver the Group's growth strategy. * individual experience and skills;
* development in the role;
* changes in responsibilities or the size or complexity
of the business; and
* competitive salary levels and market forces.
--------------------------------------------------- -----------------------------------------------------------------
Benefits
To provide a competitive benefits package as part Executive Directors receive private medical insurance, critical
of total remuneration. life and death in service
insurance and a company car allowance. Other benefits may be
provided based on individual
circumstances as considered appropriate by the Committee.
--------------------------------------------------- -----------------------------------------------------------------
Pension
To provide a competitive retirement benefit. Executive Directors are entitled to receive contributions
towards defined contribution pension
plans of up to 10% of their base salary. It may be permitted to
take the benefit as cash in
lieu of pension contributions where appropriate.
The Company will also pass on part of the Employers' National
Insurance savings made that
result from any pension salary sacrifice's made by Executive
Directors, in the form of increased
pension contributions.
--------------------------------------------------- -----------------------------------------------------------------
Annual bonus
The incentivise and reward based on the Executive Directors' annual bonuses are based on financial
achievement of annual financial objectives. performance targets which are set
each year by the committee. For Executive Directors, the maximum
bonus opportunity is up to
100%. The Committee has discretion over the amounts awarded and
may make consideration to
other corporate activities such as acquisitions and disposals
aligned with shareholder returns.
The target for the year in review was to achieve a minimum of 6%
growth in adjusted EBITDA,
which would give rise to an award equivalent to 25% of base
salary. Performance above this
target would lead to higher awards, increasing on a
straight-line basis, up to a maximum of
100% of base salary for adjusted EBITDA growth of 16% in the
year.
In-line with that structure and award calculation the Committee
has determined that there
will be no bonus awarded to Executive Directors for 2022.
--------------------------------------------------- -----------------------------------------------------------------
LTIP
To incentivise and reward achievement of sustained The Executive Directors receive remuneration under the following
and long-term business performance and term incentive plans: Enterprise
create alignment with shareholders. Management Scheme ("EMI" which is now closed; Joint Share
Ownership Plan ("JSOP"); Performance
Share Plan ("PSP") and Save As You Earn Scheme ("SAYE"). All of
which have a three-year vesting
period.
The EMI, SAYE and JSOP are market value option plans and as such
reward growth in the share
price from the date of the award. In the case of the JSOP scheme
the final exercise price
is equivalent to share price on the date of grant plus an
additional carrying cost, equivalent
to simple interest, of 4.5 per cent per annum. As such this
scheme only rewards growth in
excess of expected equity market returns.
Under the PSP award, the maximum opportunity is nil-cost options
to the value of 100% of base
salary and is subject to malus and clawback provisions.
Performance is assessed against a
rolling three-year performance period and subject to the
achievement of performance targets
set by the Remuneration Committee. Currently these are based on
diluted adjusted earnings
per share growth and the achievement of a ESG related targets.
--------------------------------------------------- -----------------------------------------------------------------
Non-Executive Directors
The table below sets out the elements of Non-Executive
Directors' remuneration as well as the purpose and operation.
Element and purpose Operation
--------------------------------------------------- -----------------------------------------------------------------
Fees
To attract and retain Non-Executive Directors of a Remuneration of the Non-Executive directors is determined
suitable calibre with the required skills by the Chairman and the Chief Executive
and experience. Officer. The Non-Executive Directors are not entitled to
annual bonuses or employee benefits
and their fees are subject to annual review.
The Chairman's remuneration is determined by Remuneration
Committee in conjunction with the
Chief Executive Officer. However, the Chairman is not
entitled to vote on the matter.
Fees are reviewed on an annual basis and consider:
* individual experience and skills;
* changes in responsibilities or the size or complexity
of the business; and
* competitive salary levels and market forces.
Reimbursements are made for business related expenses.
--------------------------------------------------- -----------------------------------------------------------------
Additional Policy Notes
Shareholding requirements
In-employment shareholding requirements:
The Executive Directors are expected to build and maintain a holding of shares to the value
of 100% of salary. Executive Directors are expected to retain all of the net of tax number
of shares they receive through share incentive plans until the 100% of salary shareholding
requirement has been met.
Post-employment shareholding requirements:
For the first 12 months following cessation of employment, an Executive Director must retain
shares equal to 100% of the in-employment guideline and in the following 12 months, retain
shares equal to 50% of the in-employment guideline.
--------------------------------------------------------------------------------------------------
Dilution limit policy
As outlined in the previous year a new policy on dilution limits has been adopted. In which,
whilst it will initially increase the potential dilution limit (including all awards made
since Jan 2015) to 18%, will by 2025 reduce the potential dilution from shares awarded under
all incentive plans to below 15% of the ordinary share capital of the Company viewed over
a 10-year rolling period.
Anpario operates an Employee Share Trust. When awards issued under the Trust are exercised
then any shares retained by the trustee shall not be included for dilution purposes if re-issued
for further awards. This is because they have already been included for dilution purposes
at the date of initial grant.
--------------------------------------------------------------------------------------------------
Remuneration in the year
Executive Directors
The remuneration of each Director for the year ended 31 December
2022 and the prior year is set out in the table below.
Richard Edwards Karen Prior(1) Marc Wilson(2)
2022 2021 2022 2021 2022 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- ------- ------- ------- ------- -------
Base salary 250 250 60 81 140 70
Taxable benefits 10 10 9 8 9 5
Pension 25 25 6 8 16 9
Annual bonus - 150 - 49 - 65
Share-based payment(3) - 2 - 2 - 5
Share options vested(3) - - - - - -
------------------------ -------- ------- ------- ------- ------- -------
Total remuneration 285 437 75 148 165 154
------------------------ -------- ------- ------- ------- ------- -------
Of which:
Fixed remuneration 285 285 75 97 165 84
Variable remuneration - 152 - 51 - 70
------------------------ -------- ------- ------- ------- ------- -------
(1) Karen Prior worked four days a week through to 1 July 2021,
after which, upon taking on her new role as Corporate
Responsibility Director this reduced to two days per week.
(2) Remuneration shown for Marc Wilson for 2021 relates to
amounts between the date of appointment as a Director on 1 July
2021 and the end of the financial year.
(3) For 2022 and onwards, the IFRS 2 share-based payment charge
disclosure will be replaced by the value of vested share options in
the period. This change is related to the implementation of the PSP
long-term incentive award structure. The PSP award includes
performance based vesting criteria and therefore subject to
estimations on future performance which can lead to variability in
the IFRS 2 charge. Disclosing the vale of share options vested will
be a fairer reflection of the value of share options received by
Directors.
Non-Executive Directors
The remuneration of each Non-Executive Director for the year
ended 31 December 2022 and the prior year is set out in the table
below.
Fees
2022 2021
GBP000 GBP000
-------------------- ------- -------
Kate Allum(1,2) 58 32
Matthew Robinson(3) 35 34
Ian Hamilton(4) 10 26
Peter Lawrence(5) - 19
Richard Wood(6) - 9
---------------------- ------- -------
(1) Appointed 1 February 2021.
(2) Remuneration for 2022 includes GBP8,000 relating to agreed
increases in fees following the appointment as Chair that should
have been paid in the prior year.
(3) Appointed 11 January 2021
(4) Appointed 1 April 2021, resigned 17 April 2022
(5) Resigned 17 June 2021
(6) Resigned 31 January 2021
Ad hoc payments
There were no ad hoc payments to any Directors for the year
ended 31 December 2022.
Payments to past Directors
There were no payments to past Directors for the year ended 31
December 2022.
Loss of office
There were no loss of office payments made for the year ended 31
December 2022.
Long-term incentive structure
In March, following advice from FIT Remuneration Consultants LLP
and a consultation process with shareholders, a new long-term
incentive structure was implemented that will apply to Executive
Directors and management. As a result, Anpario has introduced a new
Performance Share Plan to work alongside the existing JSOP share
scheme.
PSP
The Anpario PSP award creates a maximum opportunity for the
participating Executive Directors equivalent to 100% of salary,
Executive Management 40% of salary and other key management 20% of
salary.
The Awards have been granted in the form of nil-cost share
options and will normally vest after three years, subject to the
achievement of performance conditions. Awards may become
exercisable subject to continued employment and the achievement of
three performance conditions, being a financial target representing
75% of the total award and two further ESG components representing
the remaining 25% as described below.
Diluted adjusted earnings per share:
75% of the PSP award is weighted on the achievement of diluted
adjusted earnings per share growth targets over a three-year
period. The minimum growth required is 6% per annum for a 18.75%
vesting of the overall PSP award, on a pro-rata straight-line basis
to a maximum 75% vesting of the overall PSP award for annual growth
of 16%.
Reduction of Carbon Intensity:
The primary objective for ESG based targets is to reduce Carbon
Intensity in-line with our ambitions to achieve net-zero emissions
by 2030. 15% of the PSP award is weighted on the reduction of
annual Carbon Intensity cumulatively since the year ended 31
December 2019. The minimum reduction required is 63% per annum for
a 4.5% vesting of the overall PSP award, on a pro-rata
straight-line basis to a maximum 15% vesting of the overall PSP
award for a cumulative reduction of 70%.
Other ESG Objectives:
The final potential 10% of the PSP Award is based on the
achievement of progress towards other ESG objectives. This will be
based on a qualitative assessment by the Remuneration Committee
which will consider a range of quantitative and qualitative inputs,
including but not limited to: diversity, equality and
inclusiveness; training and development of staff; reductions in
waste and water usage; health and safety; and sustainable business
operations.
Joint Share Ownership Plan
The Joint Share Ownership Plan ("JSOP") and the Anpario plc
Employees Shares Trust ("the Trust") were established and approved
by resolution of the Non-Executive Directors on 26 September 2011.
The JSOP provides for the acquisition by employees, including
Executive Directors, of beneficial interests as joint owners (with
the Trust) of Ordinary Shares in the Company upon the terms of a
Joint Ownership Agreement ("JOA").
The terms of the JOAs provide, inter alia, that if jointly owned
shares become vested and are sold, the proceeds of sale will be
divided between the joint owners so that the participating Director
receives an amount equal to any growth in the market value of the
jointly owned Ordinary shares above the initial market value, less
a "carrying cost" over the vesting period (equivalent to simple
interest at 4.5 per cent per annum on the initial market value) and
the Trust receives the initial market value of the jointly owned
shares plus the carrying cost. Jointly owned Ordinary shares will
become vested if the participant remains with the Company for a
minimum period of 3 years.
Director's share interests and awards
Share interests
The interests of the Directors who served during the period, as
at 31 December 2022, in the Ordinary shares of 23p each in the
Company were as follows: -
31 Dec Interests Interests 31 Dec
2021 acquired disposed 2022 Guidelines
Number in the year in the year Number Shareholding guidelines met
----------------- ------- ------------ ------------ ------- ----------------------- ----------
Richard Edwards 88,396 80,000 - 168,396 100% Yes
Karen Prior 77,445 80,000 - 157,445 100% Yes
Marc Wilson 9,676 2,000 - 11,676 100% No
Matthew Robinson - 8,600 - 8,600 n/a n/a
----------------- ------- ------------ ------------ ------- ----------------------- ----------
There have been no changes in Directors' interests between 31
December 2022 and 22 March 2023.
Share awards
Awards granted in the year are as follows.
Normal Awards made Minimum Exercise price
Director Award plan Date of grant vesting period during the year (pence per share)
------------ ----------- -------------- ---------------- ---------------- ----------------------
Marc Wilson JSOP 23 March 2022 3 years 300,000 545.00
Marc Wilson PSP 23 March 2022 3 years 26,168 nil
------------ ----------- -------------- ---------------- ---------------- ----------------------
Under the Company's long-term incentive plans the following
Directors have the right to acquire Ordinary shares of 23p each as
follows.
31 Dec 31 Dec
Exercise price 2021 Options exercised Options granted 2022
Director Award plan (pence per share) Number in year in year Number
---------------- ----------- ------------------ ------- ----------------- --------------- -------
Richard Edwards EMI 158.50 80,000 (80,000) - -
EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 609,781 - - 609,781
JSOP(1) 245.00 740,219 - - 740,219
SAYE 322.72 5,577 - - 5,577
---------------------------- ------------------ ------- ----------------- --------------- -------
Karen Prior JSOP(2) 79.00 86,956 - - 86,956
EMI 158.50 80,000 (80,000) - -
EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 347,825 - - 347,825
JSOP(1) 245.00 590,219 - - 590,219
JSOP(1) 375.00 175,000 - - 175,000
SAYE 322.72 5,577 - - 5,577
Marc Wilson JSOP(1) 330.00 20,000 - - 20,000
SAYE 322.72 5,577 - - 5,577
JSOP(1) 620.00 50,000 - - 50,000
JSOP(1) 545.00 - - 300,000 300,000
PSP(3) nil - - 26,168 26,168
---------------------------- ------------------ ------- ----------------- --------------- -------
(1) The exercise price upon vesting will increase by a carrying
cost equivalent to simple interest at 4.5% per annum on the option
price for three years
(2) The exercise price upon vesting will increase by a carrying
cost equivalent to simple interest at 4.5% per annum on the option
price until exercised
(3) Vesting is subject to performance criteria as outlined in
the remuneration policy section above
Directors' service contracts
The Executive Directors are employed under service contracts
with the Group, these are available to view at the Company's
Registered Office. The key terms of the services contracts are set
out below.
Notice period
Executive Director Position Contract Date From Company From Director
------------------ --------------------------------- --------------- ------------ -------------
Richard Edwards Chief Executive Officer 5 November 2006 12 months 6 months
Karen Prior Corporate Responsibility Director 1 October 2009 12 months 6 months
Marc Wilson Group Finance Director 1 July 2021 12 months 6 months
------------------ --------------------------------- --------------- ------------ -------------
Non-Executive Directors' terms of appointment
Each of the Chairman and Non-Executive Director have a letter of
appointment stating their annual fee and termination terms.
The appointments are terminable on three months written notice
at any time by either the Company or the Non-Executive
Director.
Notice period
Executive Director Date of current appointment From Company From Director
------------------ --------------------------- ------------ -------------
Kate Allum 1 February 2021 3 months 3 months
Matthew Robinson 11 January 2021 3 months 3 months
------------------ --------------------------- ------------ -------------
Matthew Robinson
Remuneration Committee Chairman
22 March 2023
Audit Committee report
Composition and meetings of the Audit Committee
The Audit Committee is comprised of the two Non-Executive
Directors, whom the Board considers to be independent and is
chaired by Matthew Robinson. Meetings are also attended, by
invitation, by the Group Finance Director, external auditors and
other management as appropriate.
The auditor, BDO LLP, has indicated its willingness to continue
in office and a resolution seeking to reappoint BDO LLP as the
Group's auditor will be proposed at the AGM.
The Committee meets at least twice each financial year with the
external auditors and considers any issues that are identified
during the course of their audit work. The Board is satisfied that
the Committee members have recent and relevant financial
experience.
The Committee met twice during the year ended 31 December 2022
with full attendance by the Committee members.
Role, responsibilities and terms of reference
The Audit Committee's role is to assist the Board in the
effective discharge of its responsibilities for financial reporting
and internal control. The Audit Committee's responsibilities
include:
Financial reporting
Monitor the integrity of the financial statements of the
Company, and to assist the Board in ensuring that the financial
statements and any formal announcements relating to financial
performance, when taken as a whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy. Ensuring that reviews are undertaken
on the significant financial reporting judgments contained in
financial statement focusing particularly on:
- the consistency of and any changes to accounting policies and practices;
- the methods used to account for significant or unusual
transactions where different approaches are possible;
- whether the Company has followed appropriate accounting
standards and made appropriate estimates and judgments, taking into
account the views of the external auditor; and
- the clarity of disclosure in the Company's financial reports
and the context in which statements are made.
Internal controls and risk management
- keep under review the adequacy and effectiveness of the
Company's internal financial controls and internal control and risk
management systems;
- keep under review the requirement for an internal audit function; and
- review and approve the statements to be included in the annual
report concerning internal controls and risk management.
Compliance, whistleblowing and fraud
review the Company's arrangements for its employees to raise
concerns, in confidence, about possible wrong doing in financial
reporting or other matters so as to ensure that arrangements are in
place for the proportionate and independent investigation of such
matters and for appropriate follow-up action; and
review the Company's systems and controls for the detection of
fraud and prevention of bribery.
External audit
Consider and make recommendations to the Board, to be put to
shareholders for approval at the AGM, in relation to the
appointment, re-appointment and removal of the external auditor.
The Committee shall oversee the selection process for a new auditor
and if an auditor resigns, the Committee shall investigate the
issues leading to this and decide whether any action is required.
Oversee the relationship with the external auditor including (but
not limited to):
- recommendations on their remuneration, whether fees for audit
or non-audit services and that the level of fees is appropriate to
enable an adequate audit to be conducted;
- approval of their terms of engagement, including any
engagement letter issued at the start of each audit and the scope
of the audit;
- assessing annually the external auditor's independence and
objectivity taking into account relevant UK professional and
regulatory requirements and the relationship as a whole, including
the provision of any non-audit services;
- satisfying itself that there are no relationships (such as
family, employment, investment, financial or business) between the
auditor and the Company (other than in the ordinary course of
business);
- monitoring the auditor's compliance with relevant ethical and
professional guidance on the rotation of audit partner;
- assessing annually the qualifications, expertise and resources
of the auditor and the effectiveness of the audit process which
shall include a report from the external auditor on their own
internal quality procedures;
- develop and implement a policy on the engagement of the
external auditor to supply non-audit services;
- discuss with the external auditor(s) before the audit
commences the nature and scope of the audit, and ensure
co-ordination where more than one audit firm is involved;
- review the findings of the audit, discussing any major issues
which arose during the audit, any problems and reservations arising
from the Final audit, and any matters the auditors may wish to
discuss (in the absence of management where necessary); and
- review the external auditor's management letter and management's response.
The Committee regularly reviews its terms of reference and makes
recommendations to the Board for any changes as appropriate. The
current terms of reference are available on the Company's
website.
Independence of external auditor
The Committee reviews the independence of the external auditor,
BDO LLP on an annual basis. It receives a detailed audit plan, from
BDO LLP, identifying their assessment of the key risks. The
Committee assesses the effectiveness of the audit process in
addressing these matters through the reporting it receives from BDO
LLP.
Judgements and significant risks considered in respect to the
Annual Report
Management override of controls
The Committee considered the inherent risk of management
override of internal controls as defined by auditing standards. In
doing so the Committee continue to review the overall robustness of
the control environment, including consideration of the Group's
whistleblowing arrangements and the review by the external
auditor.
Recognition and measurement of product development
The Group holds assets on the statement of financial position in
relation to both current research and development projects and
developed products that have resulted in commercial launches. These
assets are subject to judgements such as whether costs are eligible
for capitalisation, the amortisation periods and impairment
reviews. The Committee was satisfied with the accounting policy in
force and with the estimates and judgements applied by management
in employing this policy.
Revenue recognition
The Committee considered the inherent risk of fraud in revenue
recognition as defined by auditing standards and was satisfied that
there no issues arising.
Matthew Robinson
Audit Committee Chairman
22 March 2023
Independent auditors' report
Opinion on the financial statements
In our opinion:
- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
December 2022 and of the Group's profit for the year then
ended;
- the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Anpario Plc (the
'Parent Company') and its subsidiaries (the 'Group') for the year
ended 31 December 2022 which comprise the Consolidated statement of
comprehensive income, the Consolidated statement of financial
position, the Consolidated statement of changes in equity, the
Consolidated statement of cash flows, the Company statement of
financial position and the Company statement of changes in equity
and notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
UK adopted international accounting standards. The financial
reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in
the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the Group and the Parent
Company's ability to continue to adopt the going concern basis of
accounting included:
- Obtaining an understanding of how the Directors undertook the
going concern assessment process to determine if we considered it
to be appropriate for the circumstances by way of enquiry with the
Directors in regards to who prepared the assessment and the
information and individuals consulted in the process;
- Obtaining the Directors' trading forecasts which underly the
going concern assessment and challenging them on the key estimates
and assumptions within such with a particular focus onthe forecast
levels of revenue, gross profit predictions and working capital
cycles, through analysis and comparison of the forecasts with prior
year actuals;
- Performing data verification and logic checks to confirm the
mathematical accuracy of the forecast model;
- Reviewing 'stress tested' sensitivity analysis to assess the
quantum of adverse variance against forecast that could be
sustained without creating material uncertainties over the going
concern assessment;
- Undertaking an analysis of post year end trading results and
comparing to forecast and current year figures in order to evaluate
the accuracy and achievability of forecasts, and
- Performing a review of the disclosures in the financial
statements to to ensure they are adequate, consistent with the
Director's assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and the Parent Company's ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
Key audit matters Existence and valuation of, developed product and development costs classified as 2022 2021
intangible
assets.
---------------------------------------------------------------------------------------
Yes Yes
--------------------------------------------------------------------------------------- ---- ----
Materiality Group financial statements as a whole
GBP246,000 (2021:GBP285,000) based on 5% (2021: 5%) of a 3 year average profit before tax
(2021: annual profit before tax)
---------------------------------------------------------------------------------------------------
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a
risk of material misstatement.
We determined that the Parent Company was the only significant
component within the Group and a full scope audit was performed by
the Group engagement team.
The remaining 16 components ('the components') were not
individually financially significant enough to require a full scope
audit for Group purposes, but did present specific individual risks
that needed to be addressed in accordance with the Group audit
approach. The components act as sales offices and all purchases are
made from the Parent Company, therefore, through specific
risk-focussed audit procedures over inventories, trade receivables
and cash, along with analytical review procedures we gained
sufficient audit assurance to form our opinion on the financial
statements as a whole. All work was conducted by the Group
engagement team, with the exception of year-end inventory count
attendance procedures at locations in Brazil, China, Indonesia, the
Netherlands, Thailand and the United States of America. Overseas
inventory count procedures were performed by other BDO network
firms, operating in accordance with instructions issued by the
Group engagement team.
Key audit matters
Key audit matter How the scope of our audit addressed
the key audit matter
Existence and valuation of developed Valuation: Valuation:
product and development costs
classified as intangible The Group has a material net book We analysed the level of revenue and
assets. (See accounting policies and value for internally developed gross profits generated historically
Note 13 intangible assets) products of GBP1.7m (2021 by developed products
- GBP1.7m) forming part of the Brands through review of trading results and
and developed products intangible compared these to the carrying value
asset with net book of the relevant
value of GBP3.4m (2021 - GBP3.6m) intangible asset, in order to identify
disclosed in Note 13. evidence of a fall in demand or other
indicators of
Following consideration of impairment impairment. This process allowed us to
indicators management carried out an challenge management's assessment of
impairment assessment the expected future
by considering the net present value returns and the anticipated life of
of future cash flows generated by the the products.
products in comparison
to their net book value. We assessed the reasonableness of
forecast future trading assumptions by
Existence: reference to current
year results and budgets and
In addition the Group has cummualtive considered the sensitivity of the
capitalised development costs of estimates of future performance
GBP1.2m (2021 - GBP0.8m) to material changes in the net
for products in development at the realisable value of each of the
year end date. developed products. We checked
that the anticipated performance of
Under accounting standards to the developed products was consistent
capitalise development costs with the overall
management is required to make Group forecasts prepared for assessing
certain judgements, including the the basis of going concern.
stage of development, the technical
feasibility of completing We reviewed the impairment assessment
the product development and the models against the requirements set
commercial viability of the products out within the relevant
accounting standard and tested the
These judgements determine whether integrity of the mathematical
development costs are eligible for calculations in the model.
capitalisation and the
period of time over which assets will We consulted with our internal
be amortised. valuation experts on the
reasonableness of the discount rate
There is also a risk of fraud through applied and the basis of the
manipulation in respect of the impairment model.
assessment made by management
of which costs are eligible for Existence:
capitalisation
We tested, on a sample basis, that
Owing to the magnitude of the product internally generated development costs
development intangibles, and the level capitalised in the
of estimation year of GBP0.5m (2021 - GBP0.4m) were
and judgement involved in determining valid business expenses, that they
both the eligibility of costs for related to the development
capitalisation and of the relevant product and further
recoverable amount, we determined the that they met the eligibility criteria
existence and valuation of brand, in IAS 38 to be
developed products capitalised by corroborating the costs
and the development costs intangible to supporting evidence.
assets to be a key audit matter.
For the portfolio of projects under
development, including costs
capitalised in previous years
as well as the current year we made
enquiries of staff outside of the
finance function, including
the technical director, who are
involved in the development of the
products in order to gain
an understanding of the development
process in order to assess if the
development costs should
continue to be capitalised.
Key observations:
We found the estimates and judgements
made by management in valuing the
developed products
and development costs intangibles were
reasonable and that costs that have
been capitalised
relate to projects that exist have
been appropriately capitalised.
-------------------------------------- --------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements Parent company financial statements
2022 2021 2022 2021
--------------------- ---------------------- ---------------------- ----------------------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------------------- ---------------------- ----------------------
Materiality 246 285 226 257
--------------------- ---------------------- ---------------------- ----------------------
Basis for determining 5% of pre-tax 5% of pre-tax profit 5% of Parent Company Capped at 90% of
materiality profit, based on a 3 pre-tax profit Group materiality
year average
--------------------- ---------------------- ---------------------- ----------------------
Rationale for the
benchmark applied Profit before tax remains the key driver of the business' value and is the underlying
driver
for management's key measure of performance. Due to the variability in the reported profit
in the recent years a 3-year average has been applied in the current year.
---------------------------------------------------------------------------------------------
Performance
materiality 190 199 170 180
--------------------- ---------------------- ---------------------- ----------------------
Basis for determining Set at 75% of Set at 70% of Set at 75% of Set at 70% of
performance materiality materiality materiality materiality
materiality
--------------------- ---------------------- ---------------------- ----------------------
Our calculation of performance materiality was increased from
70% of financial statement materiality to 75% in the year. Our
rationale for this increase is that it is the third year of our
appointment as auditor and the history of unadjusted differences
over our period of appointment is low. Performance materiality of
75% of financial statement materiality was considered to give
suitable level to determine the nature of and extent of testing
required.
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP5k (2021:
GBP5.7k). We also agreed to report differences below this threshold
that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and
matters as described below.
Strategic report and Directors' report In our opinion, based on the work undertaken in the course
of the audit:
* the information given in the Strategic report and the
Directors' report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
* the Strategic report and the Directors' report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the
Group and Parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the
strategic report or the Directors' report.
Matters on which we are required to report by exception We have nothing to report in respect of the following
matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit
have not been received from branches not visited by
us; or
* the Parent Company financial statements are not in
agreement with the accounting records and returns; or
* certain disclosures of Directors' remuneration
specified by law are not made; or
* we have not received all the information and
explanations we require for our audit.
-------------------------------------------------------------
Responsibilities of Directors
As explained more fully in the Statement of Directors'
responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
We gained an understanding of the legal and regulatory framework
applicable to the Group and the Components of the Group including
the industry in which they operate and considered the risk of acts
by the Group and components which were contrary to applicable laws
and regulations, including fraud. Our understanding was obtained
from enquires with the board of Directors and the management team,
our experience of auditing similar business models, and continuity
in the audit team in respect of auditing the entity in previous
years. The most significant matters relevant to the Group included
but were not limited to compliance with the Companies Act 2006, the
AIM listing rules Animal Feed product regulatory requirements, the
principles of the Quoted Companies Alliance Corporate Governance
Code and and accounting standards.
We focused on areas that could give rise to a material
misstatement in the Group and Company financial statements which,
alongside the key audit matter, included a fraud risk in relation
to revenue recognition and the risk of management override of
controls. Our testing included, but was not limited to:
- enquiries of management of non compliance with laws and
regulations or fraud in the period and other unusual transactions.
We corroborated our enquires through a review of minutes of Board
meetings throughout the year;
- challenge of key estimates and judgements, including those
applied to the key audit matter by management in the financial
statements to check that it was free from management bias;
- identifying and testing a sample of journal entries for the following journal types:
- any journals outside of the normal course of business or
indicative of manipulation of the financial statements;
- all journals posted to revenue to ascertain if any unusual
transactions exist which are outside the normal course of business;
and
- any manual or late journals posted at a consolidated level.
- performing the following revenue tests:
- review of the revenue nominal accounts for any unusual
transactions, including reviewing all postings to revenue in the
significant component of the Group using data analytic techniques
to identify outliers which did not follow the pattern we
expected;
- testing a sample of transactions posted to the nominal ledger
in December 2021 to check that revenue had been recorded in the
correct period;
- review of the elimination of intra-group revenue and
associated unrealised profit within inventories at consolidation
level; and
- review of transfer prices applied on a sample of intra-group
revenue transactions to verify that arm's length prices had been
applied.
- Consideration of management's assessment of related parties
and any other unusual transactions and evaluating the process for
identifying and monitoring any such transactions, and
- Consideration of the total unadjusted audit differences for
indications of bias or deliberate misstatement.
We communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to
the Parent Company's members those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Gareth Singleton (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK
22 March 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
for the year ended 31 December 2022
2022 2021
Note GBP000 GBP000
---------------------------------------------------------------- ----- --------- ---------
Revenue 3 33,103 33,367
Cost of sales (18,967) (17,106)
---------------------------------------------------------------- ----- --------- ---------
Gross profit 14,136 16,261
Administrative expenses (10,576) (10,610)
Operating profit 4 3,560 5,651
Depreciation and amortisation 4 1,225 1,273
Adjusting items 6 423 53
Adjusted EBITDA 6 5,208 6,977
---------------------------------------------------------------- ----- --------- ---------
Net finance income 9 121 50
---------------------------------------------------------------- ----- --------- ---------
Profit before tax 3,681 5,701
Income tax 10 (378) (1,018)
---------------------------------------------------------------- ----- --------- ---------
Profit for the year 3,303 4,683
---------------------------------------------------------------- ----- --------- ---------
Other comprehensive income/(expense):
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translating foreign operations 387 (12)
Cashflow hedge movements (net of deferred tax) 19 (902) (124)
Total comprehensive income for the year 2,788 4,547
---------------------------------------------------------------- ----- --------- ---------
Basic earnings per share 12 16.13p 22.92p
Diluted earnings per share 12 15.10p 21.16p
Adjusted earnings per share 12 17.81p 24.92p
Diluted adjusted earnings per share 12 16.67p 23.01p
---------------------------------------------------------------- ----- --------- ---------
Consolidated statement of financial position
as at 31 December 2022
restated(1) restated(1)
2022 2021 2020
Note GBP000 GBP000 GBP000
--------------------------------------------------- ----- --------- ------------ ------------
Intangible assets 13 11,375 11,295 11,522
Property, plant and equipment 14 4,864 4,603 4,142
Right-of-use assets 15 50 81 85
Deferred tax assets 16 859 1,352 987
Derivative financial instruments 19 153 108 641
Non-current assets 17,301 17,439 17,377
Inventories 17 9,867 7,578 4,902
Trade and other receivables 18 7,003 6,873 6,053
Derivative financial instruments 19 21 335 327
Current income tax assets 774 214 -
Short-term investments 1,828 1,803 2,348
Cash and cash equivalents 11,739 13,742 13,472
--------------------------------------------------- ----- --------- ------------ ------------
Cash, cash equivalents and short-term investments 20 13,567 15,545 15,820
Current assets 31,232 30,545 27,102
Total assets 48,533 47,984 44,479
--------------------------------------------------- ----- --------- ------------ ------------
Lease liabilities 21 (17) (17) (7)
Derivative financial instruments 19 (825) (157) -
Deferred tax liabilities 16 (1,724) (2,264) (1,662)
Non-current liabilities (2,566) (2,438) (1,669)
Trade and other payables 22 (3,983) (5,172) (5,007)
Lease liabilities 21 (35) (68) (83)
Derivative financial instruments 19 (638) (4) -
Current income tax liabilities - - (215)
Current liabilities (4,656) (5,244) (5,305)
Total liabilities (7,222) (7,682) (6,974)
--------------------------------------------------- ----- --------- ------------ ------------
Net assets 41,311 40,302 37,505
--------------------------------------------------- ----- --------- ------------ ------------
Called up share capital 23 5,624 5,446 5,426
Share premium 23 14,934 11,547 11,148
Other reserves 24 (10,461) (6,788) (6,506)
Retained earnings 25 31,214 30,097 27,437
Total equity 41,311 40,302 37,505
--------------------------------------------------- ----- --------- ------------ ------------
(1) Prior years have been restated to distinguish between cash
and cash equivalents and short-term investments, the later of which
relate to deposit accounts with a notice period of more than three
months but less than six months. These were previously shown as
cash and cash equivalents. See note 20.
The financial statements were approved by the Board and
authorised for issue on 22 March 2023.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share Share Other Retained Total
capital premium reserves earnings equity
------------------------------------
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 1 Jan 2021 5,426 11,148 (6,506) 27,437 37,505
------------------------------------ ----- --------- --------- ---------- ---------- --------
Profit for the period - - - 4,683 4,683
Currency translation differences - - (12) - (12)
Cash flow hedge reserve 19 - - (124) - (124)
Total comprehensive income for
the year - - (136) 4,683 4,547
------------------------------------ ----- --------- --------- ---------- ---------- --------
Issue of share capital 23 20 399 - - 419
Joint-share ownership plan 24 - - (310) - (310)
Share-based payment adjustments 24 - - 36 - 36
Deferred tax regarding share-based
payments - - 128 - 128
Final dividend relating to 2020 - - - (1,372) (1,372)
Interim dividend relating to
2021 11 - - - (651) (651)
Transactions with owners 20 399 (146) (2,023) (1,750)
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 31 Dec 2021 5,446 11,547 (6,788) 30,097 40,302
------------------------------------ ----- --------- --------- ---------- ---------- --------
Profit for the period - - - 3,303 3,303
Currency translation differences - - 387 - 387
Cash flow hedge reserve 19 - - (902) - (902)
Total comprehensive income for
the year - - (515) 3,303 2,788
------------------------------------ ----- --------- --------- ---------- ---------- --------
Issue of share capital 23 178 3,387 - - 3,565
Joint-share ownership plan 24 - - (3,270) - (3,270)
Share-based payment adjustments 24 - - 183 - 183
Deferred tax regarding share-based
payments - - (71) - (71)
Final dividend relating to 2021 11 - - - (1,512) (1,512)
Interim dividend relating to
2022 11 - - - (674) (674)
Transactions with owners 178 3,387 (3,158) (2,186) (1,779)
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 31 Dec 2022 5,624 14,934 (10,461) 31,214 41,311
------------------------------------ ----- --------- --------- ---------- ---------- --------
Consolidated statement of cash flows
for the year ended 31 December 2022
restated(1)
2022 2021
Note GBP000 GBP000
------------------------------------------------ ----- -------- ------------
Operating profit for the year 3,560 5,651
Depreciation, amortisation and impairment 4 1,225 1,273
Loss on disposal of intangible assets 13 45 -
Loss/(gain) on disposal of property, plant
and equipment 14 1 (2)
Share-based payments 24 183 36
Fair value adjustment to derivatives 395 533
Operating cash flows before changes in
working capital 5,409 7,491
Increase in inventories (1,661) (2,759)
Decrease/(increase) in trade and other
receivables 254 (915)
(Decrease)/increase in trade and other
payables (2,171) 375
Increase in working capital (3,578) (3,299)
Cash generated from operations 1,831 4,192
------------------------------------------------ ----- -------- ------------
Income tax paid (744) (1,047)
Net cash from operating activities 1,087 3,145
------------------------------------------------ ----- -------- ------------
Purchases of property, plant and equipment 14 (809) (917)
Proceeds from disposal of property, plant
and equipment - 6
Payments to acquire intangible assets 13 (731) (506)
Interest received 9 124 54
Movement in short-term investments 20 (25) 545
Net cash used in investing activities (1,441) (818)
Joint share ownership plan 24 (3,270) (310)
Proceeds from issuance of shares 3,565 419
Cash payments in relation to lease liabilities (70) (89)
Lease interest paid (3) (4)
Dividend paid to Company's shareholders (2,186) (2,023)
Net cash used in financing activities (1,964) (2,007)
Net (decrease)/increase in cash and cash
equivalents (2,318) 320
------------------------------------------------ ----- -------- ------------
Effect of exchange rate changes 315 (50)
Cash and cash equivalents at the beginning
of the year 13,742 13,472
Cash and cash equivalents at the end of
the year 11,739 13,742
------------------------------------------------ ----- -------- ------------
(1) Prior years have been restated to distinguish between cash
and cash equivalents and short-term investments, the later of which
relate to deposit accounts with a notice period of more than three
months but less than six months. These were previously shown as
cash and cash equivalents and therefore included in the statement
of cash flows, however now only the movement in short-term
investments is shown. See note 20.
Notes to the financial statements
for the year ended 31 December 2022
1. General information
Anpario plc ("the Company") and its Subsidiaries (together "the
Group") produce and distribute natural feed additives for animal
health, hygiene and nutrition. Anpario plc is a public company
traded on the Alternative Investment Market ("AIM") of the London
Stock Exchange and is incorporated in the United Kingdom and
registered in England and Wales. The address of its registered
office is Unit 5 Manton Wood Enterprise Park, Worksop,
Nottinghamshire, S80 2RS. The presentation currency of the Group is
pounds sterling. For details of the basis of consolidation see note
2.2.
2. Summary of significant accounting policies
2.1. Basis of preparation
The Group has presented its financial statements in accordance
with UK adopted International Accounting Standards.
The financial statements have been prepared on the historical
cost basis, except for financial instruments that are measured at
fair values at the end of each reporting period, as explained in
the accounting policies below. Historical cost is generally based
on the fair value of the consideration given in exchange for goods
and services.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in a period of the revision and future periods
if the revision affects both current and future periods. More
information is available in note 2.22.
The principal accounting policies of the Group are set out
below, and have been applied consistently in dealing with items
which are considered material in relation to the Group's financial
statements.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
has adequate resources to continue in operation for the foreseeable
future and has been specifically assessed to the period ending
March 2024.
The Group has a strong balance sheet, with no debt and a strong
cash position and has traded profitably and cash generatively
through the financial year. The Group's forecasts and projections,
taking into account reasonable estimate of a possible downturn in
trading performance arising from the ongoing market and
geo-political uncertainty, show that the Group has sufficient
financial resources, both from the Group's robust balance sheet and
its expected cash flow generation, sufficient for the going concern
period. Accordingly, the Directors have adopted the going concern
basis in preparing these consolidated financial statements.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its Subsidiaries drawn up to 31
December 2022.
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50%
of the voting power but is able to govern the financial and
operating policies by virtue of de-facto control.
De-facto control may arise in circumstances where the size of
the Group's voting rights relative to the size and dispersion of
holdings of other shareholders give the Group the power to govern
the financial and operating policies, etc. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control
ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a Subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred. If the
business combination is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date;
any gains or losses arising from such remeasurement are recognised
in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IFRS 9 in profit or loss. Contingent consideration that is
classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the Subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting policies of Subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
2.3. Revenue recognition
The Group applies IFRS 15 'Revenue from Contracts with
Customers'. Revenue comprises the fair value of the consideration
received or receivable for the sale of goods in the ordinary course
of the Group's activities. Revenue is shown net of value added tax,
returns and discounts and after eliminating sales within the Group.
Revenue is derived principally from the sales of goods.
The amount of revenue recognised reflects the consideration to
which the Group is or expects to be entitled to in exchange for
those goods or services. Revenue is recognised when the performance
obligations have been satisfied, which is once control of the goods
has transferred from Anpario to the buyer. In most instances,
control passes and sales revenue is recognised at the point in time
when the product is delivered to the vessel or vehicle on which it
will be transported once loaded, the destination port or the
customer's premises.
In some instances the goods are sold on Cost and Freight (CFR)
or Cost, Insurance and Freight (CIF) Incoterms. When goods are sold
on a CFR or CIF basis, the Group is responsible for providing these
services (shipping and insurance) to the customer, sometimes after
the date at which Anpario has lost control of the goods. Anpario
considers revenue related to the shipping and insurance service
element of the contract to be immaterial and does not consider
there to be separate performance obligations.
2.4. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Board.
2.5. Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into pounds sterling at the rates of
exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are included in the profit or loss for
the period.
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("functional
currency"). The consolidated financial statements are presented in
pounds sterling, which is the Group's functional and presentational
currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the date of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement,
except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
Group companies
The results and financial position of all Group entities that
have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
- assets and liabilities for each balance sheet presented are
translated at the closing exchange rate at the date of the balance
sheet;
- income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case the income and expenses are
translated at the rate on the dates of the transaction); and
- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as hedges of
such investments, are taken to shareholders' equity. When a foreign
operation is partially disposed of or sold, exchange differences
that were recognised in equity are recognised in the income
statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity
are treated as assets and liabilities of the foreign entity and
translated at the closing exchange rate.
2.6. Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable net
assets acquired. Goodwill is reviewed for impairment at least
annually or more frequently if events or changes in circumstances
indicate a potential impairment. Goodwill is carried at cost less
accumulated impairment losses and is allocated to the appropriate
cash-generating unit for the purpose of impairment testing. Any
impairment is recognised immediately through the income statement
and is not subsequently reversed.
Brands
Brands are stated at cost less accumulated amortisation and
impairment. Brand names acquired in a business combination are
recognised at fair value based on an expected royalty value at the
acquisition date. Useful lives of brand names are estimated and
amortised over a period of 20 to 30 years on a straight-line basis
and included in administrative expenses in the income statement.
The Optivite Brand has already existed for over 30 years and is
expected to continue to have a useful life into the foreseeable
future, however management felt it appropriate to assign a finite
life rather than an indefinite one and as such assigned a life of
30 year's to this asset. This change was made in the current year
and amortisation has commenced on this basis. Brands are allocated
to appropriate cash-generating units and subject to impairment
testing on an annual basis. Any impairment is recognised
immediately through the income statement and is not subsequently
reversed.
Customer relationships
Customer relationships acquired in a business combination are
recognised at fair value at the acquisition date. Customer
relationships are deemed to have a finite useful life and are
carried at original fair value less accumulated amortisation.
Amortisation is calculated using the straight-line method over the
expected useful life of 10 years and included in administrative
expenses in the income statement.
Patents, trademarks and registrations
Separately acquired patents, trademarks and registrations are
shown at historical cost. Patents, trademarks and registrations
have finite useful lives and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line
method to allocate the cost of patents, trademarks and
registrations over their estimated useful lives of 5 to 20 years
and included in administrative expenses in the income
statement.
Development costs
Development costs are stated at cost less accumulated
amortisation and impairment. Development costs are recognised if it
is probable that there will be future economic benefits
attributable to the asset, the cost of the asset can be measured
reliably, the asset is separately identifiable and there is control
over the use of the asset.
The assets are amortised when available for use on a
straight-line basis over the period over which the Group expects to
benefit from these assets and included in administrative expenses
in the income statement. Research expenditure is written off to the
income statement in the year in which it is incurred.
Where appropriate, once development work has been completed the
asset(s) generated is reclassified to the Developed Products
intangible asset category and is amortised over a period of 10
years.
Development costs that are directly attributable to the design
and testing of identifiable and unique products controlled by the
Group are recognised as intangible assets when the following
criteria are met:
- it is technically feasible to complete the product so that it will be available for use;
- management intends to complete the product and use or sell it;
- there is an ability to use or sell the product;
- it can be demonstrated how the product will generate probable future economic benefits;
- adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
- the expenditure attributable to the product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the
product include the development employee costs and an appropriate
portion of relevant overheads.
Software and licenses
Software and licenses are stated at cost less accumulated
amortisation and impairment. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use. Amortisation is
calculated using the straight-line method to allocate the cost of
software and licenses over their estimated useful lives of 5 to 7
years and included in administrative expenses in the income
statement.
2.7. Impairment of non-financial assets
The carrying amounts of the Group's assets are reviewed at each
balance sheet date to determine whether there is any indication of
impairment, if so the asset's recoverable amount is estimated. The
recoverable amount is the higher of its fair value less costs to
sell and its value in use. For intangible assets that are not yet
available for use, goodwill or other intangible assets with an
indefinite useful life, an impairment test is performed at each
balance sheet date.
In assessing value in use, the expected future cash flows from
the asset are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. An impairment
loss is recognised in the income statement whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a change in the
estimates used to determine the recoverable amount, but not to an
amount higher than the carrying amount that would have been
determined (net of depreciation and or amortisation) had no
impairment loss been recognised in prior years. For goodwill, a
recognised impairment loss is not reversed.
2.8. Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use. Land is
not depreciated. Depreciation is provided at rates calculated to
write off the cost less estimated residual value of each asset over
its expected useful life using the straight-line method, as
follows:
Buildings 50 years or period of lease if shorter
Plant and machinery 3-10 years
--------------------------------------
Fixtures, fittings and equipment 3-10 years
--------------------------------------
Assets in the course of construction for production, supply or
administrative purposes, or for purposes not yet determined, are
carried at cost, less any recognised impairment loss. Cost includes
professional fees. Depreciation of these assets, on the same basis
as other assets, commences when the assets are ready for their
intended use.
The carrying amounts of the Group's assets are reviewed at each
balance sheet date to determine whether there is any indication of
impairment and an impairment loss is recognised in the income
statement where appropriate.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within the
income statement.
2.9. Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost is determined using the weighted average cost method.
The cost of finished goods comprises raw materials, direct labour,
other direct costs and related production overheads that have been
incurred in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in
the ordinary course of business.
2.10. Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of the receivables. The provision is recognised in the income
statement as an administrative expense.
The Group applies the simplified approach when using the
expected credit loss (ECL) impairment model for trade receivables.
Under the simplified approach the Group always measures the loss
allowance at an amount equal to the lifetime ECL for trade
receivables.
The measurement of ECL is a function of the probability of
default, loss given default (i.e. the magnitude of the loss if
there is a default) and the exposure at default. Loss given default
is an estimate of the loss arising on default. It is based on the
difference between the contractual cash flows due and those that
the lender would expect to receive. Probability of default
constitutes a key input in measuring ECL. Probability of default is
an estimate of the likelihood of default over a given time horizon,
the calculation of which includes historical data, assumptions and
expectations of future conditions.
The ECL on these financial assets are estimated using a
provision matrix based on the Group's historical credit loss
experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current
as well as the forecast direction of conditions at the reporting
date, including time value of money where appropriate.
The ECL's are updated each reporting period to reflect changes
in credit risk since initial recognition. The Group writes off a
trade receivable when there is information indicating that the
debtor is in severe financial difficulty and there is no realistic
prospect of recovery, e.g. when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings. None of the
trade receivables that have been written off is subject to
enforcement activities.
2.11. Trade and other payables
Trade and other payables are initially recognised at fair value
and are subsequently measured at amortised cost. Trade and other
payables are obligations to pay for goods or services that have
been acquired in the ordinary course of business from suppliers.
Trade payables are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of
the business if longer). If not, they are presented as non-current
liabilities.
2.12. Cash, cash equivalents and short-term investments
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term
deposits that are readily convertible into cash with a notice
period of less than three months.
Short-term investments
Short-term investments comprise short-term deposits that are
readily convertible into cash with a notice period more than three
months and less than a year.
2.13. Financial instruments
The Group's principal financial instruments comprise derivatives
and cash and cash equivalents. These financial instruments are used
to manage currency exposures, funding and liquidity requirements.
Other financial instruments which arise directly from the Group's
operations includes trade and other receivables (note 18) and trade
and other payables (note 22). The main risks arising from the
Group's financial instruments and related policies are detailed in
note 2.21.
Financial instruments, excluding derivatives, are held at
amortised cost. Derivative financial instruments are detailed in
note 2.14.
The Group uses the following valuation hierarchy to determine
the carrying value of financial instrument that are measured at
fair value:
Level 1 Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
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Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs).
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2.14. Derivative financial instruments
The Group applies IFRS 9 'Financial Instruments'. Where
qualifying for hedge accounting, derivative financial instruments
are held at fair value through other comprehensive income,
non-qualifying derivatives are held at fair value through profit or
loss.
The Group designates certain hedging instruments, which include
derivatives, in respect of foreign currency risk, as cash flow
hedges. Hedges of foreign exchange risk on firm commitments are
accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents
the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument is highly effective in offsetting
changes in fair values or cash flows of the hedged item.
The Group uses derivative financial instruments to manage
certain exposures to fluctuations in foreign currency exchange
rates, these have been designated as qualifying cash flow
hedges.
IFRS 9 removed the requirement to demonstrate hedge
effectiveness between a range of 80-125% and instead requires that
you can demonstrate an economic relationship between the hedged
item and hedging instrument. The effective portion of changes in
the fair value of derivatives that are designated and qualify as
cash flow hedges is recognised in other comprehensive income and
accumulated in reserves in equity. The gain or loss relating to the
ineffective portion is recognised immediately in profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss (for
instance when the forecast sale that is hedged takes place).
2.15. Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
no material items of income or expense that have been shown
separately due to the significance of their nature or amount.
2.16. Taxation
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Company's Subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in Subsidiaries, except where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
2.17. Employee benefits
Share-based payments
The Group issues equity-settled share-based payments and shares
under the Joint Share Ownership Plan ("JSOP"), Company Share Option
Plan ("CSOP") and Unapproved schemes to certain employees. These
are measured at fair value and along with associated expenses are
recognised as an expense in the income statement with a
corresponding increase (net of expenses) in equity. The fair values
of these payments are measured at the dates of grant using
appropriate option pricing models, taking into account the terms
and conditions upon which the awards are granted. The fair value is
recognised over the period during which employees become
unconditionally entitled to the awards subject to the Group's
estimate of the number of awards which will lapse, either due to
employees leaving the Group prior to vesting or due to non-market
based performance conditions not being met.
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
- including any market performance conditions (for example, an entity's share price);
- excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales growth
targets and remaining an employee of the entity over a specified
time period); and
- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium. The grant by the Company of options over its equity
instruments to the employees of Subsidiary undertakings in the
Group is treated as a capital contribution. The fair value of
employee services received, measured by reference to the grant date
fair value, is recognised over the vesting period as an increase to
investment in Subsidiary undertakings, with a corresponding credit
to equity in the Parent entity financial statements.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash-settled
transaction.
Pension obligations
The Group operates a defined contribution pension scheme and
contributes a percentage of salary to individual employee schemes.
Pension contributions are recognised as an expense as they fall due
and the Group has no further payment obligations once the
contributions have been paid.
2.18. Equity and reserves
Share capital
Share capital is determined using the nominal value of Ordinary
shares that have been issued.
Share premium
The share premium account includes any premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issue of shares are deducted from the share
premium account, net of any related income tax benefits.
Treasury shares
Treasury shares represents consideration paid, including any
directly attributable incremental costs, to acquire shares held by
the Company in Anpario plc.
Joint Share Ownership Plan
The JSOP shares reserve arises when the Company issues equity
share capital under the JSOP, which is held in trust by Anpario plc
Employees' Share Trust ("the Trust"). The interests of the Trust
are consolidated into the Group's financial statements and the
investment in the Company's shares is deducted from equity as if
they were treasury shares.
Merger reserve
The premium arising on the issue of consideration shares to
acquire a business is credited to the merger reserve.
Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative amount of
gains and losses on hedging instruments deemed effective as cash
flow hedges. The cumulative deferred gain or loss on the hedging
instrument is recognised only when the hedged transaction impacts
the profit or loss.
Share-based payment reserve
The share-based payment reserve is credited with amounts charged
to the income statement in respect of the movements in the fair
value of equity-settled share-based payments and shares issued
under the JSOP.
Translation reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, from their functional
currency into the Parent Company's functional currency, being
pounds sterling, are recognised directly in the foreign exchange
reserve.
Retained earnings
All other net gains and losses and transactions with owners
(e.g. dividends) not recognised elsewhere.
2.19. Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders.
2.20. Leases
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less).
For these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
- the lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate; or
- the lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used); or
- a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
Right-of-use assets relating to the Group's leasing activities
are recognised in the consolidated statement of financial position
at an amount equal to the lease liability on initial measurement
and any subsequent adjustments such as modifications to lease
terms. Right-of-use assets are depreciated over the shorter period
of lease term and useful life of the underlying asset.
2.21. Financial risk management
The Group is exposed to a number of financial risks, including
credit risk, liquidity risk, exchange rate risk and capital
risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and deposits with financial
institutions. The Group's exposure to credit risk is influenced
mainly by the individual characteristics of each customer. The
Group has an established credit policy under which each new
customer is analysed for creditworthiness before the Group's
payment and delivery terms and conditions are offered. Where
possible, risk is minimised through settlement via letters of
credit and purchase of credit insurance. The Group's investment
policy restricts the investment of surplus cash to interest bearing
deposits with banks and building societies without high credit
ratings.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure that it will always
have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable
losses or damage to the Group's reputation.
Exchange rate risk
The Group's principal functional currency is pounds sterling.
However, during the year the Group had exposure to Euros, US
dollars and other currencies. The Group's policy is to maintain
natural hedges, where possible, by matching revenue and receipts
with expenditure and put in place hedging instruments as considered
appropriate to mitigate the risk.
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. The Group's overall strategy remains unchanged
from 2021.
The capital structure of the Group consists of equity of the
Group, comprising issued capital, reserves and retained earnings as
disclosed in notes 23 to 25. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends
payable to shareholders, return capital to shareholders or issue
new shares.
2.22. Critical accounting judgements and key sources of estimation uncertainty
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are:
Critical accounting judgements
Capitalisation of development costs
Development costs are capitalised as per the Group accounting
policy outlined in note 2.6, which identifies several criteria to
be met in order for capitalisation to occur in accordance with IAS
38. Inherently due to the nature of developing new products and
applications there is uncertainty as to the outcome and judgements
are required to make a determination as to the suitability of costs
for capitalisation.
Key sources of estimation uncertainty
Estimated impairment value of intangible assets
The Group tests annually whether intangible assets have suffered
any impairment. Impairment provisions are recorded as applicable
based on Directors' estimates of recoverable values. Following the
assessment of the recoverable amount of goodwill and intangibles of
the Group that totalled GBP11.4m as per note 13 of the financial
statements, the Directors consider the recoverable amount of
goodwill and intangibles to be supported by their value in use
calculation. Budgets comprise forecasts of revenue, staff costs and
overheads based on current and anticipated market conditions that
have been considered and approved by the Board. Whilst the Group is
able to manage aspects of costs, the revenue projections are
inherently uncertain due to the short term nature of business and
unstable market conditions driven by external factors. The
sensitivity analysis in respect of the recoverable amount of
goodwill is presented in note 13.
Deferred tax recognition
Deferred tax is provided in full on temporary differences under
the liability method using substantively enacted rates to the
extent that they are expected to reverse. Provision is made in full
where the temporary differences result in liabilities, but deferred
tax assets are only recognised where the Directors believe it is
probable that the assets will be recovered. Judgement is required
to determine the likelihood of reversal of temporary differences in
establishing whether an asset should be recognised.
Patent Box Scheme
The UK Patent Box scheme allows companies to apply a lower rate
of corporation tax to profits attributable to qualifying patents.
IFRS accounting standards require tax to be recognised on the most
likely outcome, but as with all tax items, HMRC reserves the right
to query the Company's calculations. The scheme was first applied
to our 2021 tax return and at the current reporting date we are
still in the window for HMRC to review this first submission. We
have consulted with our tax and patent advisors and discussions
have taken place with Her Majesty's Revenue and Customs (HMRC)
about the principles of the UK Patent Box Legislation. The
directors consider the acceptance of our Patent Box tax
computations to be more likely than not and as such we expect a
material reduction in UK Corporation Tax because of the Patent Box
application.
2.23. Adoption of new and revised accounting standards
New standards, interpretations and amendments effective from 1
January 2022
During the year, the Group has adopted the following new and
revised standards and interpretations. Their adoption has not had
any significant impact on the accounts or disclosures in these
financial statements:
- Annual Improvements to IFRSs (2018-2020 Cycle): IFRS 1; IFRS
9; IAS 41 and the illustrative examples accompanying IFRS 16;
- Conceptual Framework for Financial Reporting (Amendments to IFRS 3);
- IAS 37 Provisions, Contingent Liabilities and Contingent
Assets (Amendment - Onerous Contracts - Cost of Fulfilling a
Contract); and
- IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use).
New standards, interpretations and amendments not yet
effective
The Group has not early adopted the following new standards,
amendments or interpretations that have been issued but are not yet
effective:
- IFRS 17 Insurance Contracts;
- Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS Practice Statement 2);
- Definition of Accounting Estimates (Amendment to IAS 8); and
- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
3. Operating segments
Management has determined the operating segments based on the
information that is reported internally to the Chief Operating
Decision Maker, the Board of Directors, to make strategic
decisions. The Board considers the business from a geographic
perspective and is organised into four geographical operating
divisions: Americas, Asia, Europe, Middle-East and Africa (MEA) and
Head Office.
All revenues from external customers are derived from the sale
of goods and services in the ordinary course of business to the
agricultural markets and are measured in a manner consistent with
that in the income statement.
Americas Asia Europe MEA Head Office Total
---------------------------------
for the year ended 31 Dec 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ------- -------- ------- ------------ --------
Total segmental revenue 9,149 12,617 16,071 3,848 - 41,685
Inter-segment revenue - - (8,582) - - (8,582)
Revenue from external customers 9,149 12,617 7,489 3,848 - 33,103
--------------------------------- --------- ------- -------- ------- ------------ --------
Depreciation and amortisation (3) (55) (13) (4) (1,150) (1,225)
Net finance income - 1 - - 120 121
Profit/(loss) before income tax 3,301 3,530 2,641 972 (6,763) 3,681
--------------------------------- --------- ------- -------- ------- ------------ --------
Americas Asia Europe MEA Head Office Total
---------------------------------
for the year ended 31 Dec 2021 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ------- --------- ------- ------------ ---------
Total segmental revenue 8,264 12,074 20,523 3,521 - 44,382
Inter-segment revenue - - (11,015) - - (11,015)
Revenue from external customers 8,264 12,074 9,508 3,521 - 33,367
--------------------------------- --------- ------- --------- ------- ------------ ---------
Depreciation and amortisation (3) (57) (11) (3) (1,199) (1,273)
Net finance income - 6 (1) - 45 50
Profit/(loss) before income tax 3,149 3,406 3,838 1,212 (5,904) 5,701
--------------------------------- --------- ------- --------- ------- ------------ ---------
No customer accounts for more than 10% of revenue.
Management review and control the Net and Total assets of the
Group, however, these are not monitored by Operating Segment and as
such they are not presented as such above.
4. Operating profit
Operating profit for the year has been arrived at after
charging/(crediting) the following items:
2022 2021
Notes GBP000 GBP000
----------------------------------------------------------- ------ ------- -------
Cost of inventories recognised as an expense 12,449 11,508
Employment costs 7 6,539 7,277
Share-based payment charges 6 213 53
Amortisation of intangible assets 13 646 733
Depreciation of property, plant and equipment 14 509 451
Depreciation of right-of-use assets 15 70 89
Loss/(gain) on disposal of tangible and intangible assets 46 (2)
Research and development expenditure 98 42
----------------------------------------------------------- ------ ------- -------
Our specialist technical team includes experts in poultry,
swine, ruminant & aquaculture species. During the year we have
capitalised internal costs of GBP447,000 (2021: GBP223,000) and
expended a further GBP81,000 (2021: GBP137,000) on external trials
in respect of current development projects.
5. Auditor's remuneration
During the year the Group obtained the following services from
the Company's auditor:
2022 2021
GBP000 GBP000
--------------------------------------------- ------- -------
Fees payable to Company's auditor for the
audit of Parent Company and consolidated
financial statements 111 92
Fees payable to Company's auditor for other
services:
Other non-audit services 5 -
The audit of Company Subsidiaries 5 5
Total fees payable to Company's auditor 121 97
--------------------------------------------- ------- -------
6. Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures (APMs), which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide depth and understanding to the
users of the financial statements to allow for further assessment
of the underlying performance of the Group.
The Board considers that adjusted EBITDA is the most appropriate
profit measure by which users of the financial statements can
assess the ongoing performance of the Group. EBITDA is a commonly
used measure in which earnings are stated before net finance
income, amortisation and depreciation. The Group makes further
adjustments to remove items that are non-recurring or are not
reflective of the underlying operational performance either due to
their nature or level of volatility. EBITDA is often used as a
proxy for cash flows and accordingly the Group adjusts for
share-based payment charges which are a non-cash measure.
During the year the Group incurred legal and professional costs
in relation to specific acquisition opportunities that did not
proceed. Due to the exceptional and non-recurring nature of these
costs, they have been excluded from our APMs.
2022 2021
GBP000 GBP000
--------------------------------- ------- -------
Operating profit 3,560 5,651
--------------------------------- ------- -------
Non-recurring acquisition costs 210 -
Share-based payments 213 53
Total adjustments 423 53
Adjusted operating profit 3,983 5,704
--------------------------------- ------- -------
Depreciation and amortisation 1,225 1,273
Adjusted EBITDA 5,208 6,977
--------------------------------- ------- -------
2022 2021
GBP000 GBP000
----------------------------------------------- ------- --------
Adjusted operating profit 3,983 5,704
----------------------------------------------- ------- --------
Income tax expense (378) (1,018)
Income tax impact of adjustments 42 3
Impact of changes in tax rates on deferred
tax - 540
Impact of prior year Patent Box tax reduction - (137)
Adjusted profit after tax 3,647 5,092
----------------------------------------------- ------- --------
7. Employment costs
2022 2021
Notes GBP000 GBP000
----------------------------- ------ ------- -------
Wages and salaries 5,522 6,204
Social security costs 692 734
Other pension costs 325 339
Share-based payment charges 26 213 53
Employment costs 6,752 7,330
----------------------------- ------ ------- -------
The key management of the Group is deemed to be the Board of
Directors who have authority and responsibility for planning and
controlling all significant activities of the Group.
Wages and salaries includes an adjustment for capitalised
internal costs of GBP447,000 (2021: GBP223,000) in respect of
current development projects, see note 13.
Director's remuneration details can be found in the Remuneration
Committee Report.
2022 2021
GBP000 GBP000
----------------------------------------------- ------- -------
Directors' emoluments 581 808
Company contributions to defined contribution
pension schemes 47 42
Share-based payment charges 80 9
----------------------------------------------- ------- -------
During the year retirement benefits were accruing to 3 Directors
(2021: 3) in respect of defined contribution pension schemes.
The highest paid Director received remuneration as outlined
below.
2022 2021
GBP000 GBP000
----------------------------------------------- ------- -------
Directors' emoluments 260 410
Company contributions to defined contribution
pension schemes 25 25
Share-based payment charges 2 2
----------------------------------------------- ------- -------
8. Number of employees
The average monthly number of employees, including Directors,
during the year was:
2022 2021
GBP000 GBP000
--------------------- ------- -------
Directors 5 5
Production 33 32
Administration 23 23
Sales and Technical 63 61
Average headcount 124 121
--------------------- ------- -------
In addition to employees, sales and technical specialists are
engaged on a consultancy basis in several countries.
9. Net finance income
2022 2021
GBP000 GBP000
------------------------------------------------- ------- -------
Interest receivable on short-term bank deposits 124 54
------------------------------------------------- ------- -------
Finance income 124 54
Lease interest paid (3) (4)
------------------------------------------------- ------- -------
Finance costs (3) (4)
Net finance income 121 50
------------------------------------------------- ------- -------
10. Income tax
2022 2021
Notes GBP000 GBP000
------------------------------------------ ------ ------- -------
Current tax on profits for the year 263 591
Adjustment for prior years (89) 48
------------------------------------------ ------ ------- -------
Current tax 174 639
Origination and reversal of temporary
differences 226 (165)
Effect of change in deferred tax rate - 540
Adjustment for prior years (22) 4
------------------------------------------ ------ ------- -------
Deferred tax 16 204 379
Income tax expense charged to the income
statement 378 1,018
------------------------------------------ ------ ------- -------
The tax on the Company's profit before tax differs from the
theoretical amount that would arise using the standard domestic tax
rate applicable to profits of the Company as follows:
2022 2021
GBP000 GBP000
------------------------------------------ ------- -------
Profit before tax 3,681 5,701
------------------------------------------- ------- -------
Tax at the UK domestic rate 19% (2021:
19%) 699 1,083
------------------------------------------- ------- -------
Prior year tax adjustments (111) 189
Patent Box reductions - Prior year - (137)
Patent Box reductions - Current year (163) (359)
Non-deductible expenses 4 (13)
Losses not recognised for deferred tax 22 64
Research and development tax credits (152) (172)
Tax charge recognised directly in equity 202 158
Effect of change in deferred tax rate - 540
Difference in overseas tax rates 70 (175)
Deferred tax impact of share options (193) (160)
Tax adjustments (321) (65)
Income tax expense charged to the income
statement 378 1,018
------------------------------------------- ------- -------
Corporation tax is calculated at 19% (2021: 19%) of the
estimated assessable profit for the year. The UK government
announced on 3 March 2021 that the government are intending to
increase the corporation tax rate from 19% to 25% from April 2023.
Deferred taxes at the balance sheet date have been measured using
these enacted rates and reflected in these financial statements
which has resulted in a deferred tax charge of GBP540,000 in the
prior year.
In addition to the amount charged to the income statement, the
following amounts relating to tax have been recognised in other
comprehensive income.
2022 2021
Note GBP000 GBP000
---------------------------------------------- ----- ------- -------
Current tax on profits for the year - (19)
---------------------------------------------- ----- ------- -------
Current tax - (19)
Origination and reversal of temporary
differences (202) (139)
---------------------------------------------- ----- ------- -------
Deferred tax 16 (202) (139)
Income tax recognised in other comprehensive
income (202) (158)
---------------------------------------------- ----- ------- -------
11. Dividends
Amounts recognised as distributions to equity holders for the
year ended 31 December:
2022 2022 2021 2021
per share total per share total
pence GBP000 pence GBP000
--------------------------- ---------- ------- ---------- -------
Interim dividend - Paid 3.15p 674 3.00p 651
--------------------------- ---------- ------- ---------- -------
Final dividend - Paid - - 7.00p 1,512
Final dividend - Proposed 7.35p 1,562 - -
Final dividend 7.35p 1,562 7.00p 1,512
Total dividend 10.50p 2,236 10.00p 2,163
--------------------------- ---------- ------- ---------- -------
The proposed final dividend is subject to approval by the
shareholders at the AGM and has not been included as a liability in
these financial statements.
The total amount of dividend paid to shareholders in the year
was GBP2,186,000 (2021: GBP2,023,000), being the final dividend for
the year prior and the interim dividend for current year.
Under the Joint Share Ownership Plan ("JSOP") the proceeds of
dividends received on jointly owned shares will be divided between
the employees and the Trust according to any growth in the market
value. Dividend amounts due to the Trust are waived. The
calculation of the split is made at the time of payment and the
estimated dividend amount shown above includes an estimate of the
amounts to be waived.
12. Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data, both adjusted and non-adjusted for its ordinary shares. Basic
EPS is calculated by dividing profit attributable to ordinary
shareholders by the weighted average number of ordinary shares
fully outstanding during the period. Potential ordinary shares and
shares held in the Joint Share Ownership Plan ("JSOP") are only
treated as dilutive when their conversion to ordinary shares would
decrease EPS.
The calculation of the basic and diluted earnings per share is
based on the following data:
2022 2021
---------------------------------------------- ----------- -----------
Profit for the year attributable to owners
of the Parent (GBP000's) 3,303 4,683
---------------------------------------------- ----------- -----------
Weighted average number of shares in issue 20,481,713 20,429,730
---------------------------------------------- ----------- -----------
Number of dilutive shares 1,392,327 1,697,602
Weighted average number for diluted earnings
per share 21,874,040 22,127,332
---------------------------------------------- ----------- -----------
Basic earnings per share 16.13p 22.92p
Diluted earnings per share 15.10p 21.16p
---------------------------------------------- ----------- -----------
The calculation of the adjusted and diluted adjusted earnings
per share is based on the following data:
Note 2022 2021
---------------------------------------------- ----- ----------- -----------
Adjusted profit attributable to owners
of the Parent (GBP000's) 6 3,647 5,092
---------------------------------------------- ----- ----------- -----------
Weighted average number of shares in
issue 20,481,713 20,429,730
---------------------------------------------- ----- ----------- -----------
Number of dilutive shares 1,392,327 1,697,602
Weighted average number for diluted earnings
per share 21,874,040 22,127,332
---------------------------------------------- ----- ----------- -----------
Adjusted earnings per share 17.81p 24.92p
Diluted adjusted earnings per share 16.67p 23.01p
---------------------------------------------- ----- ----------- -----------
13. Intangible assets
Brands
and Patents, Software
developed Customer trademarks Development and
Goodwill products relationships and registrations costs Licenses Total
---------------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Cost
As at 1 January 2021 5,960 4,440 786 1,773 559 784 14,302
Additions - - - 133 360 13 506
Reclassifications - 113 - - (113) - -
Disposals - - - (99) - - (99)
As at 31 December
2021 5,960 4,553 786 1,807 806 797 14,709
Additions - 78 - 115 528 10 731
Reclassifications - 135 - - (135) 136 136
Disposals - - - - (45) - (45)
Foreign exchange - - - 2 - - 2
As at 31 December
2022 5,960 4,766 786 1,924 1,154 943 15,533
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Accumulated
amortisation
As at 1 January 2021 - 731 661 890 - 498 2,780
Charge for the year - 261 61 277 - 134 733
Disposals - - - (99) - - (99)
As at 31 December
2021 - 992 722 1,068 - 632 3,414
Charge for the year - 326 23 195 - 102 646
Reclassifications - - - - - 98 98
As at 31 December
2022 - 1,318 745 1,263 - 832 4,158
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Net book value
As at 1 January 2021 5,960 3,709 125 883 559 286 11,522
As at 31 December
2021 5,960 3,561 64 739 806 165 11,295
As at 31 December
2022 5,960 3,448 41 661 1,154 111 11,375
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Brands relate to the fair value of previously acquired brands.
The Optivite brand was acquired in 2009 and has a net book value at
31 December 2022 of GBP1,451,000 (2021: GBP1,501,000). The Meriden
brand was acquired in 2012 and has a net book value at 31 December
2022 of GBP328,000 (2021: GBP363,000). These are deemed to have a
useful economic life between 20 and 30 years due to the inherent
intellectual property contained in the products, the longevity of
the product lives and global market opportunities.
The reclassification to Brands and Developed Products if
GBP135,000 represents newly created products from Development
projects. The reclassification to Software and Licenses of
GBP136,000 cost and GBP98,000 amortisation, represents website
costs previously included as a tangible asset, see also note
14.
Goodwill related to previously acquired operations is reviewed
on a global basis with a further consideration of the sales
attributable to each of the trading brands as identified in the
table below.
Goodwill is allocated as follows:
GBP000
------------------------------------------------------ -------
Acquisition of Kiotechagil operations 3,552
Acquisition of Optivite operations 592
Acquisition of Meriden operations 1,346
Acquisition of Cobbett business 470
------------------------------------------------------- -------
Goodwill as at 31 December 2021 and 31 December 2022 5,960
------------------------------------------------------- -------
The recoverable amount of a CGU is determined based on
value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management
covering a five-year period. Cash flows beyond a five-year period
are extrapolated using estimated growth rates of 2.5% per annum
(2021: 2.5%).
The discount rate used of 14% (2021: 12%) is pre-tax and
reflects specific risks relating to the operating segments.
Based on the calculations of the recoverable amount of each CGU,
no impairment to goodwill was identified.
The Group has conducted a sensitivity analysis on the impairment
test of each CGU and the group of units carrying value. A cut in
the annual growth rate of 6.2 percentage points to a negative
growth of minus 3.7 percentage points would cause the carrying
value of goodwill to equal its recoverable amount.
14. Property, plant and equipment
Fixtures, Assets in
Land and Plant fittings the course
buildings and machinery and equipment of construction Total
--------------------------
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- --------------- --------------- ----------------- -------
Cost
As at 1 January 2021 1,854 3,355 635 479 6,323
Additions 16 119 39 743 917
Transfer of assets in
construction 51 327 - (378) -
Disposals - - (148) - (148)
As at 31 December 2021 1,921 3,801 526 844 7,092
Additions 29 38 35 707 809
Transfer of assets in
construction 303 1,203 (3) (1,503) -
Reclassification - - (136) - (136)
Disposals (2) (25) (29) - (56)
Foreign exchange - - 2 - 2
As at 31 December 2022 2,251 5,017 395 48 7,711
-------------------------- ----------- --------------- --------------- ----------------- -------
Accumulated depreciation
As at 1 January 2021 283 1,473 425 - 2,181
Charge for the year 30 338 83 - 451
Transfer of assets in
construction - - - - -
Disposals - - (144) - (144)
Foreign exchange - - 1 - 1
As at 31 December 2021 313 1,811 365 - 2,489
Charge for the year 47 391 71 - 509
Transfer of assets in
construction (8) 9 - - 1
Reclassification - - (98) - (98)
Disposals (2) (24) (29) - (55)
Foreign exchange - - 1 - 1
As at 31 December 2022 350 2,187 310 - 2,847
-------------------------- ----------- --------------- --------------- ----------------- -------
Net book value
As at 1 January 2021 1,571 1,882 210 479 4,142
As at 31 December 2021 1,608 1,990 161 844 4,603
As at 31 December 2022 1,901 2,830 85 48 4,864
-------------------------- ----------- --------------- --------------- ----------------- -------
Held within land and buildings is an amount of GBP500,000 (2021:
GBP500,000) in respect of non-depreciable land.
The reclassification out of Fixtures, fittings and equipment of
GBP136,000 cost and GBP98,000 amortisation, represents website
costs are now included as a intangible asset, see also note 13.
15. Right-of-use assets
Fixtures,
Land and Plant and fittings
buildings machinery and equipment Total
--------------------------
GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- ----------- --------------- -------
Cost
As at 1 January 2021 321 26 7 354
Additions 28 - - 28
Modification to lease
terms 56 - - 56
Disposals (139) (26) (4) (169)
Foreign exchange 4 - - 4
As at 31 December 2021 270 - 3 273
Additions - 23 - 23
Modification to lease
terms 12 - - 12
Foreign exchange 14 - - 14
As at 31 December
2022 296 23 3 322
-------------------------- ----------- ----------- --------------- -------
Accumulated depreciation
As at 1 January 2021 239 25 5 269
Charge for the year 87 1 1 89
Modification to lease
terms - - (5) (5)
Disposals (139) (26) - (165)
Foreign exchange 4 - - 4
As at 31 December 2021 191 - 1 192
Charge for the year 68 1 1 70
Foreign exchange 10 - - 10
As at 31 December
2022 269 1 2 272
-------------------------- ----------- ----------- --------------- -------
Net book value
As at 1 January 2021 82 1 2 85
As at 31 December 2021 79 - 2 81
As at 31 December
2022 27 22 1 50
-------------------------- ----------- ----------- --------------- -------
Land and building right-of-use assets relate to leased offices,
other assets are less material and various in nature that are
required for the Group to conduct its activities.
Further information about the lease liabilities that relate to
the right-of-use assets above are contained in note 21. Details of
cash outflow for those leases are contained in the Consolidated
Statement of Cash Flows.
There are no material short-term or low value leases.
16. Deferred tax
2022 2021
------------------------------------------
Notes GBP000 GBP000
------------------------------------------ ------ ------- -------
As at 1 January 912 675
Income statement charge 10 204 379
Deferred tax credited directly to equity 10 (202) (139)
Foreign exchange (49) (3)
------------------------------------------ ------ ------- -------
As at 31 December 865 912
------------------------------------------ ------ ------- -------
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
-------------------------------
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ------ ------------ ------- --------- ------- ------------- -------
As at 1 January 2021 947 671 44 (483) (504) 675
Income statement credit 10 497 134 - 53 (305) 379
Deferred tax charged directly
to equity - - (29) - (110) (139)
Foreign exchange - - - (3) - (3)
As at 31 December 2021 1,444 805 15 (433) (919) 912
Income statement charge 10 135 (25) - (54) 148 204
Deferred tax charged directly
to equity - - (273) (94) 165 (202)
Foreign exchange - - - (49) - (49)
As at 31 December 2022 1,579 780 (258) (630) (606) 865
------------------------------- ------ ------------ ------- --------- ------- ------------- -------
2022 2021
-----------------------------------
GBP000 GBP000
----------------------------------- ------- --------
Deferred income tax asset (859) (1,352)
Deferred income tax liability 1,724 2,264
Net deferred income tax liability 865 912
------------------------------------ ------- --------
Included in 'Other timing differences' above is GBP529,000
(2021: GBP675,000) that relates to the tax impact of the
elimination of intercompany unrealised profit held in
inventory.
The UK government announced on 3 March 2021 that the government
are intending to increase the corporation tax rate from 19% to 25%
from April 2023. Deferred taxes at the balance sheet date have been
measured using these enacted rates and reflected in these financial
statements which has resulted in a deferred tax charge of
GBP540,000 in the prior year.
A deferred tax asset has been recognised for tax losses in the
UK and US, carried forward on the grounds that sufficient future
taxable profits are forecast to be realised. No deferred tax asset
is recognised in respect of losses incurred in other overseas
subsidiaries, due to the uncertainty surrounding the timing of the
utilisation of those losses.
17. Inventories
2022 2021
GBP000 GBP000
------------------------------------- ------- -------
Raw materials and consumables 4,664 2,366
Finished goods and goods for resale 5,203 5,212
Inventory 9,867 7,578
------------------------------------- ------- -------
18. Trade and other receivables
2022 2021
GBP000 GBP000
----------------------------------- ------- -------
Trade receivables - gross 6,198 6,076
----------------------------------- ------- -------
Less: expected credit losses (231) (237)
Trade receivables - net 5,967 5,839
Taxes 450 543
Other receivables 56 49
Prepayments 530 442
Total trade and other receivables 7,003 6,873
----------------------------------- ------- -------
The carrying amount of gross trade receivables are denominated
in the following currencies:
2022 2021
GBP000 GBP000
--------------------------- ------- -------
Pounds sterling 1,724 1,828
US dollars 2,460 2,740
Euros 924 764
Other currencies 1,090 744
Trade receivables - gross 6,198 6,076
--------------------------- ------- -------
No interest is charged on trade receivables if balances are paid
in full and to terms, there has been no interest charged in the
current or previous financial year. There is no security held
against outstanding balances.
The Group applies the simplified approach to provisioning for
expected credit losses prescribed by IFRS 9, which permits the use
of the lifetime expected loss provisioning for all trade
receivables.
The Group measures the loss allowance for trade receivables at
an amount equal to lifetime expected credit loss "ECL". The ECL on
trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis
of the debtor's current financial position, adjusted for factors
that are specific to the debtors, general economic conditions of
the industry in which the debtors operate and an assessment of both
the current as well as the forecast direction of conditions at the
reporting date. The Group will also, using this and all other
information available, make specific judgements about receivables
which may need to be individually assessed for impairment. Where
required these are marked as Credit Impaired amounts and detailed
analysis undertaken to assess the amount likely to be recovered
including consideration of the effect of credit enhancements.
The Group seeks to mitigate credit risk, in so far as possible,
through the use of credit insurance. The Group has historically
suffered low levels of credit losses, whilst there are no
guarantees on future performance, the credit losses experienced in
the past have come from customers that we were unable to obtain
specific credit insurance for. The credit insurance in place allows
for the recovery of 90% of trading debt with a customer according
to a pre-agreed insured limit. The Group sometimes trades beyond
this credit insured limit according to internal approval
procedures.
Accordingly, the Group have segmented customers according to
their credit insurance status. The following table details the risk
profile of trade receivables based on the Group's provision matrix
and indvidual assessments as at 31 December 2022. The expected loss
rates are the same for the Group and Company.
1-60 61-120 >121
Not days days days
past past past past Credit
due due due due impaired Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- ------- ------- ------- ---------- -------
Specifically insured
customers 3,884 969 107 - - 4,960
Uninsured customers 670 151 31 6 - 858
Credit impaired 136 101 80 63 - 380
Trade receivables -
gross 4,690 1,221 218 69 - 6,198
------------------------ ------- ------- ------- ------- ---------- -------
Expected loss rates:
Specifically insured
customers 0% 1% 6% 7% - 1%
Uninsured customers 2% 6% 28% 35% - 4%
Credit impaired 28% 34% 36% 100% - 43%
Specifically insured
customers 16 11 6 - - 33
Uninsured customers 14 9 9 2 - 34
Credit impaired 38 34 29 63 - 164
Expected credit losses 68 54 44 65 - 231
------------------------ ------- ------- ------- ------- ---------- -------
Trade receivables -
net 4,622 1,167 174 4 - 5,967
------------------------ ------- ------- ------- ------- ---------- -------
The comparative table below shows the Group's provision matrix
and individual assessments as at 31 December 2021.
1-60 61-120 >121
Not days days days
past past past past Credit
due due due due impaired Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- ------- ------- ------- ---------- -------
Specifically insured
customers 3,977 381 - 26 - 4,384
Uninsured customers 1,351 149 15 5 - 1,520
Credit impaired - - - - 172 172
Trade receivables -
gross 5,328 530 15 31 172 6,076
------------------------ ------- ------- ------- ------- ---------- -------
Expected loss rates:
Specifically insured
customers 0% 1% 5% 7% - 1%
Uninsured customers 2% 6% 23% 33% - 3%
Credit impaired - - - - 100% 100%
Specifically insured
customers 16 5 - 2 - 23
Uninsured customers 28 9 3 2 - 42
Credit impaired - - - - 172 172
Expected credit losses 44 14 3 4 172 237
------------------------ ------- ------- ------- ------- ---------- -------
Trade receivables -
net 5,284 516 12 27 - 5,839
------------------------ ------- ------- ------- ------- ---------- -------
The movement in expected credit losses under IFRS 9 are as
follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- -------
As at 1 January 2021 54 103 157
Provisions for receivables created 11 115 126
Amounts recovered during the year - (48) (48)
Foreign exchange gains - 2 2
As at 31 December 2021 65 172 237
Provisions for receivables created 2 117 119
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (96) (96)
Foreign exchange gains - 2 2
As at 31 December 2022 67 164 231
-------------------------------------- ------------- ------------- -------
19. Financial instruments and risk management
Carrying amount of financial instruments
Derivatives Derivatives
Measured designated not designated
at amortised as hedging as hedging
cost instruments instruments Total
-----------------------------
As at 31 December
2022 Note GBP000 GBP000 GBP000 GBP000
----------------------------- ----- -------------- ------------- ---------------- --------
Derivative financial
instruments - - 153 153
Non-current - - 153 153
Trade and other receivables 18 7,003 - - 7,003
Derivative financial
instruments - 1 20 21
Short-term investments 20 1,828 - - 1,828
Cash and cash equivalents 20 11,739 - - 11,739
Current 20,570 1 20 20,591
Financial assets 20,570 1 173 20,744
----------------------------- ----- -------------- ------------- ---------------- --------
Lease liabilities 21 (17) - - (17)
Derivative financial
instruments 19 - (417) (408) (825)
Non-current (17) (417) (408) (842)
Trade and other payables 22 (3,983) - - (3,983)
Lease liabilities 21 (35) - - (35)
Derivative financial
instruments 19 - (533) (105) (638)
Current (4,018) (533) (105) (4,656)
Financial liabilities (4,035) (950) (513) (5,498)
----------------------------- ----- -------------- ------------- ---------------- --------
Derivatives Derivatives
Measured designated not designated
at amortised as hedging as hedging
cost instruments instruments Total
-----------------------------
As at 31 December
2021 Note GBP000 GBP000 GBP000 GBP000
----------------------------- ----- -------------- ------------- ---------------- --------
Derivative financial
instruments - 108 - 108
Non-current - 108 - 108
Trade and other receivables 18 6,873 - - 6,873
Derivative financial
instruments - 206 129 335
Short-term investments 20 1,803 - - 1,803
Cash and cash equivalents 20 13,742 - - 13,742
Current 22,418 206 129 22,753
Financial assets 22,418 314 129 22,861
----------------------------- ----- -------------- ------------- ---------------- --------
Lease liabilities 21 (17) - - (17)
Derivative financial
instruments 19 - (93) (64) (157)
Non-current (17) (93) (64) (174)
Trade and other payables 22 (5,172) - - (5,172)
Lease liabilities 21 (68) - - (68)
Derivative financial
instruments 19 - - (4) (4)
Current (5,240) - (4) (5,244)
Financial liabilities (5,257) (93) (68) (5,418)
----------------------------- ----- -------------- ------------- ---------------- --------
Hedge relationships
The Group has elected to adopt the hedge accounting requirements
of IFRS 9 Financial Instruments. The Group enters into hedge
relationships where the critical terms of the hedging instrument
and the hedged item match, therefore, for the prospective
assessment of effectiveness a qualitative assessment is performed.
Hedge effectiveness is determined at the origination of the hedging
relationship. Quantitative effectiveness tests are performed at
each period end to determine the continuing effectiveness of the
relationship. In instances where changes occur to the hedged item
which result in the critical terms no longer matching, the
hypothetical derivative method is used to assess effectiveness.
Fair values of financial instruments
Financial instruments are measured in accordance with the
accounting policy set out in note 2.13. Derivative financial
instruments, consisting of foreign exchange forward and options
contracts, are considered Level 2. There were no transfers between
levels in the period and the valuation technique used to measure
the instruments are forward exchange rates at the reporting date.
The carrying value of the financial instruments is at amortised
cost and is deemed to be approximate to fair value.
Credit risk
Trade receivables and cash are financial instruments deemed
subject to credit risk. Note 18 details credit risk relating to
trade receivables. Cash balances are invested with banks and
financial institutions that have a minimum credit rating to
mitigate the credit risk. The Directors do not consider any losses
from non performance of these institutions. The carrying value of
the trade receivables, cash balances and short-term investments
represents the maximum exposure to credit risk at the end of the
year.
Liquidity risk
The Group maintains cash balances and monitors working capital
to ensure it has sufficient available funds for operations and
planned investment activity. The amounts due in more than one year
are immaterial.
The derivative financial assets are all net settled; therefore,
the maximum exposure to credit risk at the reporting date is the
fair value of the derivative assets which are included in the
consolidated statement of financial position.
Financial liabilities with a maturity of more than 3 months are
immaterial and comprise of lease liabilities, disclosed in note 21
and derivative financial liabilities details in the exchange rate
section below. For all other financial liabilities the maturity is
less than three months and therefore the carrying value is the same
as the fair value.
Currently management consider liquidity risk to be minimal.
Exchange rate risk
The Group is exposed to foreign currency exchange rate risk
mainly as a result of trade receivables and intercompany balances
that will be settled in US dollars.
The Group seeks to minimise the effects of exchange rate risk
using various methods, including entering into foreign currency
forward and option contracts. Where applicable these are designated
as cash flow hedges against highly probable forecast foreign
currency sales. If cash flow hedge accounting is not applicable
then the value is taken through profit or loss.
Included within other comprehensive income is the movement in
the cash flow hedge reserve as outlined below.
2022 2021
GBP000 GBP000
---------------------------------------------------- -------- --------
Change in value of cash flow hedges (1,175) (153)
Deferred tax asset 273 29
---------------------------------------------------- -------- --------
Cash flow hedge movements (net of
deferred tax) (902) (124)
---------------------------------------------------- -------- --------
The financial instruments in place are to mitigate the risks
associated with net future US dollar receipts. The Group uses two
types of hedging instrument: fixed forwards and participating
forwards. The fixed forward contracts are fixed agreements to
exchange currency at the hedged rate. The participating forwards
provide protection at the hedged rate, each contract is divided
into monthly windows, at the end of each month the Group has the
right but not the obligation to sell at the hedged rate, however if
spot trades below the barrier rate in the month then the Group must
sell USD at the hedged rate. This means that Anpario has protection
at the hedged rate, but may also benefit from exchange between the
barrier rate and hedged rate. The details of the notional amounts,
hedged rate and spot rate at 31 December are outlined below. The
maximum exposure to credit risk at the reporting date is the fair
value of the derivative assets in the Consolidated Statement of
Financial Position.
2022 2021
------------------------------------------------ ------- -------
GBP/USD spot rate at 31 December 1.2102 1.3536
------------------------------------------------- ------- -------
Fixed forward contracts
Weighted average forward
rate 1.3049 1.3822
--------------------------------------------------- ------- -------
Maturing in the next year (Notional amount in
US dollars 000's) 2,370 270
Maturing between one and two years (Notional
amount in US dollars 000's) 4,200 2,370
Maturing between two and three years (Notional
amount in US dollars 000's) 3,000 2,550
Notional amount (US Dollars
000's) 9,570 5,190
------------------------------------------------- ------- -------
Participating forward contracts
Weighted average forward
rate 1.3130 1.3145
--------------------------------------------------- ------- -------
Weighted average barrier
rate 1.2142 1.2128
--------------------------------------------------- ------- -------
Maturing in the next year (Notional amount in
US dollars 000's) 7,050 8,674
Maturing between one and two years (Notional
amount in US dollars 000's) 5,800 6,600
Maturing between two and three years (Notional
amount in US dollars 000's) 1,900 2,500
Notional amount (US Dollars
000's) 14,750 17,774
------------------------------------------------- ------- -------
20. Cash, cash equivalents and short-term investments
Cash and cash equivalents comprise cash and short-term deposits
held by Group companies. Short-term investments comprise of bank
deposits, held with major UK financial institutions, with notice
periods greater than three months but less than six months. The
carrying amount of these assets approximates to their fair
value.
restated restated
2022 2021 2020
GBP000 GBP000 GBP000
--------------------------------------- ------- --------- ---------
Short-term investments 1,828 1,803 2,348
Cash and cash equivalents 11,739 13,742 13,472
--------------------------------------- ------- --------- ---------
Cash, cash equivalents and short-term
investments 13,567 15,545 15,820
--------------------------------------- ------- --------- ---------
During the preparation of financial statements, it was
identified that certain deposits did not met the definition of cash
and cash equivalents due to having a notice period greater than
three months. All amounts are held in accounts with periods of less
than six months. This was also the case for prior periods and as
such they have been restated. These amounts held in deposit
accounts with a notice period of over three months and less than
six months have now been presented as short-term investments. There
is no impact on the net assets or income statement for any of the
periods, the only change is within the presentation of the current
assets.
As a result of this change the consolidated statement of cash
flows has been restated. The short term investments have been
removed from cash and cash equivalents and the movement on the
investments have been shown in investing activities. The total net
cash used in investing activities for the year ended 31 December
2021 has reduced from GBP1,363,000 as previously stated to
GBP818,000.
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities
as follows:
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Less than one year 35 68
Current lease liabilities 35 68
Between one and five years 17 17
Non-current lease liabilities 17 17
Lease Liabilities 52 85
------------------------------- ------- -------
22. Trade and other payables
2022 2021
GBP000 GBP000
--------------------------------- ------- -------
Trade payables 2,698 2,604
Taxes and social security costs 169 150
Other payables 112 101
Accruals 1,004 2,317
Trade and other payables 3,983 5,172
--------------------------------- ------- -------
There is no interest payable on trade payables and no security
against outstanding balances.
23. Share capital and share premium
The authorised share capital is made up of:
Number GBP000
----------------------------- ----------- -------
Ordinary shares of 23p each 86,956,521 20,000
'A' Shares of 99p each 1,859,672 1,841
Authorised share capital 21,841
----------------------------- ----------- -------
The allotted, called up and fully paid share capital is made up
of Ordinary shares of 23p each as follows:
Share capital Share premium Total
Note Number GBP000 GBP000 GBP000
------------------- ----- ----------- -------------- -------------- -------
As at 1 January
2021 23,591,133 5,426 11,148 16,574
Exercise of share
options 26 35,048 8 101 109
Issue of shares
to JSOP 26 50,000 12 298 310
------------------- ----- ----------- -------------- -------------- -------
As at 31 December
2021 23,676,181 5,446 11,547 16,993
Exercise of share
options 26 177,338 40 255 295
Issue of shares
to JSOP 26 600,000 138 3,132 3,270
------------------- ----- ----------- -------------- -------------- -------
As at 31 December
2022 24,453,519 5,624 14,934 20,558
------------------- ----- ----------- -------------- -------------- -------
The company holds shares in treasury as follows:
Number GBP000
-------------------------------------------- -------- -------
As at 1 January 2021, 31 December 2021 and
31 December 2022 440,388 1,189
----------------------------------------------- -------- -------
The Anpario plc Employees' Share Trust holds shares in relation
to the Joint Share Ownership Plan as follows:
Number
------------------------ ----------
As at 1 January 2021 2,750,000
Purchase of shares 50,000
As at 31 December 2021 2,800,000
Purchase of shares 600,000
As at 31 December 2022 3,400,000
------------------------ ----------
24. Other reserves
Joint
Share Share-based Cashflow
Treasury Ownership Merger payment hedge Translation
shares Plan reserve reserve reserve reserve Total
----------------------------
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ----- --------- ----------- --------- ------------ --------- ------------ -------
As at 1 January 2021 1,189 7,530 (228) (2,117) (185) 317 6,506
Joint-share ownership plan 23 - 310 - - - - 310
Share-based payment charge 26 - - - (36) - - (36)
Share-based payment tax
adjustments - - - (128) - - (128)
Movement in fair value
(net of tax) 19 - - - - 124 - 124
Currency translation
differences - - - - - 12 12
As at 31 December 2021 1,189 7,840 (228) (2,281) (61) 329 6,788
Joint-share ownership plan 23 - 3,270 - - - - 3,270
Share-based payment charge 26 - - - (183) - - (183)
Share-based payment tax
adjustments - - - 71 - - 71
Movement in fair value
(net of tax) 19 - - - - 902 - 902
Currency translation
differences - - - - - (387) (387)
As at 31 December 2022 1,189 11,110 (228) (2,393) 841 (58) 10,461
---------------------------- ----- --------- ----------- --------- ------------ --------- ------------ -------
The nature and purpose of other reserves' items are disclosed in
note 2.18.
25. Retained earnings
GBP000
------------------------ --------
As at 1 January 2021 27,437
Profit for the year 4,683
Dividends (2,023)
As at 31 December 2021 30,097
Profit for the year 3,303
Dividends (2,186)
As at 31 December 2022 31,214
------------------------- --------
26. Share-based payments
The Group operates, or has operated previously, a number of
equity-settled share based remuneration schemes for employees.
Including the following: Enterprise Management Incentive ("EMI")
scheme; Save As You Earn ("SAYE") scheme; Company Share Option Plan
("CSOP") and an unapproved scheme. These schemes are subject to
only one vesting condition being that the individual remains an
employee of the Group for a period of either 3 or 5 years.
PSP
Under the PSP scheme awards have been granted in the form of
nil-cost share options and will normally vest after three years,
subject to the achievement of performance conditions. Awards may
become exercisable subject to continued employment and the
achievement of three performance conditions, being a financial
target representing 75% of the total award and two further ESG
components representing the remaining 25% as described below.
Diluted adjusted earnings per share:
75% of the PSP award is weighted on the achievement of diluted
adjusted earnings per share growth targets over a three-year
period. The minimum growth required is 6% per annum for a 18.75%
vesting of the overall PSP award, on a pro-rata straight-line basis
to a maximum 75% vesting of the overall PSP award for annual growth
of 16%.
Reduction of Carbon Intensity:
The primary objective for ESG based targets is to reduce Carbon
Intensity in-line with our ambitions to achieve net-zero emissions
by 2030. 15% of the PSP award is weighted on the reduction of
annual Carbon Intensity cumulatively since the year ended 31
December 2019. The minimum reduction required is 63% per annum for
a 4.5% vesting of the overall PSP award, on a pro-rata
straight-line basis to a maximum 15% vesting of the overall PSP
award for a cumulative reduction of 70%.
Other ESG Objectives:
The final potential 10% of the PSP Award is based on the
achievement of progress towards other ESG objectives. This will be
based on a qualitative assessment by the Remuneration Committee
which will consider a range of quantitative and qualitative inputs,
including but not limited to: diversity, equality and
inclusiveness; training and development of staff; reductions in
waste and water usage; health and safety; and sustainable business
operations.
Movements in the number of share options outstanding are as
follows:
Weighted Weighted
average average
Number exercise Number exercise
of options price (p) of options price (p)
2022 2022 2021 2021
---------------------------- ------------ ----------- ------------ -----------
Outstanding at 1 January 562,842 255 592,469 254
Granted during the year 84,514 535 10,000 565
Lapsed during the year - - (4,579) 334
Exercised during the year (177,338) 167 (35,048) 308
Outstanding at 31 December 470,018 339 562,842 255
---------------------------- ------------ ----------- ------------ -----------
Exercisable at 31 December 264,000 269 441,338 228
---------------------------- ------------ ----------- ------------ -----------
Share options outstanding at the end of the year have the
following expiry dates and weighted average exercise prices:
Weighted Weighted
average average
Number exercise Number exercise
of options price (p) of options price (p)
2022 2022 2021 2021
--------------------------------- ------------ ----------- ------------ -----------
2022 - - 538 334
2023 - - 160,000 159
2024 100,000 245 109,000 245
2025 84,800 290 84,800 290
2026 62,200 239 70,000 240
2027 91,504 323 91,504 323
2028 47,000 438 47,000 438
2032 84,514 535 - -
Total outstanding share options 470,018 339 562,842 255
--------------------------------- ------------ ----------- ------------ -----------
The range of exercise prices of outstanding share options at the
year end was 238p to 565p (2021: 159p to 565p) and their weighted
average remaining contractual life was 4 years (2021: 4 years).
The fair value of services received in return for share options
granted and the shares which have been issued into the joint
beneficial ownership of the participating Executive Directors and
the Trustee of The Anpario plc Employees' Share Trust is calculated
based on the Black-Scholes valuation model. The expense is
apportioned over the vesting period and is based on the number of
financial instruments which are expected to vest and the fair value
of those financial instruments at the date of the grant.
The charge for the year in respect of share options granted and
associated expenses amounts to GBP213,000 (2021: GBP53,000) of
which a charge of GBP30,000 (2021: GBP17,000) relates to
professional fees.
During the year options totalling 684,514 were awarded under
incentive schemes listed in the schedule below. For which, the
weighted average fair value of options granted was determined based
on the following assumptions using the Black-Scholes pricing model.
Expected volatility was determined by management using historical
data.
Plan PSP JSOP
Grant date 23 Mar 2022 23 Mar 2022
Number of options granted 84,514 600,000
Grant price (p) 535.0 545.0
Carrying cost (per annum) - 4.5%
Exercise price (p) - 618.6
Vesting period (years) 3.0 3.0
Option expiry (years) 10.0 10.0
Expected volatility of the share price 25.0% 25.0%
Dividends expected on the shares 1.9% 1.8%
Risk-free rate 1.4% 1.4%
Fair value (p) 496.5 72.8
---------------------------------------- ------------ ------------
27. Related party transactions
The Group considers the Directors to be the key management
personnel. There were no transactions within the year in which the
Directors had any interest. The Remuneration Committee Report
contains details of the Board emoluments.
None of the Group's shareholders are deemed to have control or
significant influence and therefore are not classified as related
parties for the purposes of this note.
28. Capital commitments
The Group had authorised capital commitments as at 31 December
as follows:
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Property, plant and equipment 140 615
Capital commitments 140 615
------------------------------- ------- -------
Company statement of financial position
As at 31 December 2022
restated(1)
2022 2021
Note GBP000 GBP000
--------------------------------------- ----- --------- ------------
Intangible assets 33 10,855 10,767
Property, plant and equipment 34 4,854 4,592
Right of use assets 26 4
Investment in subsidiaries 35 11,353 12,196
Deferred tax assets 36 - 302
Derivative financial instruments 19 153 108
Non-current assets 27,241 27,969
Inventories 37 5,315 3,219
Trade and other receivables 38 10,845 13,889
Derivative financial instruments 19 21 335
Current income tax assets 971 295
Short-term investments 1,828 1,803
Cash and cash equivalents 8,790 9,854
--------------------------------------- ----- --------- ------------
Cash, cash equivalents and short-term
investments 10,618 11,657
Current assets 27,770 29,395
Total assets 55,011 57,364
--------------------------------------- ----- --------- ------------
Lease liabilities 1 (1)
Derivative financial instruments 19 (825) (157)
Deferred tax liabilities 36 (1,724) (2,264)
Non-current liabilities (2,548) (2,422)
Trade and other payables 39 (7,496) (8,660)
Lease liabilities (27) (4)
Derivative financial instruments 19 (638) (4)
Current income tax liabilities - -
Current liabilities (8,161) (8,668)
Total liabilities (10,709) (11,090)
--------------------------------------- ----- --------- ------------
Net assets 44,302 46,274
--------------------------------------- ----- --------- ------------
Called up share capital 40 5,624 5,446
Share premium 14,934 11,547
Other reserves 41 (8,498) (4,438)
Retained earnings 32,242 33,719
Total equity 44,302 46,274
--------------------------------------- ----- --------- ------------
1 Prior year have been restated to distinguish between cash and
cash equivalents and short-term investments, the later of which
relate to deposit accounts with a notice period of more than three
months but less than six months. These were previously shown as
cash and cash equivalents. See note 20.
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 to not present the Parent Company income
statement. The profit for the Parent Company for the year was
GBP709,000 (2021: GBP4,553,000).
The financial statements were approved by the Board and
authorised for issue on 23 March 2023.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Company statement of changes in equity
for the year ended 31 December 2022
Share Share Other Retained Total
capital premium reserves earnings equity
------------------------------------
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 1 Jan 2021 5,426 11,148 (4,168) 31,189 43,595
------------------------------------ ----- --------- --------- ---------- ---------- --------
Profit for the period - - - 4,553 4,553
Cash flow hedge reserve - - (124) - (124)
Total comprehensive income
for the year - - (124) 4,553 4,429
------------------------------------ ----- --------- --------- ---------- ---------- --------
Issue of share capital 23 20 399 - - 419
Joint-share ownership plan 26 - - (310) - (310)
Share-based payment adjustments 26 - - 36 - 36
Deferred tax regarding share-based
payments - - 128 - 128
Final dividend relating to
2020 - - - (1,372) (1,372)
Interim dividend relating to
2021 11 - - - (651) (651)
Transactions with owners 20 399 (146) (2,023) (1,750)
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 31 Dec 2021 5,446 11,547 (4,438) 33,719 46,274
------------------------------------ ----- --------- --------- ---------- ---------- --------
Profit for the period - - - 709 709
Cash flow hedge reserve - - (902) - (902)
Total comprehensive income
for the year - - (902) 709 (193)
------------------------------------ ----- --------- --------- ---------- ---------- --------
Issue of share capital 23 178 3,387 - - 3,565
Joint-share ownership plan 26 - - (3,270) - (3,270)
Share-based payment adjustments 26 - - 183 - 183
Deferred tax regarding share-based
payments - - (71) - (71)
Final dividend relating to
2021 11 - - - (1,512) (1,512)
Interim dividend relating to
2022 11 - - - (674) (674)
Transactions with owners 178 3,387 (3,158) (2,186) (1,779)
------------------------------------ ----- --------- --------- ---------- ---------- --------
Balance at 31 Dec 2022 5,624 14,934 (8,498) 32,242 44,302
------------------------------------ ----- --------- --------- ---------- ---------- --------
29. Significant accounting policies
Please refer to note 1 for full details of the Company's
incorporation, registered office, operations and principal
activity.
The separate financial statements of the Company are presented
as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under FRS 101 (Financial
Reporting Standard 101) issued by the Financial Reporting Council.
The financial statements have therefore been prepared in accordance
with FRS 101 (Financial Reporting Standard 101) 'Reduced Disclosure
Framework' as issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the
disclosure exemptions available under that Standard in relation to
share-based payments, financial instruments, capital management,
presentation of comparative information in respect of certain
assets, presentation of a cash flow statement and certain related
party transactions. Where required, equivalent disclosures are
given in the Group financial statements.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies, and critical
accounting judgements and key sources of estimation uncertainty
adopted are the same as those set out in note 2 to the Group
financial statements except as noted below. These have been applied
consistently throughout the period and the preceding period.
Investments
Fixed asset investments in subsidiaries are shown at cost less
provision for impairment.
Receivables from Subsidiary undertakings
The Company holds intercompany receivables with subsidiary
undertakings subject to terms of less than one year. If a
significant change in credit risk occurs following initial
recognition then an impairment assessment is carried out. The
Directors assess periodically and at each period end whether there
has been a significant increase in credit risk. Where there has
been a significant increase in credit risk an impairment assessment
is carried out.
30. Profit for the period
The auditor's remuneration for audit and other services is
disclosed within note 5 to the Group financial statements.
Dividends declared and paid during the financial period are
disclosed in note 11 to the Group financial statements.
31. Employment costs
2022 2021
Notes GBP000 GBP000
----------------------------- ------ ------- -------
Wages and salaries 3,292 3,913
Social security costs 419 475
Other pension costs 265 218
Share-based payment charges 26 213 53
Employment costs 4,189 4,659
----------------------------- ------ ------- -------
The key management of the Group is deemed to be the Board of
Directors who have authority and responsibility for planning and
controlling all significant activities of the Group. Director's
remuneration details can be found in the Remuneration Committee
Report.
32. Number of employees
The average monthly number of employees, including Directors,
during the year was:
2022 2021
GBP000 GBP000
--------------------- ------- -------
Directors 5 5
Production 33 32
Administration 16 16
Sales and Technical 32 29
Average headcount 86 82
---------------------- ------- -------
33. Intangible assets
Brands
and Patents, Software
developed Customer trademarks Development and
Goodwill products relationships and registrations costs Licenses Total
---------------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Cost
As at 31 December
2021 5,490 4,464 559 1,800 806 797 13,916
Additions - 78 - 115 528 10 731
Reclassifications - 135 - - (135) 136 136
Disposals - - - - (45) - (45)
As at 31 December
2022 5,490 4,677 559 1,915 1,154 943 14,738
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Accumulated
amortisation
As at 31 December
2021 - 903 546 1,068 - 632 3,149
Charge for the year - 326 13 195 - 102 636
Reclassifications - - - - - 98 98
As at 31 December
2022 - 1,229 559 1,263 - 832 3,883
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Net book value
As at 31 December
2021 5,490 3,561 13 732 806 165 10,767
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
As at 31 December
2022 5,490 3,448 - 652 1,154 111 10,855
--------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
The reclassification to Brands and Developed Products if
GBP135,000 represents newly created products from Development
projects. The reclassification to Software and Licenses of
GBP136,000 cost and GBP98,000 amortisation, represents website
costs previously included as a tangible asset, see also note
34.
More information about Goodwill can be found in note 13 to the
financial statements.
34. Property, plant and equipment
Assets
Fixtures, in the
Land and Plant fittings course
buildings and machinery and equipment of construction Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- --------------- --------------- ----------------- -------
Cost
As at 31 December
2021 1,921 3,801 473 844 7,039
Additions 29 38 32 707 806
Transfer of assets
in construction 303 1,203 (3) (1,503) -
Reclassification - - (136) - (136)
Disposals (2) (25) (29) - (56)
As at 31 December
2022 2,251 5,017 337 48 7,653
-------------------------- ----------- --------------- --------------- ----------------- -------
Accumulated depreciation
As at 31 December
2021 313 1,811 323 - 2,447
Charge for the year 47 391 66 - 504
Transfer of assets
in construction (8) 9 - - 1
Reclassification - - (98) - (98)
Disposals (2) (24) (29) - (55)
As at 31 December
2022 350 2,187 262 - 2,799
-------------------------- ----------- --------------- --------------- ----------------- -------
Net book value
As at 31 December
2021 1,608 1,990 150 844 4,592
As at 31 December
2022 1,901 2,830 75 48 4,854
-------------------------- ----------- --------------- --------------- ----------------- -------
Held within land and buildings is an amount of GBP500,000 (2021:
GBP500,000) in respect of non-depreciable land.
The reclassification out of Fixtures, fittings and equipment of
GBP136,000 cost and GBP98,000 amortisation, represents website
costs are now included as a intangible asset, see also note 33.
35. Investment in subsidiaries
Unlisted
investments
---------------------------------------------
GBP000
--------------------------------------------- -------------
Cost
As at 1 January 2021 12,202
Investment in Subsidiaries 2,617
Write off of dormant subsidiary investments (7)
--------------------------------------------- -------------
As at 31 December 2021 14,812
Investment in Subsidiaries 18
As at 31 December 2022 14,830
--------------------------------------------- -------------
Provisions for diminution in value
As at 1 January 2021 and 31 December 2021 2,616
Provisions made in the year 861
--------------------------------------------- -------------
As at 31 December 2022 3,477
--------------------------------------------- -------------
Net book value
As at 1 January 2021 9,586
--------------------------------------------- -------------
As at 31 December 2021 12,196
--------------------------------------------- -------------
As at 31 December 2022 11,353
--------------------------------------------- -------------
Following an impairment review it was determined that a
provision for diminution of value of GBP861,000 was required in
relation to the investment in Anpario Saúde e Nutrição Animal Ltda
to reflect the fair value of the investment. Last year, investment
balances in dormant subsidiaries that no longer feature as part of
the Group strategy were written off, these totalled GBP7,000 and
relate to Anpario Turkey Hayvan Sa lı ı ve Yem Katkıları İthalat
İhracat Sanayi ve Ticaret Anonim irketi.
Total investments in Subsidiaries in the year were GBP18,000
(2021: GBP2,617,000). This relates to the establishment of Anpario
(Vietnam) Company Limited.
Full list of investments
The Group holds share capital in the following Companies which
are accounted for as Subsidiaries, all of which have a principal
activity of Technology Services and the Group holds 100% of the
Ordinary Shares.
Country
of registration
or incorporation
------------------------------------------------------------------- ------------------
Directly held
------------------------------------------------------------------- ------------------
Anpario Pty Ltd
Level 1, 286 High Street, Penrith 2750 Australia
------------------------------------------------------------------- ------------------
Anpario Saúde e Nutrição Animal Ltda
Rua Brigadeiro Henrique Fontenelle, 745 - room 4,
Parque São Domingos, São Paulo, 05125-000 Brazil
------------------------------------------------------------------- ------------------
Anpario (Shanghai) Biotech Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
------------------------------------------------------------------- ------------------
Anpario GmbH
c/o Startplatz, IM Mediapark 5, 50670 Cologne Germany
------------------------------------------------------------------- ------------------
Anpario (Biotech) Limited
6th Floor, South Bank House, Barrow Street, Dublin
4. Ireland
------------------------------------------------------------------- ------------------
PT. Anpario Biotech Indonesia
Gedung 18 Office Park Iantai Mezz- unit F2, Jl. ,
TB Simatupang Kav. 18, Jakarta 12520 Indonesia
------------------------------------------------------------------- ------------------
Anpario Malaysia Sdn. Bhd.
Real Time Corporate Services Sdn. Bhd. Unit C-12-4,
Level 12, Block C, Megan Avenue II, 12 Jalan Yap Kwan
Seng, 50450 Kuala Lumpur Malaysia
------------------------------------------------------------------- ------------------
Anpario Biotech Malaysia Sdn. Bhd
Real Time Corporate Services Sdn. Bhd. Unit C-12-4,
Level 12, Block C, Megan Avenue II, 12 Jalan Yap Kwan
Seng, 50450 Kuala Lumpur Malaysia
------------------------------------------------------------------- ------------------
Anpario Latinoamerica SA de CV
Av. Technologico Sur # 134 cas 4, Colonia Moderna,
CP 76030, Queretaro Mexico
------------------------------------------------------------------- ------------------
Anpario (Thailand) Ltd
65/152 Chamnan Phenjati Building Floor 18, Rama 9
Road, Huaykwang Sub-district, Huaykwang District,
Bangkok 10310 Thailand
------------------------------------------------------------------- ------------------
Anpario Turkey Hayvan Sa lı ı ve Yem Katkıları
İthalat İhracat Sanayi ve Ticaret Anonim
irketi
Barbaros Mahallesi Halk Cad. Palladium Residence,
(A Blok) Apt. No: 8 A/3 Ata ehir/İstanbul. Turkey
------------------------------------------------------------------- ------------------
Anpario Inc
2 W. Washington Street, Suite 400, Greenville, SC
29601 US
------------------------------------------------------------------- ------------------
Anpario NZ Limited
Alliott NZ LTD, Level 2, 142 Broadway,
Newmarket, Auckland, 1023, NZ New Zealand
------------------------------------------------------------------- ------------------
Anpario (Vietnam) Company Limited
No.8, Lane 265 Chien Thang Street,
Van Quan Residential Area,
Van Quan Ward, Ha Dong District,
Hanoi, Vietnam. Vietnam
------------------------------------------------------------------- ------------------
Optivite International Limited - Company Number 02346087*
Agil Limited**
Anpario UK Limited**
Aquatice Limited**
Kiotech Limited**
Kiotechagil Limited**
Meriden Animal Health Limited**
Orego-Stim Limited**
Optivite Limited**
Unit 5 Manton Wood Enterprise Park, Worksop, Nottinghamshire,
S80 2RS United Kingdom
------------------------------------------------------------------- ------------------
Indirectly held
------------------------------------------------------------------- ------------------
Meriden (Shanghai) Animal Health Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
------------------------------------------------------------------- ------------------
Optivite Latinoamericana SA de CV**
20 Boulevard de la Industria, Cuautitlan-Izcalli,
54716 Mexico
------------------------------------------------------------------- ------------------
Optivite SA (Proprietary) Limited
PO Box 578, Cape Town 8000 South Africa
------------------------------------------------------------------- ------------------
The Group has no associates or joint-ventures.
* Companies where the Directors have taken advantage of the
exemption from having an audit of the entities' individual
financial statements for the year ended 31 December 2022 in
accordance with Section 479A of The Companies Act 2006.
** Dormant companies
36. Deferred tax
2022 2021
------------------------------------------
GBP000 GBP000
------------------------------------------ ------- -------
As at 1 January 1,962 1,470
Income statement (charge)/credit (36) 631
Deferred tax credited directly to equity (202) (139)
------------------------------------------ ------- -------
As at 31 December 1,724 1,962
------------------------------------------ ------- -------
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
----------------------------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------------ ------- --------- ------- ------------- -------
As at 1 January 2021 947 671 44 - (192) 1,470
Income statement credit 497 134 - - - 631
Deferred tax credited directly
to equity - - (29) - (110) (139)
As at 31 December 2021 1,444 805 15 - (302) 1,962
Income statement (charge)/credit 135 (25) - (148) 2 (36)
Deferred tax charged/(credited)
directly to equity - - (273) (94) 165 (202)
As at 31 December 2022 1,579 780 (258) (242) (135) 1,724
---------------------------------- ------------ ------- --------- ------- ------------- -------
2022 2021
-----------------------------------
GBP000 GBP000
----------------------------------- ------- -------
Deferred income tax asset - (302)
Deferred income tax liability 1,724 2,264
Net deferred income tax liability 1,724 1,962
----------------------------------- ------- -------
37. Inventories
2022 2021
GBP000 GBP000
------------------------------------- ------- -------
Raw materials and consumables 4,664 2,366
Finished goods and goods for resale 651 853
Inventory 5,315 3,219
------------------------------------- ------- -------
38. Trade and other receivables
2022 2021
GBP000 GBP000
------------------------------------------ ------- -------
Trade receivables - gross 3,958 4,706
------------------------------------------ ------- -------
Less: expected credit losses (149) (166)
Trade receivables - net 3,809 4,540
Receivables from Subsidiary undertakings 6,479 8,789
Taxes 56 125
Other receivables 2 2
Prepayments 499 433
Total trade and other receivables 10,845 13,889
------------------------------------------ ------- -------
No interest is charged on trade receivables if balances are paid
in full and to terms, there has been no interest charged in the
current or previous financial year. There is no interest charged on
receivables from subsidiary undertakings and payment is expected
within terms of less than one year. There is no security against
outstanding balances.
The Group applies the simplified approach to provisioning for
expected credit losses prescribed by IFRS 9, which permits the use
of the lifetime expected loss provisioning for all trade
receivables. More information about how ECL is calculated is
contained in note 18 to the Group financial statements.
Credit risk related to receivables from subsidiary undertakings
are individually assessed based on an assessment of changes in
credit risk and there was no impairment provision as at 31 Dec 2022
(2021: GBPnil).
The movements in expected credit losses under IFRS 9 are as
follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- -------
As at 1 January 2021 32 33 65
Provisions for receivables created 13 115 128
Amounts recovered during the year - (27) (27)
As at 31 December 2021 45 121 166
Provisions for receivables created - 117 117
Provisions for receivables released (13) - (13)
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (90) (90)
Foreign exchange (losses) and gains - - -
As at 31 December 2022 32 117 149
-------------------------------------- ------------- ------------- -------
39. Trade and other payables
2022 2021
GBP000 GBP000
---------------------------------------- ------- -------
Trade payables 2,620 2,533
Amounts due to subsidiary undertakings 4,202 4,536
Taxes and social security costs 127 102
Other payables 44 52
Accruals and deferred income 503 1,437
Trade and other payables 7,496 8,660
---------------------------------------- ------- -------
There is no interest payable on trade payables or amounts due to
subsidiary undertakings and no security against outstanding
balances.
40. Share capital
The movements in share capital are disclosed in note 23 to the
Group financial statements.
41. Other reserves
2022 2021
GBP000 GBP000
----------------------------- -------- --------
Treasury shares 1,189 1,189
Joint Share Ownership Plan 11,110 7,840
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (2,393) (2,281)
Cash flow hedge reserve 841 (61)
Other reserves 8,498 4,438
----------------------------- -------- --------
The nature and purpose of other reserves' items are disclosed in
note 2.18.
A reconciliation of each component of other reserves that has a
movement is shown in the note 24.
42. Related party transactions
Transactions between the Company and its subsidiaries are on an
arm's length basis or in accordance with local transfer pricing
regulations.
The following amounts were outstanding at the reporting
date:
2022 2021
Note GBP000 GBP000
------------------------------ ----- ------- -------
Amounts owed by Subsidiaries 38 6,479 8,789
Amounts owed to Subsidiaries 39 4,202 4,536
------------------------------ ----- ------- -------
The amounts outstanding are unsecured and will be settled in
cash. No guarantees have been given or received. No provisions have
been made for doubtful debts in respect of the amounts owed by
related parties.
Enquiries:
Anpario plc
Richard Edwards, CEO +44(0) 777 6417 129
Marc Wilson, Group Finance Director +44(0) 1909 537380
Karen Prior, Corporate Responsibility Director and Company Secretary +44(0) 1909 537380
Peel Hunt LLP (Nomad and broker) +44 (0)20 7418 8900
Adrian Trimmings
Andrew Clark
Lalit Bose
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END
FR FFFSVVLILFIV
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March 22, 2023 03:00 ET (07:00 GMT)
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