We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Anpario Plc | LSE:ANP | London | Ordinary Share | GB00B3NWT178 | ORD 23P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 250.00 | 245.00 | 255.00 | 250.00 | 250.00 | 250.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pesticides, Agric Chems, Nec | 33.1M | 3.3M | 0.1375 | 18.18 | 60.03M |
From Apr 2019 to Apr 2024
TIDMANP
RNS Number : 4997S
Anpario PLC
17 March 2021
Anpario plc
("Anpario" or the "Group")
Final results
Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable animal feed additives for animal health, nutrition and biosecurity is pleased to announce its full year results for the twelve months to 31 December 2020.
Highlights
Financial highlights
-- 5% increase in revenue to GBP30.5m (2019: GBP29.0m) -- 9% increase in gross profit to GBP15.8m (2019: GBP14.5m) -- 22% increase in profit before tax to GBP5.4m (2019: GBP4.4m) -- Diluted earnings per share up 13% to 19.89p (2019: 17.61p)
-- Proposed final dividend of 6.25p (2019: 5.5p) per share, total dividend for the year 9.0p (2019: 8.0p) an increase of 12.5%
-- Cash balances of GBP15.8m at the year-end (2019: GBP13.8m)
Operational highlights
-- Excellent operating performance helped by quick implementation of Covid-19 response plans.
-- Sales growth in the Americas, Europe and China, particularly through the Company's own subsidiaries.
-- US study proves anti-viral activity of pHorce (R) in swine.
-- Successful Orego-stim (R) global launch in layers and pullets following North Carolina State University 3 year study.
-- New Orego-Stim Aqua improves output and profitability in the absence of antibiotic growth promoters (AGPs).
-- Investment in automated pallet delivery system completed.
"The Board is delighted to report the Group's best operating performance to date, notwithstanding that 2020 was an extremely challenging year for the world due to the Covid-19 pandemic. This outstanding performance is due to the swift implementation of our Covid-19 response plans and the commitment, flexibility and supreme efforts of our staff. The resilience of the company's systems and operating procedures have meant that the company was able to operate as near normal as possible, ensuring customers did not experience disruption in supply.
The current financial year has started well, building on momentum from 2020. Our global sales team is supporting customers and we are continuing online customer meetings, technical training and business development effectively.
Finally, this is my last statement before I retire from the Board at this year's AGM. I would, therefore, like to take the opportunity to thank all staff and shareholders for their loyalty and support of Anpario in helping to build a successful company which has delivered significant shareholder value, including a substantial increase in market capitalisation. We have appointed a new Non-Executive team with exceptional knowledge and experience who will provide wise counsel to the executive management in taking Anpario to the next level. It has been an absolute pleasure and privilege to be involved with the Company and to work closely with Richard and Karen in particular."
Peter Lawrence, Chairman
(1) Adjusted EBITDA represents operating profit for the year GBP5.267m (2019: GBP4.297m) adjusted for: share based payments and associated costs GBP0.067m (2019: GBP0.124m); loss on disposal of property GBPnil (2019: GBP0.061m); foreign exchange losses GBP0.442m (2019: GBP0.332m gain); foreign exchange hedging gains GBP0.405m (2019: GBP0.274m); and depreciation, amortisation and impairment charges of GBP1.233m (2019: GBP1.140m)
Strategic report
Chairman's statement
Overview
Anpario is pleased to report its best performance to date with sales exceeding GBP30m and a 22% improvement in profit before tax to GBP5.4m, during a period of extraordinary disruption as the Covid-19 (coronavirus) pandemic continues to impact many countries around the world. I am immensely proud of the way the Group reacted quickly by implementing response plans which mitigated much of the disruption and delivered an excellent financial result. Strong cost and cash control helped to deliver profits significantly ahead of the previous year, thereby strengthening our balance sheet, whilst also returning record levels of cash to shareholders by way of dividends and a share buy-back.
There were strong performances in the Americas, Europe and in China where sales showed a quick recovery as farmers restocked their pig operations and the ban on the use of antibiotic growth promoters (AGPs) in animal feed also benefited sales of Orego-Stim(R). The Middle East experienced continued weakness in the second half. Our strategy in recent years to set up local subsidiaries and sales teams is proving successful with the strongest growth through these channels which have been able to fully support end customers throughout the pandemic. We also invested in an automated pallet delivery system which has increased production capacity and streamlined the output processes at the Manton Wood production plant.
We anticipate keeping most of the Covid-19 response measures in place for the foreseeable future given the prevalence of the second wave of infection currently around the world but, expect that as the vaccination programs are implemented then business development initiatives, which require a more personal touch, will resume. Nevertheless, we have learnt some valuable lessons in how to apply communication technology to operate more efficiently. The Company has not made use of any of the UK Government's financial support measures available in relation to Covid-19.
Dividend
The Board is recommending a final dividend of 6.25 pence per share (2019: 5.5 pence) making a total of 9.0 pence per share for the year (2019: 8.0 pence), an increase of 12.5%. This dividend, payable on 30 July to shareholders on the register on 16 July, reflects the Board's continued confidence in the Group and its ability to generate cash. Taken with the GBP1 million returned to shareholders through the share buy-back in March 2020, cash returned to shareholders amounts to GBP2.7m for the period.
AGM
The Board plans to hold the AGM on Thursday 17 June 2021, at 11.00am. We recognise that the AGM is a good opportunity for shareholders to meet and ask questions of the Board, especially given the recent new appointments. We will let shareholders know nearer the time the arrangements for the AGM, but these will depend on Covid-19 restrictions and government advice in place at that time.
Board changes
The Board succession plan for Non-Executive Directors was announced in our recent trading update. Richard Wood retires from the Board on 31 March 2021, and I thank him for his valuable contribution and guidance as Senior Independent Director and Chair of the Remuneration Committee. I have also advised the Board of Anpario that I shall retire as Non-Executive Chairman, Chair of the Audit and Nomination committees at Anpario's AGM on 17 June 2021. It has been an absolute pleasure and privilege to have been involved with the company and to have worked closely with Richard and Karen, in particular.
I welcome Kate Allum and Matthew Robinson to the Anpario Board who bring a wealth of corporate governance and commercial experience to the Company. I also look forward to Ian Hamilton joining us on 1 April 2021. A further announcement will be made regarding the positions of Chairman, Senior Independent Director and Board Committees.
In addition, Karen Prior has told the Board that she wishes to relinquish the role of Group Finance Director after the AGM but will remain as an Executive Director of the Company responsible for Corporate Social Responsibility and as Company Secretary. Marc Wilson, who is currently Group Management Accountant, will be Karen's successor to the Board from 1st July. Marc, who joined Anpario in 2010, has been instrumental in the preparation of the statutory and management accounts as well as implementing the Group's enterprise resource planning system and controls.
Karen Prior will now oversee ESG matters and the Board has been further strengthened in this regard by the appointment of Kate Allum who has significant experience in leading sustainability and diversity initiatives.
Environmental, Social and Governance (ESG)
Sustainability and environmental issues are core to Anpario's operations with a focus on products which comprise almost 100% natural ingredients and working with key suppliers who share our sustainable goals. Anpario is committed to providing innovative solutions to the food farming industry, working in harmony with the natural aspects of an animal's biology to promote healthy growth at least damage to the environment. Work is progressing to evidence the positive impact of products such as Orego-stim(R) on greenhouse gas emissions reduction. Implementing strong governance and stakeholder accountability has always been central to our values and ethics.
People
It is testament to our staff across the globe that we have been able to deliver such an excellent performance in what is the most challenging of years for the world. Our staff have had to adapt to new ways of working and have assiduously followed our Covid-19 procedures to ensure operations were not compromised. We are also proud to have supported our local NHS hospitals and used our China expertise and shipping contacts to import face masks which were donated to local care homes. The commitment and dedication of all our people is greatly appreciated.
Outlook
There has been a strong start to trading in the current year. We will continue our online customer meetings and business development activities until lockdown restrictions are relaxed. Nonetheless, Anpario's global sales team is well positioned to support customers across our network. Investing and developing our sales and marketing channels around the world remains a priority, as does targeting new markets, such as aquaculture, with both existing and new innovations which bring significant value to the producers.
We expect the Covid-19 pandemic to continue to restrict international travel which may inhibit some business development initiatives but Anpario's local sales teams have been a significant strength in supporting our customers. We anticipate some challenges in the supply of goods to Europe to persist until the customs discrepancies are ironed out and protocols defined in the Brexit trade agreement are uniformly interpreted and applied across the EU. The setting up of a European stockholding hub will not only alleviate these temporary issues but will also offer Anpario a better platform to grow our direct to end-customer business across the continent.
Our natural products, such as Orego-Stim(R), are in demand not only when legislation such as the banning of AGPs or formaldehyde is implemented but also to improve animal health which in turn delivers performance benefits to farmers and meat processors in producing safe and sustainable food for consumers in a biosecure environment.
Our strong balance sheet enables the Group to invest in innovative natural product solutions, expand our global reach and undertake earnings enhancing and complementary acquisitions to continue the profitable development of the Group. We remain confident in capturing the opportunities to grow the business for the long-term benefit of all stakeholders.
Peter Lawrence
Chairman
17 March 2021
Chief Executive Officer's statement
Non-Executive Directors
I would firstly like to pay tribute to Peter Lawrence who is retiring as Chairman at the forthcoming AGM. Peter was instrumental in the development of Anpario following the acquisition of Agil in 2006. As a valued Board member and Chairman with his in-depth knowledge and experience of the industry he has made a significant contribution to the growth of the Group. On behalf of the Company, I would like to thank both Peter and Richard Wood, who also retires at the end of this month, for their commitment, support and counsel given during their time on the Board .
Overview of the financial year
Group sales for the year to 31 December 2020 grew by 5% to GBP30.5m, with strong performances from the Americas, Europe and China. China benefited from a relatively quick recovery of the Covid-19 lockdown and the rebuilding of pig herds following the African Swine Fever (ASF) epidemic. New legislation in China banning the use of antibiotic growth promoters (AGPs) in animal feed also started to benefit the Company towards the end of the period. These regions offset weakness in South East Asia where sales were flat over the year, after a strong first half, due to lockdowns which resulted in reduced meat protein consumption and an element of forward buying in the first half by our distributors. The Middle East suffered significantly as religious events were cancelled and the repatriation of foreign workers from the region reduced consumption in general.
Gross profit improved by 9% to GBP15.8m with gross margins improving to 51.9% from 50.0% compared to the same period last year. This improvement reflects the strong growth delivered through our subsidiaries and direct to customer trading, as well as from selling higher value-added products and the contribution from our recent investment in the liquid bottling plant. We have made further investments in our UK production plant this year including a GBP0.3m investment in a pallet delivery system to streamline the flow of finished pallets through the factory.
The pandemic has led to the suspension of travel and industry exhibitions since March 2020 which subsequently delivered cost savings in these areas. We expect suspensions to remain in place until at least the middle of this year and although some business development activities are best done face to face, the new efficient ways of working remotely with technology will remain with us in the future.
Our strong profit growth is reflected in the Company's cash generation affording the Group resources to invest in its multi-channel offering, especially where a local sales presence allows us to work more closely with end customers to drive growth. We continue to invest in product development and trial work for new applications of our technology, and in new species sectors such as aquaculture. Sales and activity through the Anpario Direct online platform continue to grow both in the UK and Australia, albeit from a low base.
Operational review
Americas
Overall, the region grew sales by 9% with Latin America and the US delivering growth of 4% and 22% respectively, but there were mixed performances across countries within Latin America.
Latin America performance was supported with key contributions from Brazil, Argentina and Peru. Brazil continued to benefit from growth in Orego-Stim(R) and Prefect(R) with a strong sales performance of 34% growth against a very high 2019 comparison. Brazil benefited from supplying China as its production recovers from African Swine Fever and the switch away from US supply of meat protein as result of the US-China trade tensions. The improvement in Peru was attributable to the appointment of a new distributor during the period.
Territories including Chile and Bolivia were badly affected by the Covid-19 pandemic. Sales in Chile declined by 49% as some of our products are indirectly used in salmon feed, which was severely impacted by closure of the restaurant trade across the Americas. Our second largest market in the region is Mexico and after growth in the previous year, suffered a sales decline of 12% due to disruption from the pandemic.
Focus on aquaculture in the region is starting to mature with products such as Orego-Stim(R), Prefect(R) and Mastercube(R), a natural pellet binder, used to improve production performance and replace commonly used antibiotics.
US growth accelerated in the second half driven by an increase in sales of the liquid version of Orego-Stim(R) by supplying smaller customers and orders through our relationship with the leading US animal health distribution company. Further trial work is being undertaken in the territory to support the marketing of Orego-Stim(R) as a natural coccidiostat to prevent the incidence of coccidiosis in poultry.
Our high strength acid-based eubiotic, pHorce(R), showed excellent results in a trial undertaken by Pipestone Applied Research (Pipestone) to evaluate the ability of feed additives to mitigate the risk of virus-contaminated feed. We are now starting to capture swine business in the US, following our investment in sales resource and a turnaround in the market there.
Asia
China delivered a strong recovery in sales in the second half ending the year 50% ahead of the same period last year. The country's quick recovery from the Covid-19 pandemic and the rebuilding of pig herds by farmers, helped drive volumes of Orego-Stim(R) and Prefect(R). We are seeing the emergence of larger farms with enhanced biosecurity and the industry taking the opportunity to modernise its approach.
The other key driver of growth towards the end of the year was the ban on AGPs in feed as essential oil products like Orego-Stim(R) are viewed as a natural replacement. In contrast, an over-supply of eggs reversed demand for our acid-based eubiotic product which targets the poultry layer market.
South East Asia had a strong first half but slowed during the rest of the year ending flat compared to the same period last year. The region was significantly impacted by reduced protein consumption and excess poultry production in Thailand which affected producer prices across the region. There was also an element of forward ordering by some distributors to reduce the chance of disruption to supply during the pandemic.
Our wholly owned subsidiaries showed some of the strongest growth in the region with Indonesia and Thailand delivering sales growth of 67% and 14% respectively. South Korea also performed well with growth of 16%. However, Bangladesh and Taiwan experienced the most severe impact to sales declining by 52% and 70% respectively. Certain parts of the region are experiencing a second wave of coronavirus infections with a consequential reduction on meat protein consumption.
Our sales teams are working closely with customers and targeting opportunities in aquaculture where we hope to capitalise on our successful trial work in tilapia and shrimp in Latin America. We are also looking to setup a subsidiary in Vietnam which is a key market in both agriculture and aquaculture.
Australasia saw modest sales growth of 2% compared to the same period last year with performances in Australia and New Zealand offsetting a reduction in business in Papua New Guinea. Australia experienced strong sales in Orego-Stim(R) and a prebiotic product which we supply to the pet sector. The Anpario Direct online platform was also launched to the pigeon and backyard farming community and the success of the racing pigeon Lady Oregon in the Sydney Gold Ring Race provided good publicity as well as vividly demonstrating the benefits of Orego-Stim(R) to animal health.
The Middle East and Africa
After last year's strong performance, the region saw a decline in sales of 38% compared to the same period last year. The Middle East has been severely affected by the Covid-19 pandemic as cancelled religious celebrations and pilgrimages, a fall in tourism and foreign workers returning home reduced meat protein consumption. There were some positive performances with Saudi Arabia, Syria and Jordan modestly up but, unfortunately, declines in Turkey, Egypt and Iraq weighed heavily on the overall result for the region. We expect the region to remain challenging although business development initiatives should see an improvement in performance over last year.
Europe
The region showed strong sales and profit growth with sales up 27% compared to the same period last year. The UK delivered a very strong performance through greater demand for our raw materials and feed hygiene products which are benefiting from the ban in the use of formaldehyde. Anpario's unique products and high service levels are valued by large raw material traders and processors and to capitalise on this further, especially on mainland Europe where we have a number of opportunities, we are investing in liquid bulk storage facilities at Manton Wood.
Russia, Belarus and Lithuania saw double digit sales increases as did Austria from where our distributor also supplies some of the Balkan countries. We have also recently appointed a new distributor in Switzerland.
As already mentioned, we have experienced some disruption in supplying customers in Europe due to Brexit but action has been taken to overcome the obstacles. Further detail is available in a later section below.
Sales and visits to the Anpario Direct online platform continue to grow monthly with the average order size being GBP85. We have agreed a deal with Provita Eurotech (Provita), a main brand manufacturer of animal health products for cattle and sheep. Anpario has agreed to stock a focused range of their key lambing and calving products including colostrum, vitamin and mineral drenches and hoof-care treatments. Stocking the UK's leading brand manufacturer of these products will attract new customers to the Anpario online channel, which offers 100% availability and next day nationwide delivery. Provita's products will be supported by online information, data sheets and video blogs from leading farmers who are already using these products.
Innovation and development
US trials with Pipestone have already demonstrated positive results by including pHorce (R) in feed which was co-infected with porcine reproductive and respiratory syndrome virus (PRRSV), porcine epidemic diarrhoea virus (PEDV) and Seneca virus A (SVA). It is also proving effective against enveloped viruses such as Avian Influenza (AI) and African Swine Fever (ASF).
Results of extensive trial work conducted over 3 years with North Carolina State University, USA has shown that Orego-Stim (R) is a cost-effective, natural solution for supporting laying hen performance and optimal egg quality. It also shows significant benefits in terms of pullet body conformation, increase in both egg size and in the number of eggs produced.
Urea formaldehyde is frequently used as a pellet binder for aquaculture feeds, especially in Asia. Aquaculture farmers are looking to replace this toxic substance with environmentally friendly alternatives and, as such, we undertook a series of university studies in Thailand to adapt our agriculture pellet binder, Mastercube(R), which is now successfully used in water where pellet integrity is required for a number of hours, especially for shrimp which tend to graze throughout the day.
Some of our product development and trial activities were curtailed due to the closure of test facilities and laboratories across the industry. Although an inconvenience, we were still able to perform commercial trials with customers for some of our products. For instance, our aquaculture version of Orego-Stim(R) replaced a commonly used antibiotic, so increasing shrimp weight gain by 4.3 grams in one week, reducing mortality to 0% and reducing the incidence of white spot syndrome virus (WSSV) by 47%. The incremental financial benefit to the shrimp farmer was US$500 per hectare. There are 220,000 hectares of shrimp farming in Ecuador alone.
Our Optomega(R) omega 3 supplement, which enhances animal fertility and egg enrichment, comprises a blend of sustainable fish oils. In addition we have recently developed an algal alternative as we recognise growing consumer demand for non-animal derived products. This new product means we can offer farmers a choice to meet changing consumer tastes.
Brexit
In anticipation of Brexit we put a number of measures in place, including building up raw material and finished stock levels and incorporating German and Irish companies. Raw material supplies, which are mostly sourced from Europe, have not experienced any disruption, and we have been able to transport products to our customers into the European Union. Our export team has been successful in resolving the challenges presented. We anticipate it taking a few months for these new arrangements to settle down. We have set up a European stockholding hub in the Netherlands using a third-party warehousing and logistics provider with specific experience in our industry. The stockholding hub will enable us to grow our direct to end-user business, facilitating our ability to offer a high level of service for smaller order sizes. From this base we expect to expand our business further in the European Union and see it as a potential opportunity.
Growth Strategy
We remain focused on organic growth through multi-channel distribution and with a strategic focus on adding value with speciality feed additives, including newly formulated products focused on new markets and broadening species segments such as aquaculture and ruminant. We aim to build on our growth momentum in United States and Latin America and the opportunities in China and Asia Pacific which are moving towards antibiotic removal. Anpario's natural and sustainable approach to animal health and intensive farming allows farmers to produce their output in a safe manner where toxic substances and threats such as antimicrobial resistance can be reduced through using our natural solutions.
In Europe we are building our reputation and resulting market share for our specialty raw material treatments and feed hygiene products. Our investment in the production plant enables us to enjoy high operational gearing. We continue to explore acquisitions opportunities to complement our current product range and enhance sales channels.
Richard Edwards
Chief Executive Officer
17 March 2021
Key performance indicators
Financial
Hot Features
Premium
2020 2019
Note GBP000 GBP000 change % change
------------------------------ ---- ------ ------ ------ --------
Revenue 3 30,522 29,046 +1,476 +5%
Gross profit 15,852 14,510 +1,342 +9%
Gross margin 51.9% 50.0% +1.9%
Adjusted EBITDA 6 6,604 5,680 +924 +16%
Profit before tax 5,350 4,394 +956 +22%
Diluted adjusted earnings per
share 12 21.15p 18.61p +2.54p +14%
Total dividend for the year 9.00p* 8.00p +1.00p +13%
Cash and cash equivalents 15,820 13,842 +1,978 +14%
Net assets 37,505 35,554 +1,908 +5%
* 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
Health and safety - there were no major accidents reportable to the Board in the year (2019: nil).
The Group also regards growth of business in key target markets and the on-going achievement of product registrations and quality assurance accreditations as other KPIs.
Financial review
Revenue and gross profits
The Group has delivered another strong year of progress, growing revenue by 5% to GBP30.5m (2019: GBP29.0m). The Europe segment delivered the strongest growth with a sales increase of 27%. Further growth was seen in the Asia and Americas segments of 6% and 9% respectively. However, difficult conditions in the Middle-East and Africa segment saw revenue decline by 38%. Detailed commentary on the performance of the operating segments is available in the Chief Executive Officer's Statement.
Gross margins have also increased 190 basis points to 51.9%, this was attributable to several factors: operational efficiencies from the automated bottling plant investment; continued changes in sales mix to focus on higher value-added products; and an increase in the proportion of direct to end-customer sales. The revenue growth combined with increased margins led to a gross profit increase of 9% to GBP15.9m (2019: GBP14.5m).
Administrative expenses
Underling administrative expenses, which exclude foreign exchange variances, increased by 7% (GBP0.7m). Employment costs excluding bonuses rose by 7% (GBP0.4m), however GBP0.3m of this related to a reduction in the level of capitalised staff costs as internal R&D projects slowed due to COVID-19. There have been a number of notable sales performances within the regions, as well as good overall profit growth and accordingly incentive costs have increased by GBP0.8m in the year.
Industry events have appropriately been curtailed due to COVID-19 and whilst digital marketing related costs have increased, overall marketing expenditure was down 44% (GBP0.3m). Similarly, the suspension of most international flights and local lockdowns have led to significant travel savings with costs down 58% (GBP0.6m). This trend is expected to continue through the first half of 2021, and whilst there will be a normalisation of costs, it is expected that we will continue the positives aspects of the increased use of technology such as the speed and ease of communication and cost efficiencies that it brings.
Other cost increases include legal and professional costs up GBP0.3m year-on-year which partly relates to setup costs to support our continued expansion to support local markets. Further, whilst we have experienced only immaterial credit losses in the year, there is GBP0.1m increase in the expected credit loss provision, further details of which are set out in note 18 to the financial statements. The Group primarily trades with customers backed by credit insurance, but this is not always feasible and we continue to monitor and assess our customers in relation to the difficult challenging macro-economic situation.
Foreign exchange
There has been continued volatility in foreign exchange markets through the year. The Group's primary foreign currency exchange rate risk relates to both sales and related receivables denominated in US Dollars. Foreign exchange losses in the period totalled GBP0.4m, however this was fully offset through the Group's continued exchange risk management strategy and fair value gains of GBP0.4m on hedging contracts as detailed in note 19. At the year end the Group has recognised a GBP1.0m (2019: GBP0.5m) financial asset on these hedging contracts, which protect a large portion of the currently forecasted US Dollar sales over the next three years at an average forward rate of GBP/USD 1.3018.
Profitability and earnings per share
Adjusted EBITDA for the year increased by 16% to GBP6.6m (2019: GBP5.7m) and diluted adjusted earnings per share increased by 14% to 21.15p per share (2019: 18.61p).
Profit before tax growth mirrored absolute Adjusted EBITDA growth but represented a higher percentage increase of 22% to GBP5.4m (2019: GBP4.4m). Basic earnings per share grew 14% to 20.63p (2019: 18.10p) this increase was lower than profit growth due to increased income tax charges for the year.
Taxation
The effective tax rate for the year was 21.4% (2019: 15.5%). Changes to UK corporation tax rates as part of the Finance Bill 2020 meant that rates now remain at 19%, rather than the previously planned reduction to 17%. Deferred taxes have been remeasured at this revised rate resulting in a deferred tax charge of GBP0.2m in the current year. Excluding this, the effective tax rate was 18.4%, this is higher than previous years with another contributing factor being the reduction in internal research and development activity due to COVID-19, therefore reducing associated R&D tax credits in the period.
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. As this rate was not substantively enacted at the balance sheet date it has not been used to calculate the deferred tax balances.
Cash generation
Net cash generated by operations for the year was GBP5.8m (2019: GBP4.0m). In the first half of the year, we significantly increased our working capital by GBP2.0m as part of our strategic response to disruption caused by COVID. This involved stocking up our subsidiaries and distributor network to ensure continuity of supply through this period and achieve a competitive advantage. Through the second half of the year these levels have started to normalise somewhat and an increase in trade payables has lead to a smaller year-on-year increase of GBP0.6m.
Net cash used in investing activities decreased in the period to GBP1.2m (2019: GBP1.4m). Investments in the current period included amounts on plant and machinery investment for further efficiencies and continued R&D and IP protection.
During the year, a GBP1.0m share buyback programme was successfully completed, purchasing 297,346 ordinary shares at a volume weighted average price of 336.31p per share and resulting in net cash used in financing activities of GBP2.5m (2019: GBP1.6m).
Overall, cash and cash equivalents increased by GBP2.0m in the year to a balance of GBP15.8m (2019: GBP13.8m). The primary purpose of holding these resources is to fund future acquisitions and we continue to explore suitable opportunities.
Dividends
The Board is recommending a final dividend of 6.25 pence per share (2019: 5.50 pence) payable on 30 July to shareholders on the register on 16 July. In addition to the interim dividend already paid, this represents an increase to the total dividend for the year of 13% to 9.0 pence per share (2019: 8.0 pence).
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.
Our business model is based on:
-- Products - high quality efficacious products presented well;
-- Channel - control the sales channel to ensure we develop strong technical and commercial relationships with the end users of Anpario products;
-- Story - powerful value add proposition demonstrating the nancial and performance bene ts of our product solutions;
-- Branding - build an impeccable Anpario brand which global customers can trust as having innovative, high quality and effective solutions for customers;
-- Quality - throughout supply chain and manufacturing processes; and -- Efficiency - efficient automated production with high operational gearing.
Strategy
Regional focus
Developing local commercial and technical relationships across the world.
Delivered through:
-- regional sales structure; -- local language speakers; -- resource that understands local market needs and challenges; and -- closer relationships with key end customers.
Actions in 2020:
-- continued increase of Direct sales channel; -- launch of Anpario Direct in Australia market; and -- set up of new subsidiary operations to serve local markets.
Future plans:
-- continued expansion of Anpario Direct to other suitable territories; -- establishment of new subsidiaries for better access and support to local markets; and -- further selective recruitment of high calibre regional resource.
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 2020:
-- US trials with Pipestone demonstrating positive results by including pHorce(R) in feed against a multitude of viruses;
-- 3 year trial work with North Carolina State University, USA has shown that Orego-Stim(R) is a cost-effective, natural solution for supporting laying hen performance and optimal egg quality.
-- Adaptation of Mastercube(R) to sucessfullly be used for acquaculture markets, especially Shrimp
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 2020:
-- evaluated a number of acquisition opportunities.
Future plans:
-- continue active search for acquisition opportunities within de ned criteria.
Operations
High quality, consistent and efficient manufacturing.
Delivered through:
-- automated production facilities; -- key industry quality accreditations; and -- quality supply partners.
Actions in 2020:
-- automated pallet wrapper and delivery system; and -- increased efficiency and throughput of high volume production line.
Future plans:
-- evaluating further production investment opportunities; -- continued expansion of packaging options; and -- developing enhanced production contingency plans.
Section 172 Statement
Introduction
As a Board, collectively and as individual Directors, we recognise our obligations and our duties as Directors. Section 172 of the Companies Act 2006 requires a director of a company to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so, each Director has regard, amongst other matters to:
-- the likely consequences of any decision in the long term; -- the interests of the Company's employees;
-- the need to foster the Company's business relationships with suppliers, customers and others;
-- the impact of the Company's operation on the community and the environment;
-- the desirability of the Company maintaining a reputation for high standard of business conduct; and
-- the need to act fairly as between members of the Company.
How the Board fulfils its Section 172 duties
We ensure that the requirements of section 172 are met and the interest of our stakeholder groups are considered through, amongst other means, a combination of the following:
-- review of strategic objectives and achievement thereof; -- annual budgets and review of resource allocations; -- results presentations to shareholders and staff; -- audit and risk management processes conducted through the year; -- health and safety reports; -- reviews of employee matters; -- annual performance appraisals for all staff including personal development reviews; -- consideration of these matters in relation to major decisions made within the year; -- regular meetings with customers and key suppliers; and -- other ad-hoc engagement with stakeholders.
Stakeholders and their key interests
The table below outlines the key stakeholders the Company has identified, their key interests and where in this annual report that further details on matters such as engagement and key decisions made in the year in relation to each stakeholder group can be found.
Stakeholder Group Key decisions made in the year Further
and key interests details
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Shareholders
Chairman's
* Delivering sustainable, profitable growth over the * Increase in dividend per share proposed in light of statement
long-term. results (see Chairman's statement). Chief
Executive
Officer's
* Robust governance and appropriate controls to * Share buy back in the year (see Director's report) to statement
mitigate risk. support the growth in value of the investment in the Key
Company. performance
indicators
Financial
review
Our business
model
and strategy
Risk
Management
Corporate
Governance
Director's
report
Corporate
responsibility
report
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Customers
Our business
* Innovative, high quality products that help overcome * Brexit planning to ensure customers received product model
the challenges of modern-day farming with reliable throughout disruption caused by Brexit (see Chief and strategy
delivery. Executive Officers statement). Risk
Management
Corporate
* Extended product ranges and geographic footprint to responsibility
improve customer experience (see Risk Management). report
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Employees
Chairman's
* Safe working environment, with fair remuneration and * Responding to COVID-19 to ensure our employees were statement
the opportunity for personal growth and career safe (see Risk Management). Our business
progression. model
and strategy
Risk
Management
Corporate
Governance
Corporate
responsibility
report
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Community and Environment
Our business
* Conducting business in an ethically and * Increased Board oversite of ESG matters (see model
environmentally responsible manner. Chairman's statement) and strategy
Risk
management
* The Board did not feel it was appropriate to claim Corporate
any UK government support for COVID-19 in light of governance
the performance of the Group. Corporate
responsibility
report
* Charitable donations and volunteer work, including
sourcing and distributing face masks to care homes
(see Corporate responsibility report).
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Suppliers
Our business
* Mutually beneficial relationships with fair business * Engagement with suppliers that may have face model
practices and prompt payment. disruption caused by Brexit. and strategy
Risk
Management
* Ensuring that in the current difficult economic Corporate
conditions we have continued to support our supply responsibility
chain by making prompt payment for supplies to ensure report
to ease any working capital pressure on our
suppliers.
------------------------------------------------------------- -------------------------------------------------------------- ----------------
Risk management
Introduction
We have examined in detail the key risks and evaluated 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, supply chain disruption and the recruitment, development and retention of employees.
COVID-19
The global and specific impacts of COVID-19 in 2020 and continuing in the future are far reaching. From March 2020 Anpario successfully implemented contingency plans with split production and operations teams, social distancing measures, remote working and technology to support our global sales teams and customers. Anpario has also built up higher raw material supplies in the UK and finished goods stocks in subsidiary warehouses globally to mitigate potential supply chain disruption.
Brexit
Sales to EU member states accounted for 10% (2019: 12%) of total sales and 36% (2019: 43%) of purchases. Brexit has remained a continuing risk since the 2016 referendum result with more certainty of our future trading relationship with Europe now enabling the planning of our EU supply chains and operations. Whilst inward supplies have been uninterrupted, we have experienced some logistical challenges in some countries although for the most part trade has continued without disruption. As part of our response plans Anpario had established Irish, German and Turkish subsidiaries in 2019 and 2020 and we have subsequently further strengthened this with warehouse facilities in the Netherlands which will be used to directly supply some EU customers.
Risk management review
The table in the risk framework section 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:
-- swift and effective implementation of our COVID-19 response plans including off-site working and effective global online sales and training programmes for staff;
-- development of remote online sales practices;
-- mitigation of Brexit impact through the establishment of a new EU subsidiary in Ireland, complimenting a German subsidiary to help meet new regulatory requirements, ease logistics and to enable raw material and finished goods stock build up;
-- successful resolution against passing off Optomega(R) product range; -- new product registrations and sales channels achieved in Indonesian subsidiary;
-- launch of new Anpario products and applications including: anti-viral organic acids, Orego-stim(R) for layers and pullets for performance improvement and complimenting vaccine use, Orego-stim(R) application for sow performance and intestinal health, ethoxyquin free anti-oxidants and pellet binder for aquaculture feeds;
-- patent application for Orego-stim(R)'s antimicrobial activity in calves progressed and a patent application lodged in respect of the anti-viral properties of pHorce(R);
-- non-animal plant product development;
-- launch of Anpario Direct to access end users in EU, China and Australia in addition to UK and providing new products specifically for equine market;
-- successfully implemented further phases of automated pallet delivery system and increased plant capacity;
-- established new subsidiary in Mexico as a regional base for Central America; -- rolled out IT security awareness training to all staff; and -- progressed 140 product registrations worldwide.
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 2021 our key areas of focus include:
-- actioning our Board succession plan;
-- revisiting our Business Continuity Plans at head office and our subsidiaries to strengthen areas of perceived weakness and adopting learnings from 2020 implementation in response to COVID-19;
-- closely monitor and review our production capacity limitations and implement appropriate actions to increase these;
-- implement new processes to enable smooth logistical operations and client delivery for EU customers;
-- review subsidiary internal controls and audit requirements; and -- further development and coaching for our key managers and staff.
Risk framework
1. Market Risk 2. Political and Economic Risk
Risks Risks
-----------------------------------------------------------------
* Gaining market entry for products and access to end * Brexit consequences.
users.
* Exchange rate fluctuations.
* Competition from global operators.
* Geopolitical risks including political and economic
* M & A activity resulting in market consolidation. instability.
* Human movement restrictions e.g. COVID-19, SARS. * Bad debts or trade disputes.
* Animal diseases e.g. African Swine Fever, Avian
Influenza, PEDV.
* Climate and environmental changes.
* 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 * Increased inventory of EU sourced raw materials.
defined product and species related goals for each
region.
* Established a warehouse and distribution facility in
the EU.
* Regular monitoring of sales budgets and sales
prospects by the management and the Board.
* Extended terms provided to EU distributors to ensure
supply in short term.
* Effective disaster planning communicated on a timely
basis.
* Limiting and hedging of foreign currency exposure.
* Regional and species diversity and an extensive range
of products with new product development and * Wide geographic diversity reduces dependency in a
launches. single country or region.
* A clear and effective marketing strategy * Rigorous customer and supplier due diligence and
communicating the benefits of Anpario sustainable monitoring of regional and customer exposures.
solutions.
* Use of credit insurance and letters of credit.
* Close customer engagement, relationships to
understand and address their needs.
* Global trademark watches and pre-emptive legal
action.
* Ensuring,our trade mark portfolio supports and is
reflective of our marketing strategy.
-----------------------------------------------------------------
Risk rating Trend Risk rating Trend
--------------------------- ------------------------------------ ---------------------------
Likelihood: Medium Increasing Likelihood: Medium No change
Impact: Medium Impact: Medium
--------------------------- ------------------------------------ ---------------------------
3. Product Development Risk 4. Production and Quality Risk
Risks Risks
--------------------------------------------------------------
* Failure to deliver new products due to lack of * Plant closures due to major accident or incident or
innovation, pipeline delays or products not meeting disaster.
commercial expectations.
* Health and Safety issues.
* Failed or aborted trials during development or
customer acceptance stages.
* Reliance on third party manufacturers.
* Lack of significant financial, R&D and other
resources. * Inadequate or poor adherence to quality systems allow
faulty product to reach customer.
* Sub-standard raw materials.
* Defective plant and equipment in our manufacturing
facility.
--------------------------------------------------------------
Potential impact Potential impact
--------------------------------------------------------------
* Reduction in competitiveness in the market. Lost * Loss of production for a significant period e.g. more
opportunities. than one month potentially leading to loss of sales.
* A succession of trial failures could adversely affect * Accidents, fatality leading to possible closure or
our ability to deliver shareholder expectations. fine.
* Our market position in key areas could be affected, * Poor product quality or product contamination.
resulting in reduced revenues and profits.
* Damage to customer relationship, reputation and
* Where we are unable to develop and launch a product financial loss.
this would result in impairment of intangible assets.
* Valuable resources may be wasted.
--------------------------------------------------------------
Control and mitigation Control and mitigation
--------------------------------------------------------------
* Continual monitoring and review of the lifestyle and * All products can be produced at approved toll
potential return from current products. Different manufacturers in the UK. Business interruption and
regions have markets that are at different points in property insurance policies arranged.
development.
* Business Continuity Plan in place.
* Potential new development projects are evaluated from
a commercial, financial and technical perspective.
The pipeline is reviewed regularly by the Board. * Third party advisor utilised and strict management
controls enforced. Employers' liability insurance
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, * Continued investment in automation has improved
deliver expected outcomes and provide useable data. product consistency and quality.
Final review and evaluation to ensure learning.
* Supplier accreditation, UFAS and FEMAS certification,
* Multiple studies are conducted to assess the effects HACCP and Trading Standards compliance. Public and
of a product on target species. product liability insurance arranged.
* In respect of all new product launches a detailed
marketing plan is established and progress against
that plan is regularly monitored.
--------------------------------------------------------------
Risk rating Trend Risk rating Trend
--------------------------- --------------------------------- ---------------------------
Likelihood: Medium Decreasing Likelihood: Low No change
Impact: Medium Impact: Medium
--------------------------- --------------------------------- ---------------------------
5. Systems Risk 6. 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
--------------------------------------------------------------
* Regular back up of data, third party provider for * Vigilance and monitoring of all appropriate
storage and system support. notifications to ensure compliance and pre-emptive
actions.
* Firewall, regular back up of data, crime and cyber
insurance in place. * Clear communicated policies and Code of Conduct
issued to all employees and partners.
* Continual review and strengthening of processes,
controls and security. * Internal training and awareness communications.
* Information Policy, Privacy Policy, Breach * Support from external experts in all countries in
Notification Policy and Disaster Recovery Plan in which we operate.
place.
* Reasonable due diligence is carried out on all
* Staff and partner awareness communication and customers and end users.
training.
* Sanction checking processes are implemented and
documented.
--------------------------------------------------------------
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
17 March 2021
Board of Directors
Non-Executive Directors
Peter A Lawrence, MSc, BSc, DIC, ACGI.
Non-Executive Chairman (A, N, R)
Peter joined the Board in August 2005 as a Non-Executive Director and became Non-Executive Chairman in 2017. Peter is the founder of ECO Animal Health Group plc from which he retired in March 2019 as the Non-Executive Chairman, having been an Executive Director ever since its formation in 1972. Peter is the Non-Executive Chairman of Baronsmead Venture Trust plc and Amati AIM VCT plc.
Richard K Wood, BSc, C Eng.
Senior Independent Director (A, N, R)
Richard joined the Board in November 2017 as a Senior Independent Director. Richard has considerable global animal health experience having built Genus plc from a small company privatised by the government, into a world leading animal genetics company. More recently, Richard was a senior independent non-executive director of Avon Rubber plc and was also chairman of Ocean Harvest Technology Inc., a small manufacturer of therapeutic animal feeds using seaweeds.
Richard has previously held the position of Chairman at Atlantic Pharmaceuticals plc, Innovis (a sheep genetics company) and Silent Herdsman Limited (Farming Technology) and was interim Chairman of ECO Animal Health Group plc in early 2019.
Matthew Robinson, MA, ACA
Non-Executive Director
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 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.
Kate Allum, BSc
Non-Executive Director
Kate has an extensive track record of senior executive and Non-Executive leadership roles in the food supply chain and agriculture industries and also has experience in other sectors. Her previous executive roles include Head of European Supply Chain at McDonald's Restaurants, Chief Executive of First Milk, the British farmer-owned dairy co-operative and Chief Executive of Cedo Ltd, an international plastic recycling business. Kate is currently a Non-Executive Director of Cranswick plc, a leading UK food producer, Origin Enterprises plc, an international agri-services business and Stock Spirits Group plc, a leading drinks manufacturer. In addition, she is the Chair of the Court of the University of the West of Scotland and a director of UCEA (Universities and Colleges Employers Association).
Executive Directors
Richard P 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.
Karen L Prior, BSc (Hons), FCA.
Group Finance Director
Karen joined the board in October 2009 as Group Finance Director. Previously, Karen has had roles as Finance Director of Town Centre Securities PLC, a listed property group and UK Finance Director of Q-Park, where she was instrumental in its establishment and growth in the UK.
Karen has also been Financial Controller of train builders Bombardier Transportation and spent 10 years of
her early career with Ernst and Young specialising in providing audit and business services to entrepreneurial businesses.
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.
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 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.
The Executive Directors hold shares and participate in incentive plans in the Company which ensures that their interests are fully aligned with those of other shareholders.
Principal 3: Corporate social responsibilities and wider stakeholders
Anpario seeks to ensure a sustainable business, behaving 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. 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.
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.
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.
The requirement for an Internal Audit function is to be kept under review.
Risk management process
We recognise that a level of risk taking is inherent within a commercial business; our risk management process is designed to identify, evaluate and mitigate the risks and uncertainties we face.
The CEO is the ultimate Risk Manager. The Board establishes our risk appetite; oversees the risk management and internal control framework and monitors the Group's exposure to principal risks.
The Executive Management Board (EMB) owns the risk management process and is responsible for managing 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; -- levels of designated authorities and approvals; -- Ways of Working (WOWs); -- Anti-Bribery and Corruption Policy; -- GDPR and Privacy Policy; and -- due diligence processes including rigorous sanctions checks.
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. A board succession plan has been announced and more details can be found in the Chairman's statement.
Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
--------------- ------------------------ ---------------- ------ ---- ----
Richard Edwards Chief Executive B Eng (Hons), C M
Officer Eng, MBA.
Karen Prior Group Finance Director BSc (Hons), FCA.
--------------- ------------------------ ---------------- ------ ---- ----
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
---------------- ------------------------ -------------- ------ ---- ----
Peter Lawrence Non-Executive Chairman MSc, BSc, DIC, C C M
ACGI.
Richard Wood Senior Independent BSc, C Eng M M C
Director
Matthew Robinson Non-Executive Director MA, ACA
Kate Allum Non-Executive Director BSc
---------------- ------------------------ -------------- ------ ---- ----
Audit = Audit Committee, Nom. = Nomination Committee, Rem. = Remuneration Committee
C = Chair, M = Member
The Board considers that the Non-Executive Directors are independent. In Peter Lawrence's case the Board has speci cally considered his length of service on the Board and determined that in terms of interest, perspective and judgement he remains independent.
All Directors are subject to reappointment by shareholders at the 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 Group Finance Director is also the Company Secretary and is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are adhered to.
In addition to formal Board and Committee meetings, ad hoc decisions of the Board and Committees are taken after discussion throughout the 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 2020. A list of the meetings convened during the year is set out below.
Number of meetings Full attendance
convened of meeting
------------------------------- ------------------ ---------------
Board meetings 5 Yes
Audit Committee meetings 2 Yes
Remuneration Committee meetings 1 Yes
------------------------------- ------------------ ---------------
The Chief Executive Officer works full time for the Group. The Group Finance Director worked an average of four 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.
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.
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 and Anti-Bribery and Corruption and a Whistleblowing Policy that is applicable to all our employees, other workers, our suppliers and those providing services to our organisation.
Principal 9: Maintaining governance structures
Anpario is 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 Group Finance Director also acts as Company Secretary and is further responsible for advising on corporate governance matters and ensuring compliance with relevant legislative and legal requirements.
Details of the key committees are set out below, the terms of reference for each are available on our website as part of the committee section of the AIM 26 disclosures www.anpario.com/aim-26/ .
Audit Committee
Details are contained within the Audit Committee Report section of this Annual Report.
Remuneration Committee
Details are contained within the Remuneration Committee Report section of this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the two Non-Executive Directors and the Chief Executive Officer and is chaired by Peter Lawrence. Meetings are held as required by the Chairman. The role of the committee is as follows:
-- regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes;
-- give full consideration to succession planning for Directors and other senior executives taking into account the challenges and opportunities facing the Company, and the skills and expertise needed on the Board in the future;
-- keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;
-- keep up to date and informed about strategic issues and commercial changes affecting the Company and the market in which it operates;
-- review and approve selection procedures for potential Board members, whether executive or non-executive, whether for immediate appointment to the Board or after a probationary period;
-- be responsible for identifying and nominating for approval of the Board, candidates to 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.
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 25 June 2020, full details of which are included in the 2019 annual report available from 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 Passed
Reports
2 Approve Final Dividend Passed
3 Re-elect Karen Prior as Director Passed
4 Re-appoint Deloitte LLP as Auditors Passed
5 Authorise Issue of Equity with Pre-emptive Passed
rights
6 Authorise Issue of Equity without Pre-emptive Passed
rights
7 Authorise Market Purchase of Ordinary Passed
Shares
--- --------------------------------------------- ------
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/ .
Corporate responsibility report
Environmental responsibility
Anpario seeks to ensure a sustainable future, conducting business in a socially, ethically and environmentally responsible manner engaging with all of our key stakeholders, including the communities in which we operate. Our people seek to meet environmental challenges with sustainability at the beating heart of Anpario. It is our responsibility to identify problems faced by producers globally and find effective sustainable solutions. As we continue to build on the strong foundations built over the past four decades, we aim to be a leading light now and in the future.
Anpario works with nature
Anpario works with nature to champion the production of safe and healthy food. Our ongoing mission is to support and supply food producers and to become a key influencer in assisting global supermarkets, farmers and food chain producers to switch to healthier and sustainable feed ingredients to benefit both animal and human health.
Through our cutting-edge products, innovations and collaborations we contribute to feeding a growing global population in a world with finite resources, helping to create good health and nutrition throughout the food supply chain and combatting animal diseases that can destroy animals, livelihoods and the world food supply.
Our innovative products work in harmony with an animals' biology to promote healthy growth and demonstrate value to the animals fed directly through all life stages, indirectly to their progeny and ultimately within the human food chain. This contributes to a more efficient use of feed ingredients to reduce the environmental footprint of food production and ensures responsibly produced food.
Anpario's sustainable objectives
Sustainable development should meet the needs of the present without compromising the ability of future generations to meet their own needs.
1. 100% sustainable products
Our bio-sciences technology has developed "eco-products" with unique features for many animals including poultry, swine, cattle and fish and also for companion animals. These improve the quality of meat, fish, eggs and milk produced, benefitting the human food chain and directly helping the animal's gut health by removing potentially harmful toxins present in animal feed and thereby reducing mortality and sickness. The improvement in gut health contributes to a reduction in the levels of greenhouse gases and ammonia generated by food production, leads to a more efficient use of feed ingredients to reduce environmental footprints and ensures responsibly produced food.
2. Zero Finite Material
Anpario's ambition is to cease to consume materials that cannot be renewed or replenished, and to use only raw materials from common minerals and plants with plentiful natural resources.
Raw materials used in our products are primarily common minerals in high grade quality from plentiful natural resources. One of our main raw materials is 100% is natural oregano oil extracted from organically grown plants and produced in a carbon neutral factory. Fish and marine oils are sourced from farmed fish produced for the human food chain or sourced from suppliers certified for sustainable fishing.
3. Zero waste and pollutants
Our self-owned and operated production facility has established benchmark levels and is dedicated to drive continuous improvements to increase efficiency and eliminate waste. Anpario suppliers share the same ethos and hold a 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.
Our global responsibility is inherent throughout our company values and re ected in our goals which are in tune with several of the United Nations 17 Sustainable Development Goals (SDG's) Anpario's activities impact:
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.
SDG 6: Clean water and sanitation - ensure availability and sustainable management of water and sanitation for all
Clean water is vital to both animal and human health. Our product portfolio includes a highly efficacious effervescent water-soluble tablet (Credence) that kills harmful moulds, fungi, bacteria and viruses in water as a cost effective one-step process on farm.
SDG 12: Responsible consumption and production - ensure sustainable consumption and production patterns
Anpario's 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
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
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 work with aquaculture experts on new formulations for sustainable and antibiotic free sh production.
SDG 17: Partnerships for the Goals: strengthen the means of implementation and revitalize the global partnership for sustainable development
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.
Anpario's products
Anpario has a substantial portfolio of proven products that make a difference to animal and ultimately human health. Some of our key innovations and animal health programmes with signi cant qualitative and measurable bene ts and which are working to achieve SDG's include:
Antibiotic free and pathogen control
The solution to eliminating antibiotic dependency requires programmes that are multifaceted in their approach combining biosecurity, management and nutrition. Anpario has spearheaded the 4 R's campaign globally to 'Review, Reduce and Replace antibiotics Responsibly' to help manage gut health and support healthier livestock through the use of natural products.
Anpario's gut health products have bene cial effects including: reduction of E.coli, increased levels of lactobacillus creating a favourable microbial environment and increase in levels of energy sources (propionate and butyrate), improved animal strength, body weight gain and reduction in mortality rate. This results in reduced energy costs and improved dietary utilisation, aiding animal performance and helping to ensure they are more robust and better able to resist pathogen challenges.
Anpario's phytogenic products contain natural oregano oil containing carvacrol and thymol which are natural antimicrobials. It regulates gut microbiota, has anti-in ammatory and antioxidant properties and stimulates appetite for efficient feed conversion.
Mycotoxin binders
Mycotoxins are toxic chemicals produced by moulds. Their presence in animal feed can have a detrimental effect including: reduced growth rates, lower fertility and abortions, impaired resistance and secondary infections, kidney and liver toxicities resulting in organ failure and potentially death. Products such as Anpro(R) range have demonstrated efficacy when independently tested over various species and generate many positive health bene ts.
Zinc oxide replacement
Traditionally, zinc oxide has been included at high levels in the diets of piglets to control E. coli infections which cause post-weaning scours but has been linked to environmental pollution and antibiotic resistance. Anpario eubiotic products can support piglet performance in the absence of therapeutic levels of zinc oxide and increase the amount of pig meat produced per year for the production unit.
Greenhouse gas emissions reduction
Following extensive research and initial studies work has commenced to develop new products and validate the use of Anpario essential oil and acid based eubiotic products to reduce greenhouse gas emissions from ruminants, pigs and poultry.
Anpario's facilities
Practices are kept under continuous review to drive further improvements in efficiency, to eliminate waste, reduce energy consumption and our carbon footprint. Examples include:
-- 88% 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 (IBCs) used for packaging & 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 in sizes of boxes;
-- dust extraction system minimises dust in the production area and prevents its emission into the environment;
-- automated palleting system has reduced forklift movements -- new plant energy solutions being researched.
Working with our 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 by 2050. Anpario is aligned and starting to plan how this can be achieved and the resources required.
Whilst we have always sought to minimise travel and flights to essential multi-purpose trips, COVD-19 lockdowns have taught us valuable lessons in how much more we can do to reduce our carbon footprint with homeworking, e-conferencing, internet based training and a significant reduction in physical visits and movements and a paperless office becoming our new normal.
Positive environmental impact assessments are expected from any new investments.
Social responsibility
Anpario's ethics
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. Anpario retains key industry quality accreditations in particular UFAS and FEMAS certifications.
Anpario is committed to achieving a safe and secure working environment in all its locations adhering to high standards of health and safety procedures.
Responsible procurement policies are in place to source raw materials to high speci cation and rigorous quality standards. Anpario seeks to partner suppliers operating to highest standards of honesty and integrity and who comply all applicable ethical labour and, trade laws and regulations, including the requirements of the Modern Slavery Act 2015 and anti-bribery and corruption legislation contained within our Code of Conduct.
Anpario's people
Behaviour
Our mindset is inherent in solving problems from new perspectives using science and technology to evoke behavioural change. Values of transparency, integrity, teamwork, innovation, and leadership have been established by the passion and commitment of our people.
Through our initiatives and education programmes we work closely with external vets and nutritionists to help, and where possible, responsibly reduce, remove and replace antibiotics by changing animal diets to include our products. Anpario are committed to extensive eld trial work lasting several months and years to nd cost effective solutions for farmers.
The Anpario 'Green Team', with representatives from all disciplines, are tasked to initiate improved, more sustainable ways of working. Going the extra mile for sustainable practice means:
-- we use science, technical ability and change in our practices to lead industry innovation. -- increasing efficiencies with fewer resources and reducing our environmental impact; -- reducing waste from business operations; -- implementing direct actions to conserve, protect and enhance natural resources; -- reducing carbon emissions, and helping our stakeholders to do the same; -- naturally optimising production and feed efficiency for our partners and customers;
-- supporting people and projects to influence positive social change - enhancing resilience of people, communities and ecosystems;
-- protecting and improving rural livelihood, equity and social well-being; -- developing our people, supporting their personal and professional growth; -- taking a leading role in the industry to drive positive change.
Community
Anpario supports and encourages charities and the local community through donations and volunteering.
In recognition of the outstanding work undertaken by NHS staff and key workers, donations were made to Nottingham Hospitals Charity and Doncaster and Bassetlaw Teaching Hospitals (DBTH).
Anpario's international trade and logistics expertise was utilised to source medical grade face masks for donation to local care homes in the collective effort to reduce the spread of COVID-19. Alongside our customer we supported an educational scheme funding the donation of poultry to a school in Maehongsorn Province, Thailand.
Anpario staff volunteered their time to work on the Rainbow Garden Memorial at DBTH. Our 2020 Charity of the Year was bone marrow donor cause DKMS with fund raising activities complimented by staff registering as donors.
Employees
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. Employees embody Anpario's key values of "Integrity, Teamwork, Innovation and Leadership".
Around 120 employees work for Anpario in the UK and its global operations. Employees are recruited from local communities and has built a very ethnically diverse team including 13 nationalities speaking 22 languages.
43% non-white ethnicities are in positions of manager above and females represent 3 out of 7 the Executive Management.
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. Where appropriate and permitted, employees are offered the opportunity to become shareholders to promote active participation in 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, Communications and Privacy;
-- Family Parental, Dependents, Maternity, Paternity, Flexible working, Adoption;
-- General Grievance, Whistle blowing, Discrimination and Bullying, and Disciplinary; and
-- Safety Health and Safety handbook, Occupational Health Policy, Drug and Alcohol abuse.
Speci c training is given to all employees in respect of key policies including online training videos and in person health and safety training.
Employees are encouraged to further develop their skills and we provide appropriate training in order to support our people and grow our organisational capabilities. Anpario currently:
-- has several apprentice places;
-- recruits graduates and doctorates in disciplines such as biosciences, accountancy, law and HR;
-- works closely with several global universities on joint scienti c initiatives;
-- provides ongoing professional training support, extensive coaching and management development programmes; and
-- provides nancial and study leave for professional and work related quali cations.
Anpario has a bonus scheme in place for its employees with targets aligned with shareholders as appropriate to their roles and responsibilities.
An analysis of Directors, managers and other employees by gender as at 31 December 2020 is as follows:
Male Female
------------------------- ---- ------
Directors and management 3 1
Production 25 3
Administration 10 13
Sales and Technical 36 29
------------------------- ---- ------
Total 74 46
------------------------- ---- ------
Directors' report
The Directors present their Annual Report and audited consolidated nancial statements for the year ended 31 December 2020.
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. 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 2020 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 pro t for the year after tax was GBP4.2m (2019: GBP3.7m).
The Directors propose a nal dividend of 6.25p per share (2019: 5.50p) making a total of 9.00p per share for the year (2019: 8.00p), amounting to a total dividend of GBP1.9m (2019: GBP1.7m).
Group research and development activities
The Group is continually researching into and developing new products. Details of expenditure incurred and impaired or written off during the year are shown in the note 4 of the Group nancial statements.
Directors
The Directors during the year under review were:
Peter Lawrence Non-Executive Chairman Richard Edwards Chief Executive Officer Karen Prior Group Finance Director Richard Wood Senior Independent Director
In addition to the Directors listed above, between 31 Dec 2020 and up to the date of this report, 17 March 2021, the following Non-Executives Directors were appointed.
Matthew Robinson Non-Executive Director (with effect from 11 January 2021)
Kate Allum Non-Executive Director (with effect from 1 February 2021)
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.
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 137,918 (2019: 50,000) Ordinary shares of 23p each were issued pursuant to the exercise of share options. During the year the Company issued nil (2019: 100,000) 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 2020 to make market purchases of Ordinary shares in the capital of the Company.
As at 31 December 2020, the Company holds 440,388 (2019: 143,042) Ordinary shares of 23p in treasury.
On 5 February 2020, the Company announced a Share Buyback Programme. On 12 March 2020 the Company completed the Buyback Programme and in total purchased 297,346 additional Ordinary shares of 23p to be held in treasury.
Substantial shareholdings
At 28 February 2021, analysis of the share register showed the following holdings of 3 per cent or more of its issued share capital:
Ordinary
Shares
(000) % held
------------------------------------- -------- ------
RBC Wealth Management 2,750 11.9
Unicorn Asset Management 2,325 10.0
Investec Wealth & Investment 2,302 9.9
Gresham House 1,399 6.0
Downing 1,109 4.8
Interactive Investor 1,017 4.4
Hargreaves Lansdown Asset Management 906 3.9
BMO Global Asset Management 898 3.9
BlackRock Investment Management 842 3.6
BGF 811 3.5
------------------------------------- -------- ------
Independent auditor
Deloitte LLP ceased to hold office as the Company's auditors and BDO LLP have been appointed as the Company's auditors and a resolution that they be re-appointed will be proposed at the AGM.
Stockbrokers
Peel Hunt LLP is the Company's stockbroker and nominated adviser.
The closing share price on 31 December 2020 was 480p per share (2019: 340p per share).
Financial risk management
Details of the Company's nancial risk management policy are set out in note 2.21 of the nancial 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 International Accounting Standards in conformity with the requirements of the Companies Act 2006 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 international accounting standards in conformity with the requirements of the Companies Act 2006, 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;
-- 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 17 March 2021 and is signed by order of the board:
Karen Prior
Company Secretary
Report of the Remuneration Committee
Introduction
On behalf of the Remuneration Committee, I am pleased to present the Remuneration Report for the year ended 31 December 2020. The Committee seeks to provide a framework that is aligned to the strategy and values of the Company and to the interests of shareholders. It recognises the need to recruit, retain and appropriately incentivise high calibre directors and managers to deliver the Company's strategy.
Overview
The Remuneration Committee is responsible for reviewing the performance of Executive Directors as well as determining the scale and structure of their remuneration, their terms and conditions of service and the grant of share awards, having due regard to the interests of shareholders.
The Committee is also responsible for reviewing the overall policy in respect of remuneration of all other employees of the Company and establishing the Company's policy and operation of share incentive schemes.
In determining the remuneration of senior executives, the Committee seeks to enable the Company to attract and retain executives of the highest calibre. The Committee also makes recommendations to the Board concerning the allocations of options to executives under the long-term incentive plan and for the administration of the scheme.
The terms of reference of the Remuneration committee can be found on the Company's website www.anpario.com/aim-26/ .
Composition and meetings
The Remuneration Committee comprises Richard Wood, Senior Non-Executive Director and Committee Chairman, and Peter Lawrence, Non-Executive Chairman of the Board. Executive Directors are invited to attend meetings as required if thought advantageous for consideration of a particular agenda item. The Remuneration Committee meets as necessary to ful l its objectives but as a minimum, at least once a year. The committee met once during the year ended 31 December 2020 with full attendance by the Committee members.
AIM requirements
As an AIM company, Anpario plc, is not required to comply with schedule 8 of the large and medium-sized companies' regulations 2008. However, it is moving towards this full level of reporting and disclosures in this report re ect this.
Directors' remuneration
In 2019 the Remuneration committee undertook a benchmarking exercise and agreed an increase in Executive salaries to market rates.
Currently Executives are incentivised to achieve a minimum 40% of gross salary up to a maximum of 100% for achievement of minimum consensus market EBITDA targets (after bonus payments). The achievement of Anpario's management and staff incentive schemes are all similarly based on revenues and profit measures.
The remuneration of the Chairman and each Director during the year ended 31 December 2020 is set out in the tables below.
Executive Directors
Share-based
Salary Pension Benefits Bonus* payments Total
2020 2020 2020 2020 2020 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
R P Edwards 250 25 42 250 1 568
K L Prior (4 days
per week) 155 15 24 155 12 361
Total 405 40 66 405 13 929
------------------ ------ --------------------- -------------------- ------ ----------- ------
The comparative figures for the year ended 31 December 2019 are shown below.
Share-based
Salary Pension Benefits Bonus* payments Total
2019 2019 2019 2019 2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
R P Edwards 190 19 9 - 34 252
K L Prior (4 days
per week) 133 13 15 - 43 204
Total 323 32 24 - 77 456
------------------ ------ --------------------- -------- ------ ----------- ------
* The bonuses to Directors are accrued in the financial year to which they relate and subsequently paid after the publication of annual results.
Non-Executive Directors
2020 2019
GBP000 GBP000
P A Lawrence 40 40
R K Wood 35 35
----------------- ------ ------
Total 75 75
----------------- ------ ------
Key activities
During the year, the Committee:
-- reviewed the salary and bonus arrangements to the Executive Directors according to industry benchmarks and appropriate increases were approved for the Executive Directors;
-- reviewed the salary and bonus arrangement for staff and approved cost of living increases, where appropriate;
-- reviewed the allocation of issued share capital for all incentive schemes; -- reviewed proposals for the grant of share related incentive schemes; and -- approved recommended proposals for short-term bonus incentives.
Remuneration policy and advisors
The objectives of the remuneration policy are to ensure that the overall remuneration of senior executives is aligned with the performance of the Company and preserves an appropriate balance of annual pro t delivery and longer term shareholder value.
The Committee keeps the remuneration policy, in particular the need for share ownership guidelines for Executive Directors, regularly under review and will take action whenever deemed necessary to ensure that remuneration is aligned with the overall strategic objectives of the Company.
The Committee seeks advice, if appropriate, from independent advisors where required on remuneration related matters.
Long term incentive plans
The Executive Directors receive remuneration under three long term incentive plans: Enterprise Management Scheme ("EMI" which is now closed; Joint Share Ownership Plan ("JSOP"); and Save As You Earn Scheme ("SAYE"). With the exception of participation in SAYE scheme the Company has been unable to offer further long term incentives to the Executive Directors due to headroom limitations involving the issue of new shares. That limit is the total number of new shares over which future awards may be made, when added to the total number of shares issued and issuable under awards granted on 16 September 2016 and any awards which are outstanding as at that date shall not exceed 16.3% of the total of the number of shares in issue from time to time.
Under the Company's EMI and SAYE Scheme the following Directors have the right to acquire Ordinary shares of 23p each as follows:
Option 31 Dec 31 Dec
Price 2020 2019
(pence per share) Number Number
------------ ------------------ ------ ------
R P Edwards 158.50 80,000 80,000
290.00 42,400 42,400
224.13 - 4,015
334.00 2,694* 2,694
322.72 5,577 -
------------ ----------------- ------ ------
K L Prior 158.50 80,000 80,000
290.00 42,400 42,400
224.13 - 4,015
334.00 2,694* 2,694
322.72 5,577 -
------------ ----------------- ------ ------
* The right to purchase these shares was exercised on 1 February 2021, and as of 17 March 2021 they have added to the respective Directors' interests as listed in relevant section below.
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 bene cial interests as joint owners (with the Trust) of Ordinary Shares in the Company upon the terms of a Joint Ownership Agreement ("JOA").
The terms of the JOAs provide, inter alia, that if jointly owned shares become vested and are sold, the proceeds of sale will be divided between the joint owners so that the participating Director receives an amount equal to any growth in the market value of the jointly owned Ordinary shares above the initial market value, less a "carrying cost" (equivalent to simple interest at 4.5 per cent per annum on the initial market value) and the Trust receives the initial market value of the jointly owned shares plus the carrying cost. Jointly owned Ordinary shares will become vested if the participant remains with the Company for a minimum period of 3 years.
The Directors interests in the JSOP shares are as follows:
31 Dec 31 Dec
2020 2019
Number Number
R P Edwards 1,350,000 1,350,000
K L Prior 1,200,000 1,200,000
-------------- --------- ---------
Director's interests in shares
The interests of the Directors who served during the period, as at 31 December 2020, in the Ordinary shares of 23p each in the Company were as follows: -
31 Dec 31 Dec
2020 2019
Number Number
------------- ------- -------
P A Lawrence 57,950 63,350
R P Edwards 210,702 206,687
K L Prior 74,751 211,800
--------------- ------- -------
Directors' interests between 31 December 2020 and 17 March 2021 have changed, reflecting the exercise by Richard Edwards and Karen Prior of SAYE options of 334.0p per share totalling 4,015 shares each. As such at the 17 March 2021, Directors' interests are as follows, Richard Edwards 213,396 and Karen Prior 77,445.
Non-Executive Directors and Chairman
Remuneration of the Non-Executive directors is determined by the Chairman and the Chief Executive Officer. The Non-Executive Directors are not entitled to annual bonuses or employee bene ts and their fees are subject to annual review.
The Chairman's remuneration is determined by Remuneration Committee in conjunction with the Chief Executive Officer. However, the Chairman is not entitled to vote on the matter.
Each of the Chairman and Non-Executive Director have a letter of appointment stating their annual fee and termination terms.
The appointments are terminable on three months written notice at any time by either the Company or the Non-Executive Director.
Executive Directors
The Executive Directors remuneration is determined by the Committee. They are eligible to participate in a discretionary annual bonus scheme which is based on annual target pro t measures and corporate activities including acquisitions and disposals aligned with shareholder returns.
The Executive Directors are also eligible to participate in the employee long term incentive plans as mentioned above.
Richard Edwards
Richard Edwards is engaged as Chief Executive Officer of the Company under a service agreement dated 5 November 2006. His appointment is terminable by the Company on 12 months' written notice and the Executive on 6 months' notice.
Karen Prior
Karen Prior is engaged as Group Finance Director of the Company under a service agreement dated 1 October 2009. Her appointment is terminable by the Company on 12 months' written notice and the Executive on 6 months' notice.
Richard Wood
Remuneration Committee Chairman
17 March 2021
Audit Committee report
Composition and meetings of the Audit Committee
The Audit Committee is comprised of the two Non-Executive Directors, whom the Board considers to be independent and is chaired by Peter Lawrence. Meetings are also attended, by invitation, by the Group Finance Director, external auditors and other management as appropriate.
During the year, following a formal tender process, BDO LLP ("BDO") were appointed as the Company's auditor for the financial year ending 31 December 2020. The appointment of BDO shall be confirmed in a vote of shareholders a the Company's next Annual General Meeting.
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 2020 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 Interim and Final audits, 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.
Peter Lawrence
Audit Committee Chairman
17 March 2021
Independent auditors' report to the members of Anpario plc
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 2020 and of the Group's profit for the year then ended;
-- the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;
-- 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 2020 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 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 international accounting standards in conformity with the requirements of the Companies Act 2006. 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;
-- Obtaining the Directors' trading forecasts underlying the going concern assessment and challenging management on the key estimates and assumptions within the forecasts around the forecast levels of revenue, gross profit and working capital cycles, through analysis and comparison of forecasts with prior year actuals;
-- Performing data verification and logic checks to confirm the mathematical accuracy of the forecast model;
-- Performing '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;
-- An analysis of post year end trading results compared to forecast and current year to evaluate the accuracy and achievability of forecasts
-- An evaluation of the adequacy of disclosures in relation to going concern.
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's 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 matter 2020 2019
Existence and valuation Existence of intangible
of brands and developed assets relating to product
products intangible assets brands .
and development cost
intangible asset.
---------------------------- ----------------------------
Materiality Group financial statements as a whole
GBP235,000 (2019: GBP220,000) based on 5% (2019:
5%) of 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 14 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 14 components act as sales offices and all purchases are made from the Parent Company, therefore, through specific risk-focussed audit procedures over inventories and cash, along with analytical review procedures we had the evidence needed 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, 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 matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Key audit matter How the scope of our audit
addressed the key audit matter
Brands and The Group has material We obtained an understanding
developed products balances for brands acquired of the relevant controls
intangibles in business combinations relating to the assessment
and costs capitalised for of the existence of these
(accounting internally developed products intangible assets, which
policies, Note of GBP3.7m (2019 - GBP4.0m). include Board monitoring
13 intangible Included within this balance and approval of development
assets - closing is GBP1.5m in relation costs capitalised during
carrying value to the acquired Optivite the year.
GBP3.7m (2019 brand, which has an indefinite
- GBP4.0) ) useful life. We have tested, on a sample
basis, that costs capitalised
Development In addition the Group has in the year were valid business
costs intangibles capitalised development expenses related to the development
costs of GBP0.6m (2019 of the relevant product and
(accounting - GBP0.9m) for products that they met the eligibility
policies, Note in development at the year-end criteria to be capitalised
13 intangible date. by corroborating the costs
assets - closing to supporting evidence. We
carrying value In accordance with IAS also made enquiries of staff
GBP0.6m (2019 38 in order to capitalise involved in the development
- GBP0.9m) development costs management of the products outside of
) is required to make certain the finance function including
judgements, including the the technical director to
stage of development, the gain an understanding of
technical feasibility of the development process.
completing the product
development and the commercial We have analysed the level
viability of the products of revenue and gross profits
generated historically by
For developed products developed products through
and acquired brands an review of trading results
assessment is required including those subject to
of the future cash flows audit procedures in the year
generated by the assets and compared to the carrying
and over what period of value of the relevant intangible
time the assets will generate asset, in order to identify
returns. evidence of a fall in demand
or other indicators of impairment.
These judgements determine This process allowed us to
whether development costs challenge management's assessment
are eligible for capitalisation of the expected future returns
and the period of time and the anticipated life
over which assets will of the products. We evidenced
be amortised. They also the continued investment
form the basis of the forecasts in new products relating
used in impairment reviews to the acquired brand to
of the intangible assets. support the assessment of
an indefinite useful life.
Owing to the magnitude
of the brand and product We assessed the reasonableness
development intangibles, of forecast future trading
and the level of estimation assumptions by reference
and judgement involved to current year results and
in determining both the budgets and considered the
eligibility of costs for sensitivity of the estimates
capitalisation and recoverable of future performance to
amount, we determined the material changes in the net
existence and valuation realisable value of each
of brand and developed of the developed products.
products and the development
costs intangible assets We reviewed the impairment
to be a key audit matter. assessment models against
the requirements set out
There is also a risk of within the relevant accounting
fraud through manipulation standard IAS 36 and tested
in respect of the assessment the integrity of the mathematical
made by management of which calculations in the model.
costs are eligible for
capitalisation. We consulted with our valuation
experts on the appropriateness
of the models for assessing
the value in use for the
nature of the intangible
assets and the reasonableness
of the discount rate applied
through benchmarking.
Key observations:
We found the Group's accounting
in respect of the brand and
development intangibles to
be materially correct.
--------------------------------- -------------------------------------
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 Parent Company
financial statements financial statements
2020 2020
--------------------------
GBP000 GBP000
-------------------------- --------------------------
Materiality 235 212
-------------------------- --------------------------
Basis for determining 5% of pre-tax profit Capped at 90% of Group
materiality materiality (3.4% of
Parent Company pre-tax
profit)
-------------------------- --------------------------
Rationale for the Profit before tax remains the key driver of the
benchmark applied business' value and is the underlying driver
for management's key measure of performance
------------------------------------------------------
Performance materiality 141 127
-------------------------- --------------------------
Basis for determining Set at 60% of materiality Set at 60% of materiality
performance materiality
-------------------------- --------------------------
We concluded that it was appropriate to set performance materiality at 60% of materiality based upon our risk assessment and in recognition that 2020 was the first year that we had audited the Group.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of GBP4.7k (2019: GBP9k). 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 In our opinion, based on the work undertaken
and Directors' report 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 have nothing to report in respect of the following
we are required matters in relation to which the Companies Act
to report by exception 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 Directors' responsibilities statement, 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 industry in which it operates and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These 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 accounting standards.
We focussed on laws and regulations that could give rise to a material misstatement in the Group Financial Statements. Our testing included, but was not limited to:
-- Enquiries of management; -- Review of minutes of Board meetings throughout the year;
-- Obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
-- Reviewing journals posted to revenue to identify any outside of the normal course of business or indicative of a manipulation of the revenue figure reported;
-- Identifying and testing a sample of journal entries, in particular journal entries posted with unusual account combinations; and
-- Verification, on a sample basis, of costs capitalised as product development to ensure that the relevant recognition criteria had been met and costs were not being capitalised to manipulate reported earnings.
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
17 March 2021
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 2020
2020 2019
Note GBP000 GBP000
--------------------------------------------- ------ --------- ---------
Revenue 3 30,522 29,046
Cost of sales (14,670) (14,536)
--------------------------------------------- ------ --------- ---------
Gross profit 15,852 14,510
Administrative expenses (10,585) (10,213)
Operating profit 4 5,267 4,297
Depreciation and amortisation 1,233 1,140
Adjusting items 6 104 243
Adjusted EBITDA 6 6,604 5,680
--------------------------------------------- ------ --------- ---------
Net finance income 9 83 97
--------------------------------------------- ------ --------- ---------
Profit before tax 5,350 4,394
Income tax 10 (1,145) (679)
--------------------------------------------- ------ --------- ---------
Profit for the year 4,205 3,715
--------------------------------------------- ------ --------- ---------
Other comprehensive income:
Items that may be subsequently reclassified
to profit or loss:
Exchange difference on translating
foreign operations (65) (121)
Cashflow hedge movements (net of deferred
tax) 19 68 125
Total comprehensive income for the
year 4,208 3,719
--------------------------------------------- ------ --------- ---------
Basic earnings per share 12 20.63p 18.10p
Diluted earnings per share 12 19.89p 17.61p
Adjusted earnings per share 12 21.94p 19.13p
Diluted adjusted earnings per share 12 21.15p 18.61p
--------------------------------------------- ------ --------- ---------
Consolidated statement of financial position
as at 31 December 2020
2020 2019
Note GBP000 GBP000
---------------------------------- ------ -------- --------
Intangible assets 13 11,522 11,517
Property, plant and equipment 14 4,142 4,011
Right of use assets 15 85 184
Deferred tax assets 16 987 744
Derivative financial instruments 19 641 362
Non-current assets 17,377 16,818
Inventories 17 4,902 4,102
Trade and other receivables 18 6,053 5,539
Derivative financial instruments 19 327 119
Current income tax assets - -
Cash and cash equivalents 20 15,820 13,842
---------------------------------- ------
Current assets 27,102 23,602
Total assets 44,479 40,420
---------------------------------- ------ -------- --------
Lease liabilities 21 (7) (121)
Deferred tax liabilities 16 (1,662) (1,384)
Non-current liabilities (1,669) (1,505)
Trade and other payables 22 (5,007) (3,206)
Lease liabilities 21 (83) (67)
Derivative financial instruments 19 - (2)
Current income tax liabilities (215) (86)
Current liabilities (5,305) (3,361)
Total liabilities (6,974) (4,866)
---------------------------------- ------ -------- --------
Net assets 37,505 35,554
---------------------------------- ------ -------- --------
Called up share capital 23 5,426 5,394
Share premium 11,148 10,849
Other reserves 24 (6,506) (5,650)
Retained earnings 25 27,437 24,961
Total equity 37,505 35,554
---------------------------------- ------ -------- --------
The financial statements were approved by the Board and authorised for issue on 17 March 2021.
Richard Edwards Karen Prior Chief Executive Officer Group Finance Director
Company Number: 03345857
Consolidated statement of changes in equity
for the year ended 31 December 2020
Share Share Other Retained Total
capital premium reserves earnings equity
------------------------------------
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ ------ --------- --------- ---------- ---------- --------
Balance at 1 Jan 2019 5,360 10,423 (5,449) 22,814 33,148
------------------------------------ ------ --------- --------- ---------- ---------- --------
Profit for the period - - - 3,715 3,715
Currency translation differences - - (121) - (121)
Cash flow hedge reserve 19 - - 125 - 125
Total comprehensive income
for the year - - 4 3,715 3,719
------------------------------------ ------ --------- --------- ---------- ---------- --------
Issue of share capital 23 34 426 - - 460
Joint-share ownership plan 26 - - (320) - (320)
Share-based payment adjustments 26 - - 104 - 104
Deferred tax regarding share-based
payments - - 11 - 11
Final dividend relating
to 2018 - - - (1,048) (1,048)
Interim dividend relating
to 2019 11 - - - (520) (520)
Transactions with owners 34 426 (205) (1,568) (1,313)
------------------------------------ ------ --------- --------- ---------- ---------- --------
Balance at 31 Dec 2019 5,394 10,849 (5,650) 24,961 35,554
------------------------------------ ------ --------- --------- ---------- ---------- --------
Profit for the period - - - 4,205 4,205
Currency translation differences - - (65) - (65)
Cash flow hedge reserve 19 - - 68 - 68
Total comprehensive income
for the year - - 3 4,205 4,208
------------------------------------ ------ --------- --------- ---------- ---------- --------
Issue of share capital 23 32 299 - - 331
Purchase of treasury shares 23 - - (1,004) - (1,004)
Share-based payment adjustments 26 - - 46 - 46
Deferred tax regarding share-based
payments - - 99 - 99
Final dividend relating
to 2019 11 - - - (1,144) (1,144)
Interim dividend relating
to 2020 11 - - - (585) (585)
Transactions with owners 32 299 (859) (1,729) (2,257)
------------------------------------ ------ --------- --------- ---------- ---------- --------
Balance at 31 Dec 2020 5,426 11,148 (6,506) 27,437 37,505
------------------------------------ ------ --------- --------- ---------- ---------- --------
Consolidated statement of cash flows
for the year ended 31 December 2020
2020 2019
Note GBP000 GBP000
-------------------------------------------- ------ -------- --------
Operating profit for the year 5,267 4,297
Depreciation, amortisation and impairment 4 1,233 1,140
Loss on disposal of property, plant
and equipment 14 3 70
Share-based payments 7 46 104
Fair value adjustment to derivatives (406) (332)
Operating cash flows before changes
in working capital 6,143 5,279
Increase in inventories (1,000) (174)
Increase in trade and other receivables (636) (281)
Increase/(decrease) in trade and other
payables 2,233 (101)
Decrease/(increase) in working capital 597 (556)
Cash generated by operations 6,740 4,723
-------------------------------------------- ------ -------- --------
Income tax paid (910) (753)
Net cash from operating activities 5,830 3,970
-------------------------------------------- ------ -------- --------
Purchases of property, plant and equipment 14 (593) (894)
Proceeds from disposal of property,
plant and equipment - 147
Payments to acquire intangible assets 13 (663) (775)
Interest received 9 88 106
Net cash used in investing activities (1,168) (1,416)
Purchase of treasury shares (1,004) -
Joint share ownership plan 26 - (320)
Proceeds from issuance of shares 331 460
Cash payments in relation to lease
liabilities (117) (134)
Lease interest paid (5) (9)
Dividend paid to Company's shareholders (1,729) (1,568)
Net cash used in financing activities (2,524) (1,571)
Net increase in cash and cash equivalents 2,138 983
-------------------------------------------- ------ -------- --------
Effect of exchange rate changes (160) (53)
Cash and cash equivalents at the beginning
of the year 13,842 12,912
Cash and cash equivalents at the end
of the year 15,820 13,842
-------------------------------------------- ------ -------- --------
Notes to the financial statements
for the year ended 31 December 2020
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 signi cant accounting policies 2.1. Basis of preparation
The Group has presented its nancial statements in accordance with International Financial Reporting Standards ("IFRSs") in conformity with the Companies Act 2006 applicable to companies reporting under IFRS.
The nancial statements have been prepared on the historical cost basis, except for nancial 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 nancial 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 nancial 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 nancial 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.
Impact of Coronavirus (COVID-19)
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 and potential impact of COVID-19, 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 nancial statements comprise the nancial statements of the Company and its Subsidiaries drawn up to 31 December 2020.
Subsidiaries are all entities over which the Group has the power to govern the nancial 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 nancial 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 nancial 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. Identi able 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 identi able 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 pro t 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 pro t or loss. Contingent consideration that is classi ed 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 identi able 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 pro t or loss.
Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Pro ts 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 satis ed, 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 identi ed 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 pro t or loss for the period.
Functional and presentational currency
Items included in the nancial 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 nancial 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 ow hedges and qualifying net investment hedges.
Group companies
The results and nancial 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 identi able 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 20 years on a straight-line basis and included in administrative expenses in the income statement, except where they are deemed to have an inde nite life and consequently are not amortised. Brands with an inde nite useful life are reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate a potential impairment. However, they are allocated to appropriate cash-generating units and subject to impairment testing on an annual basis. Any impairment is recognised immediately through the income statement and is not subsequently reversed.
Customer relationships
Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. Customer relationships are deemed to have a nite 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 nite 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 bene ts attributable to the asset, the cost of the asset can be measured reliably, the asset is separately identi able 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 bene t 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 reclassi ed 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 identi able 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 bene ts;
-- adequate technical, nancial 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- nancial 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 inde nite useful life, an impairment test is performed at each balance sheet date.
In assessing value in use, the expected future cash ows from the asset are discounted to their present value using a pre-tax discount rate that re ects current market assessments of the time value of money and the risks speci c 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, ttings 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 nished 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 simpli ed approach when using the expected credit loss (ECL) impairment model for trade receivables. Under the simpli ed 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 ows 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 nancial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are speci c 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 re ect 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 nancial 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 and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits that are readily convertible into cash.
2.13. Financial instruments
The Group's principal financial instruments comprise derivatives and cash and cash equivalents. These financial instruments are used to manage currency exposures, funding and liquidity requirements. Other financial instruments which arise directly from the Group's operations includes trade and other receivables (note 18) and trade and other payables (note 22). The main risks arising from the Group's financial instruments and related policies are detailed in note 2.21.
Financial instruments, excluding derivatives, are held at amortised cost. Derivative financial instruments are detailed in note 2.14.
The Group uses the following valuation hierarchy to determine the carrying value of financial instrument that are measured at fair value:
Level 1
Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
2.14. Derivative nancial 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 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 bene ts
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 ow 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 2019.
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
Indefinite useful life Brand
One Brand asset held by the Group has been determined as having an indefinite useful life since there is no foreseeable limit to the period over which it is expected to generate net cash inflows not least because the brand has existed for decades. Indefinite life assets are not amortised, but subject to an impairment review at least once a year per the Group's accounting policy note 2.7 and is subject to the same judgements as part of this process as other intangible assets as outlined below.
of goodwill is presented in note 13.
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
Deferred tax recognition
Deferred tax is provided in full on temporary differences under the liability method using substantively enacted rates to the extend that they are expected to reverse. Provision is made in full where the temporary difference 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.
2.23. Impact of accounting standards and interpretations
New standards impacting the Group that have been adopted in the annual financial statements for the year ended 31 December 2020, none of which had any significant impact, and those which are relevant to these financial statements are listed below:
COVID-19-Related Rent Concessions (Amendments to IFRS 16)
In the current year, the Group has applied IFRS 16 (as issued by the IASB in January 2016) that is Effective 1 June 2020. The impact of which to the financial statements was immaterial. IFRS 16 was amended to provide a practical expedient for lessees accounting for rent concessions that arise as a direct consequence of the COVID-19 pandemic and satisfy the following criteria:
-- The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
-- The reduction is lease payments affects only payments originally due on or before 30 June 2021; and
-- There are is no substantive change to other terms and conditions of the lease.
Rent concessions that satisfy these criteria may be accounted for in accordance with the practical expedient, which means the lessee does not assess whether the rent concession meets the definition of a lease modification. Lessees apply other requirements in IFRS 16 in accounting for the concession.
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.
Head
Americas Asia Europe MEA Office Total
---------------------------------
for the year ended 31 Dec
2020 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ------- -------- ------- -------- --------
Total segmental revenue 7,384 11,664 16,567 2,668 - 38,283
Inter-segment revenue - - (7,761) - - (7,761)
Revenue from external customers 7,384 11,664 8,806 2,668 - 30,522
--------------------------------- --------- ------- -------- ------- -------- --------
Depreciation and amortisation (3) (63) (3) (4) (1,160) (1,233)
Net finance income - (1) - 1 83 83
Profit/(loss) before income
tax 1,473 4,100 3,906 828 (4,957) 5,350
--------------------------------- --------- ------- -------- ------- -------- --------
Head
Americas Asia Europe MEA Office Total
---------------------------------
for the year ended 31 Dec
2019 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ------- -------- ------- -------- --------
Total segmental revenue 6,802 11,009 12,545 4,323 - 34,679
Inter-segment revenue - - (5,633) - - (5,633)
Revenue from external customers 6,802 11,009 6,912 4,323 - 29,046
--------------------------------- --------- ------- -------- ------- -------- --------
Depreciation and amortisation (4) (71) - (4) (1,061) (1,140)
Net finance income - (3) - 2 98 97
Profit/(loss) before income
tax 1,268 3,717 3,051 1,377 (5,019) 4,394
--------------------------------- --------- ------- -------- ------- -------- --------
Included in the Europe category above is revenue from the UK of GBP5,239,000 (2019: GBP3,450,000). Revenue derived from other individual countries is not significant in the context of the group revenue and therefore has been grouped by geographic region.
4. Operating profit
Operating profit for the year has been arrived at after charging the following items:
2020 2019
Notes GBP000 GBP000
--------------------------------------------- ------- ------- -------
Cost of inventories recognised as an
expense 10,267 10,932
Employment costs 7 7,278 5,785
Share-based payment charges 67 124
Amortisation of intangible assets 655 629
Depreciation of property, plant and
equipment 459 375
Depreciation of right-of-use assets 119 136
Loss on disposal of tangible and intangible
assets 3 70
Research and development expenditure 43 23
--------------------------------------------- ------- ------- -------
Our specialist technical team includes experts in poultry, swine, ruminant & aquaculture species. During the year we have capitalised internal costs of GBP213,000 (2019: GBP302,000) and expended a further GBP247,000 (2019: GBP149,000) on external trials in respect of current development projects.
5. Auditor's remuneration
During the year Deloitte LLP ceased to hold office as the Company's auditors and BDO LLP have been appointed as the Company's auditors.
During the year the Group obtained the following services from the Company's auditor:
2020 2019
GBP000 GBP000
--------------------------------------------- ------- -------
Fees payable to Company's auditor for the
audit of Parent Company and consolidated
financial statements 89 61
Fees payable to Company's auditor for other
services:
Other non-audit services 5 -
The audit of Company Subsidiaries 5 9
Total fees payable to Company's auditor 99 70
--------------------------------------------- ------- -------
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 subsitute for or superior to IFRS measures, provide depth and understanding to the users of the financial statements to allow for further assessment of the underlying performance of the Group.
The Board considers that adjusted EBITDA is the most appropriate profit measure by which users of the financial statements can assess the ongoing performance of the Group. EBITDA is a commonly used measure in which earnings are stated before net finance income, amortisation and depreciation. The Group makes further adjustments to remove items that are non-recurring or are not reflective of the underlying operational performance either due to their nature or the level of volatility. EBITDA is often used as a proxy for cash flows and accordingly the Group adjust for share-based payment charges which are a non-cash measure.
2020 2019
GBP000 GBP000
------------------------------------------------- ------- -------
Operating profit 5,267 4,297
------------------------------------------------- ------- -------
Share-based payments 67 124
Loss on disposal of property - 61
Foreign exchange losses/(gains) 442 332
Foreign exchange hedging - Fair value movements (405) (274)
------------------------------------------------- ------- -------
Total adjustments 104 243
Adjusted operating profit 5,371 4,540
------------------------------------------------- ------- -------
Depreciation and amortisation 1,233 1,140
Adjusted EBITDA 6,604 5,680
------------------------------------------------- ------- -------
2020 2019
GBP000 GBP000
-------------------------------------------- -------- -------
Adjusted operating profit 5,371 4,540
-------------------------------------------- -------- -------
Income tax expense (1,145) (679)
Impact of changes in tax rates on deferred
tax 158 -
Income tax impact of adjustments 88 66
Adjusted profit after tax 4,472 3,927
-------------------------------------------- -------- -------
7. Employment costs
2020 2019
Notes GBP000 GBP000
----------------------------- ------- ------- -------
Wages and salaries 6,354 4,987
Social security costs 695 586
Other pension costs 229 212
Share-based payment charges 26 67 124
Employment costs 7,345 5,909
----------------------------- ------- ------- -------
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.
8. Number of employees
The average monthly number of employees, including Directors, during the year was:
2020 2019
GBP000 GBP000
--------------------- ------- -------
Directors 4 4
Production 29 28
Administration 23 20
Sales and Technical 64 62
Average headcount 120 114
--------------------- ------- -------
In addition to employees, sales and technical specialists are engaged on a consultancy basis in several countries.
9. Net finance income
2020 2019
GBP000 GBP000
------------------------------------------------- ------- -------
Interest receivable on short-term bank deposits 88 106
------------------------------------------------- ------- -------
Finance income 88 106
Lease interest paid (5) (9)
------------------------------------------------- ------- -------
Finance costs (5) (9)
Net finance income 83 97
------------------------------------------------- ------- -------
10. Income tax
2020 2019
Notes GBP000 GBP000
------------------------------------------ ------- ------- -------
Current tax on profits for the year 1,026 662
Adjustment for prior years 29 (46)
------------------------------------------ ------- ------- -------
Current tax 1,055 616
Origination and reversal of temporary
differences 101 27
Effect of change in deferred tax rate 158 -
Adjustment for prior years (169) 36
------------------------------------------ ------- ------- -------
Deferred tax 16 90 63
Income tax expense charged to the income
statement 1,145 679
------------------------------------------ ------- ------- -------
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:
2020 2019
GBP000 GBP000
------------------------------------------ ------- -------
Profit before tax 5,350 4,394
------------------------------------------- ------- -------
Tax at the UK domestic rate 19% (2019:
19%) 1,017 835
------------------------------------------- ------- -------
Non-deductible expenses 109 66
Losses not recognised for deferred tax 156 189
Research and development tax credits (191) (310)
Prior year tax adjustments 18 (10)
Tax credit recognised directly in equity 83 (24)
Effect of change in deferred tax rate 158 -
Difference in overseas tax rates (113) (90)
Other tax adjustments (92) 23
------------------------------------------- ------- -------
Tax adjustments 128 (156)
Income tax expense charged to the income
statement 1,145 679
------------------------------------------- ------- -------
Corporation tax is calculated at 19% (2019: 19%) of the estimated assessable profit for the year. Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2020 on 17 March 2020. The rate applicable from 1 April 2020 now remains at 19%, rather than the previously enacted reduction to 17%. 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 GBP158,000 in the current 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. As this rate was not substantively enacted at the balance sheet date it has not been used to calculate the deferred tax balances.
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised in other comprehensive income.
2020 2019
Note GBP000 GBP000
---------------------------------------------- ------ ------- -------
Current tax on profits for the year (12) (8)
---------------------------------------------- ------ ------- -------
Current tax (12) (8)
Origination and reversal of temporary
differences (70) 23
---------------------------------------------- ------ ------- -------
Deferred tax 16 (70) 23
Income tax recognised in other comprehensive
income (82) 15
---------------------------------------------- ------ ------- -------
11. Dividends
Amounts recognised as distributions to equity holders for the year ended 31 December:
2020 2020 2019 2019
per share total per share total
pence GBP000 pence GBP000
--------------------------- ---------- ------- ---------- -------
Interim dividend - Paid 2.75p 585 2.50p 520
--------------------------- ---------- ------- ---------- -------
Final dividend - Paid - - 5.50p 1,144
Final dividend - Proposed 6.25p 1,300 - -
Final dividend 6.25p 1,300 5.50p 1,144
Total dividend 9.00p 1,885 8.00p 1,664
--------------------------- ---------- ------- ---------- -------
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 GBP1,729,000 (2019: GBP1,568,000), 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:
2020 2019
---------------------------------------------- ----------- -----------
Profit for the year attributable to owners
of the Parent (GBP000's) 4,205 3,715
----------------------------------------------- ----------- -----------
Weighted average number of shares in
issue 20,387,477 20,529,625
----------------------------------------------- ----------- -----------
Number of dilutive shares 755,047 570,500
Weighted average number for diluted earnings
per share 21,142,524 21,100,125
----------------------------------------------- ----------- -----------
Basic earnings per share 20.63p 18.10p
Diluted earnings per share 19.89p 17.61p
----------------------------------------------- ----------- -----------
The calculation of the adjusted and diluted adjusted earnings per share is based on the following data:
Note 2020 2019
---------------------------------------------- ------ ----------- -----------
Adjusted profit attributable to owners
of the Parent (GBP000's) 6 4,472 3,927
---------------------------------------------- ------ ----------- -----------
Weighted average number of shares in
issue 20,387,477 20,529,625
---------------------------------------------- ------ ----------- -----------
Number of dilutive shares 755,047 570,500
Weighted average number for diluted earnings
per share 21,142,524 21,100,125
---------------------------------------------- ------ ----------- -----------
Adjusted earnings per share 21.94p 19.13p
Diluted adjusted earnings per share 21.15p 18.61p
---------------------------------------------- ------ ----------- -----------
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
2019 5,960 3,432 786 1,636 2,499 688 15,001
Additions - - - 323 432 20 775
Reclassifications - 241 - - (242) - (1)
Disposals - - - (172) (1,823) - (1,995)
Foreign exchange - - - (1) - - (1)
As at 31 December
2019 5,960 3,673 786 1,786 866 708 13,779
Additions - - - 127 460 76 663
Reclassifications - 767 - - (767) - -
Disposals - - - (137) - - (137)
Foreign exchange - - - (3) - - (3)
As at 31 December
2020 5,960 4,440 786 1,773 559 784 14,302
-------------------- --------- ----------- --------------- ------------------- ------------ ---------- --------
Accumulated
amortisation
As at 1 January
2019 - 394 522 635 1,823 254 3,628
Charge for the
year - 155 78 281 - 115 629
Disposals - - - (172) (1,823) - (1,995)
As at 31 December
2019 - 549 600 744 - 369 2,262
Charge for the
year - 182 61 283 - 129 655
Disposals - - - (137) - - (137)
As at 31 December
2020 - 731 661 890 - 498 2,780
-------------------- --------- ----------- --------------- ------------------- ------------ ---------- --------
Net book value
As at 1 January
2019 5,960 3,038 264 1,001 676 434 11,373
As at 31 December
2019 5,960 3,124 186 1,042 866 339 11,517
As at 31 December
2020 5,960 3,709 125 883 559 286 11,522
-------------------- --------- ----------- --------------- ------------------- ------------ ---------- --------
The reclassification to Brands and Developed Products represents newly created products from Development projects.
Goodwill related to previously acquired trading brands 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.
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 (2019: 2.5%).
The discount rate used of 12% (2019: 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 16.1 percentage points to a negative growth of minus 13.6 percentage points would cause the carrying value of goodwill to equal its recoverable amount.
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 2019 and
31 December 2020 5,960
---------------------------------------- -------
Brands primarily 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 2020 of GBP1,501,000 (2019: GBP1,501,000). The Meriden brand was acquired in 2012 and has a net book value at 31 December 2020 of GBP398,000 (2019: GBP434,000). These are deemed to have between 20 years and an indefinite useful life due to the inherent intellectual property contained in the products, the longevity of the product lives and global market opportunities. Brands with indefinite useful lives are assessed for impairment with goodwill in the annual impairment review as described above.
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 2019 2,181 2,137 488 554 5,360
Additions 1 187 181 525 894
Transfer of assets
in construction - 1,078 1 (1,079) -
Disposals (325) (106) (85) - (516)
Foreign exchange - - (2) - (2)
As at 31 December 2019 1,857 3,296 583 - 5,736
Additions - 61 53 479 593
Disposals (3) (2) (1) - (6)
As at 31 December 2020 1,854 3,355 635 479 6,323
-------------------------- ----------- --------------- --------------- ----------------- -------
Accumulated depreciation
As at 1 January 2019 340 973 337 - 1,650
Charge for the year 31 265 79 - 375
Disposals (118) (103) (78) - (299)
Foreign exchange - - (1) - (1)
As at 31 December 2019 253 1,135 337 - 1,725
Charge for the year 30 340 89 - 459
Disposals - (2) (1) - (3)
As at 31 December 2020 283 1,473 425 - 2,181
-------------------------- ----------- --------------- --------------- ----------------- -------
Net book value
As at 1 January 2019 1,841 1,164 151 554 3,710
As at 31 December 2019 1,604 2,161 246 - 4,011
As at 31 December 2020 1,571 1,882 210 479 4,142
-------------------------- ----------- --------------- --------------- ----------------- -------
Held within land and buildings is an amount of GBP500,000 (2019: GBP500,000) in respect of non-depreciable land. In 2019, the Group disposed of property that had not been in use for a number of years following the closure of offices previously used by Kiotechagil. The property had a net book value of GBP207,000 and a loss of GBP61,000 has been recognised in the prior year's income statement.
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 2019 404 106 28 538
Additions 148 - - 148
Modification to lease
terms (27) 5 - (22)
Disposals (221) (64) - (285)
As at 31 December 2019 304 47 28 379
Additions 10 - - 10
Modification to lease
terms 7 1 - 8
Disposals - (22) (21) (43)
As at 31 December 2020 321 26 7 354
-------------------------- ----------- ----------- --------------- -------
Accumulated depreciation
As at 1 January 2019 236 90 16 342
Charge for the year 117 12 7 136
Disposals (221) (64) - (285)
Foreign exchange 2 - - 2
As at 31 December 2019 134 38 23 195
Charge for the year 107 9 3 119
Modification to lease
terms (2) - - (2)
Disposals - (22) (21) (43)
As at 31 December 2020 239 25 5 269
-------------------------- ----------- ----------- --------------- -------
Net book value
As at 1 January 2019 168 16 12 196
As at 31 December 2019 170 9 5 184
As at 31 December 2020 82 1 2 85
-------------------------- ----------- ----------- --------------- -------
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
2020 2019
----------------------------------
Notes GBP000 GBP000
---------------------------------- ------- ------- -------
As at 1 January 640 541
Income statement charge/(credit) 10 90 63
Deferred tax (credited)/charged
directly to equity 10 (70) 23
Foreign exchange 15 13
-------------------------------------- ------- ------- -------
As at 31 December 675 640
-------------------------------------- ------- ------- -------
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
-------------------------
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- ------------ ------- --------- ------- ------------- -------
As at 1 January 2019 633 548 1 (289) (352) 541
Income statement credit 10 172 3 - (61) (51) 63
Deferred tax charged
directly to equity - - 27 - (4) 23
Foreign exchange - - - 13 - 13
As at 31 December 2019 805 551 28 (337) (407) 640
Income statement charge 10 142 120 - (161) (11) 90
Deferred tax charged
directly to equity - - 16 - (86) (70)
Foreign exchange - - - 15 - 15
As at 31 December 2020 947 671 44 (483) (504) 675
------------------------- ------- ------------ ------- --------- ------- ------------- -------
2020 2019
---------------------
GBP000 GBP000
--------------------- ------- -------
Deferred income tax
asset (987) (744)
Deferred income tax
liability 1,662 1,384
Net deferred income
tax liability 675 640
-------------------------- ------- -------
Included in 'Other timing differences' above is GBP389,000 (2019: GBP307,000) that relates to the tax impact of the elimination of intercompany unrealised profit held in inventory.
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2020 on 17 March 2020. The rate applicable from 1 April 2020 now remains at 19%, rather than the previously enacted reduction to 17%. 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 GBP158,000 in the current 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. As this rate was not substantively enacted at the balance sheet date it has not been used to calculate the deferred tax balances.
A deferred tax asset has been recognised for US and German tax losses carried forward on the grounds that sufficient future taxable profits are forecast to be realised. No deferred tax asset is recognised in respect of losses incurred in other overseas subsidiaries, due to the uncertainty surrounding the timing of the utilisation of those losses.
17. Inventories
2020 2019
GBP000 GBP000
------------------------------------- ------- -------
Raw materials and consumables 1,932 1,996
Finished goods and goods for resale 2,970 2,106
Inventory 4,902 4,102
------------------------------------- ------- -------
18. Trade and other receivables
2020 2019
GBP000 GBP000
----------------------- ------- -------
Trade receivables -
gross 5,398 5,127
--------------------------- ------- -------
Less: expected credit
losses (157) (111)
Trade receivables -
net 5,241 5,016
Taxes 198 163
Other receivables 51 46
Prepayments 563 314
Total trade and other
receivables 6,053 5,539
--------------------------- ------- -------
The carrying amount of gross trade receivables are denominated in the following currencies:
2020 2019
GBP000 GBP000
--------------------- ------- -------
Pounds sterling 2,100 1,690
US dollars 1,366 2,021
Euros 744 435
Other currencies 1,188 981
Trade receivables -
gross 5,398 5,127
------------------------- ------- -------
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 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 poisition, 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 individual assessments as at 31 December 2020. 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 3,604 499 - - - 4,103
Uninsured customers 996 156 13 - - 1,165
Credit impaired - - - - 130 130
Trade receivables -
gross 4,600 655 13 - 130 5,398
------------------------ ------- ------- ------- ------- ---------- -------
Expected loss rates:
Specifically insured
customers 0% 1% - - - 1%
Uninsured customers 2% 6% 23% - - 3%
Credit impaired - - - - 79% 79%
Specifically insured
customers 15 6 - - - 21
Uninsured customers 21 9 3 - - 33
Credit impaired - - - - 103 103
Expected credit losses 36 15 3 - 103 157
------------------------ ------- ------- ------- ------- ---------- -------
Trade receivables -
net 4,564 640 10 - 27 5,241
------------------------ ------- ------- ------- ------- ---------- -------
The comparative table below shows the Group's provision matrix and individual assessments as at 31 December 2019.
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 3,544 275 - 3 - 3,822
Uninsured customers 1,058 19 12 4 - 1,093
Credit impaired - - - - 212 212
Trade receivables -
gross 4,602 294 12 7 212 5,127
------------------------ ------- ------- ------- ------- ---------- -------
Expected loss rates:
Specifically insured
customers 0% 0% 1% 4% - 0%
Uninsured customers 0% 1% 13% 42% - 1%
Credit impaired - - - - 49% 49%
Specifically insured
customers 1 - - - - 1
Uninsured customers 3 - 2 2 - 7
Credit impaired - - - - 103 103
Expected credit losses 4 - 2 2 103 111
------------------------ ------- ------- ------- ------- ---------- -------
Trade receivables -
net 4,598 294 10 5 109 5,016
------------------------ ------- ------- ------- ------- ---------- -------
The movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
---------------------------- ------------- ------------- -------
As at 1 January 2019 - 247 247
Provisions for receivables
created 8 11 19
Amounts written off
as unrecoverable - (49) (49)
Amounts recovered during
the year - (100) (100)
Foreign exchange (losses)
and gains - (6) (6)
As at 31 December 2019 8 103 111
Provisions for receivables
created 46 45 91
Amounts written off
as unrecoverable - (4) (4)
Amounts recovered during
the year - (46) (46)
Foreign exchange (losses)
and gains - 5 5
As at 31 December 2020 54 103 157
------------------------------- ------------- ------------- ------- 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
2020 Note GBP000 GBP000 GBP000 GBP000
----------------------------- ------ -------------- ------------- ---------------- --------
Derivative financial
instruments - 305 336 641
Non-current - 305 336 641
Trade and other receivables 18 6,053 - - 6,053
Derivative financial
instruments - - 327 327
Cash and cash equivalents 20 15,820 - - 15,820
Current 21,873 - 327 22,200
Financial assets 21,873 305 663 22,841
----------------------------- ------ -------------- ------------- ---------------- --------
Lease liabilities 21 (7) - - (7)
Non-current (7) - - (7)
Trade and other payables 22 (5,007) - - (5,007)
Derivative financial
instruments 19 - - - -
Lease liabilities 21 (83) - - (83)
Current (5,090) - - (5,090)
Financial liabilities (5,097) - - (5,097)
----------------------------- ------ -------------- ------------- ---------------- --------
Derivatives Derivatives
Measured designated not designated
at amortised as hedging as hedging
cost instruments instruments Total
-----------------------------
As at 31 December
2019 Note GBP000 GBP000 GBP000 GBP000
----------------------------- ------ -------------- ------------- ---------------- --------
Derivative financial
instruments - 154 208 362
Non-current - 154 208 362
Trade and other receivables 18 5,539 - - 5,539
Derivative financial
instruments - - 119 119
Cash and cash equivalents 20 13,842 - - 13,842
Current 19,381 - 119 19,500
Financial assets 19,381 154 327 19,862
----------------------------- ------ -------------- ------------- ---------------- --------
Lease liabilities 21 (121) - - (121)
Non-current (121) - - (121)
Trade and other payables 22 (3,206) - - (3,206)
Derivative financial
instruments 19 - (2) - (2)
Lease liabilities 21 (67) - - (67)
Current (3,273) (2) - (3,275)
Financial liabilities (3,394) (2) - (3,396)
----------------------------- ------ -------------- ------------- ---------------- --------
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 and cash balances represent 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.
2020 2019
GBP000 GBP000
-------------------------------------------- ------- -------
Change in value of
cash flow hedges 84 152
Deferred tax liability (16) (27)
----------------------------------------------- ------- -------
Cash flow hedge movements (net of deferred
tax) 68 125
---------------------------------------------- ------- -------
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.
2020 2019
------------------------------------------------ ------- -------
GBP/USD spot rate at 31 December 1.3663 1.3268
------------------------------------------------- ------- -------
Fixed forward contracts
Weighted average forward
rate - 1.3295
--------------------------------------------------- ------- -------
Maturing in the next year (Notional
amount in US dollars 000's) - 1,200 Notional amount (US Dollars 000's) - 1,200 ------------------------------------------------- ------- ------- Participating forward contracts Weighted average forward rate 1.3018 1.2993 --------------------------------------------------- ------- ------- Weighted average barrier rate 1.2017 1.1839 --------------------------------------------------- ------- ------- Maturing in the next year (Notional amount in US dollars 000's) 7,548 6,348 Maturing between one and two years (Notional amount in US dollars 000's) 8,674 7,548 Maturing between two and three years (Notional amount in US dollars 000's) 6,000 3,474 Notional amount (US Dollars 000's) 22,222 17,370 ------------------------------------------------- ------- -------
The hedged ratio is 1:1.
20. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits held by Group companies. The carrying amount of these assets approximates to their fair value.
As at 31 December 2020, the Group held GBPnil (2019: GBP388,000) of cash which was restricted in its use. The prior year restriction was temporary and was lifted on the 6 January 2020.
2020 2019
GBP000 GBP000
--------------------------- ------- -------
Cash and cash equivalents 15,820 13,842
--------------------------- ------- -------
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities as follows:
2020 2019
GBP000 GBP000
------------------------------- ------- -------
Less than one year 83 67
Current lease liabilities 83 67
Between one and five years 7 121
Non-current lease liabilities 7 121
Lease Liabilities 90 188
------------------------------- ------- -------
22. Trade and other payables
2020 2019
GBP000 GBP000
--------------------------------- ------- -------
Trade payables 2,586 2,119
Taxes and social security costs 229 112
Other payables 75 186
Accruals 2,117 789
Trade and other payables 5,007 3,206
--------------------------------- ------- -------
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
2019 23,303,215 5,360 10,423 15,783
Exercise of share
options 26 150,000 34 426 460
------------------- ------ ----------- -------------- -------------- -------
As at 31 December
2019 23,453,215 5,394 10,849 16,243
Exercise of share
options 26 137,918 32 299 331
------------------- ------ ----------- -------------- -------------- -------
As at 31 December
2020 23,591,133 5,426 11,148 16,574
------------------- ------ ----------- -------------- -------------- -------
The company holds shares in treasury as follows:
Number GBP000
-------------------------------------- -------- -------
As at 1 January 2019 and 31 December
2019 143,042 185
Purchase of treasury
shares 297,346 1,004
----------------------------------------- -------- -------
As at 31 December
2020 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 2019 and 31 December
2019 2,650,000
Purchase of shares 100,000
------------------------------------------ ----------
As at 31 December
2020 2,750,000
------------------------------------------ ----------
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 2019 185 7,210 (228) (1,857) 8 131 5,449
Joint-share ownership
plan 23 - 320 - - - - 320
Share-based payment
charge 26 - - - (104) - - (104)
Share-based payment
tax adjustments - - - (11) - - (11)
Movement in fair value
(net of tax) 19 - - - - (125) - (125)
Currency translation
differences - - - - - 121 121
As at 31 December 2019 91 185 7,530 (228) (1,972) (117) 252 5,650
Purchase of treasury
shares 23 1,004 - - - - - 1,004
Share-based payment
charge 26 - - - (46) - - (46)
Share-based payment
tax adjustments - - - (99) - - (99)
Movement in fair value
(net of tax) 19 - - - - (68) - (68)
Currency translation
differences - - - - - 65 65
As at 31 December 2020 1,189 7,530 (228) (2,117) (185) 317 6,506
------------------------ ----- --------- ----------- --------- ------------ --------- ------------ -------
The nature and purpose of other reserves' items are disclosed in note 2.18.
25. Retained earnings
GBP000
------------------------ --------
As at 1 January 2019 22,814
------------------------- --------
Profit for the year 3,715
Dividends (1,568)
As at 31 December 2019 24,961
------------------------- --------
Profit for the year 4,205
Dividends (1,729)
As at 31 December 2020 27,437
------------------------- --------
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. All the 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.
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)
2020 2020 2019 2019
---------------------------- ------------ ----------- ------------ -----------
Outstanding at 1 January 641,292 241 793,033 253
Granted during the year 91,504 323 - -
Lapsed during the year (2,409) 224 (101,741) 327
Exercised during the year (137,918) 240 (50,000) 262
Outstanding at 31 December 592,469 254 641,292 241
---------------------------- ------------ ----------- ------------ -----------
Exercisable at 31 December 383,800 219 514,127 222
---------------------------- ------------ ----------- ------------ -----------
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)
2020 2020 2019 2019
--------------------------------- ------------ ----------- ------------ -----------
2020 - - 55,327 224
2021 30,165 334 30,165 334
2023 160,000 159 160,000 159
2024 114,000 245 124,000 244
2025 84,800 290 84,800 290
2026 75,000 240 140,000 238
2027 91,504 323 10,000 343
2028 37,000 403 37,000 403
Total outstanding share options 592,469 254 641,292 241
--------------------------------- ------------ ----------- ------------ -----------
The range of exercise prices of outstanding share options at the year end was 159p to 403p (2019: 159p to 403p) and their weighted average remaining contractual life was 4 years (2019: 5 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 GBP67,000 (2019: GBP124,000) of which a charge of GBP21,000 (2019: GBP20,000) relates to professional fees.
During the year options totalling 91,504 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 SAYE Grant date 02/11/2020 Number of options granted 91,504 Grant price (p) 403.4 Exercise price (p) 322.7 Vesting period (years) 3.0 Option expiry (years) 3.5 Expected volatility of the share price 25.0% Dividends expected on the shares 2.0% Risk-free rate 0.5% Fair value (p) 99.3 ------------------------------------- ----------- 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:
2020 2019
GBP000 GBP000
------------------------------- ------- -------
Property, plant and equipment 135 41
Capital commitments 135 41
------------------------------- ------- -------
Company statement of financial position
as at 31 December 2020
2020 2019
Note GBP000 GBP000
---------------------------------- ------ --------- --------
Intangible assets 33 10,984 10,966
Property, plant and equipment 34 4,126 3,988
Right of use assets 27 85
Investment in subsidiaries 35 9,586 9,598
Deferred tax assets 36 192 100
Derivative financial instruments 19 641 362
Non-current assets 25,556 25,099
Inventories 37 2,516 2,406
Trade and other receivables 38 12,167 9,954
Derivative financial instruments 19 327 119
Cash and cash equivalents 13,324 11,665
---------------------------------- ------
Current assets 28,334 24,144
Total assets 53,890 49,243
---------------------------------- ------ --------- --------
Lease liabilities (1) (20)
Deferred tax liabilities 36 (1,662) (1,384)
Non-current liabilities (1,663) (1,404)
Trade and other payables 39 (8,433) (6,909)
Lease liabilities (27) (67)
Derivative financial instruments 19 - (2)
Current income tax liabilities (172) (117)
Current liabilities (8,632) (7,095)
Total liabilities (10,295) (8,499)
---------------------------------- ------ --------- --------
Net assets 43,595 40,744
---------------------------------- ------ --------- --------
Called up share capital 40 5,426 5,394
Share premium 11,148 10,849
Other reserves 41 (4,168) (3,377)
Retained earnings 31,189 27,878
Total equity 43,595 40,744
---------------------------------- ------ --------- --------
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 to not present the Parent Company income statement. The profit for the Parent Company for the year was GBP5,040,000 (2019: GBP4,814,000).
The financial statements were approved by the Board and authorised for issue on 17 March 2020.
Richard Edwards Karen Prior Chief Executive Officer Group Finance Director
Company Number: 03345857
Company statement of changes in equity
for the year ended 31 December 2020
Share Share Other Retained Total
capital premium reserves earnings equity
---------------------------------
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- ---- --------- --------- ---------- ---------- --------
Balance at 1 Jan 2019 5,360 10,423 (3,297) 24,632 37,118
--------------------------------- ---- --------- --------- ---------- ---------- --------
Profit for the period - - - 4,814 4,814
Cash flow hedge reserve - - 125 - 125
Total comprehensive income
for the year - - 125 4,814 4,939
--------------------------------- ---- --------- --------- ---------- ---------- --------
Issue of share capital 23 34 426 - - 460
Joint-share ownership plan 26 - - (320) - (320)
Share-based payment adjustments 26 - - 104 - 104
Deferred tax regarding
share-based payments - - 11 - 11
Final dividend relating
to 2018 - - - (1,048) (1,048)
Interim dividend relating
to 2019 11 - - - (520) (520) Transactions with owners 34 426 (205) (1,568) (1,313) --------------------------------- ---- --------- --------- ---------- ---------- -------- Balance at 31 Dec 2019 5,394 10,849 (3,377) 27,878 40,744 --------------------------------- ---- --------- --------- ---------- ---------- -------- Profit for the period - - - 5,040 5,040 Cash flow hedge reserve - - 68 - 68 Total comprehensive income for the year - - 68 5,040 5,108 --------------------------------- ---- --------- --------- ---------- ---------- -------- Issue of share capital 23 32 299 - - 331 Purchase of treasury shares - - (1,004) - (1,004) Joint-share ownership plan 26 - - - - - Share-based payment adjustments 26 - - 46 - 46 Deferred tax regarding share-based payments - - 99 - 99 Final dividend relating to 2019 11 - - - (1,144) (1,144) Interim dividend relating to 2020 11 - - - (585) (585) Transactions with owners 32 299 (859) (1,729) (2,257) --------------------------------- ---- --------- --------- ---------- ---------- -------- Balance at 31 Dec 2020 5,426 11,148 (4,168) 31,189 43,595 --------------------------------- ---- --------- --------- ---------- ---------- -------- 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 notes 3 and 4 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
2020 2019
Notes GBP000 GBP000
----------------------------- ------- ------- -------
Wages and salaries 4,287 3,103
Social security costs 365 355
Other pension costs 145 154
Share-based payment charges 26 67 124
Employment costs 4,864 3,736
----------------------------- ------- ------- -------
32. Number of employees
The average monthly number of employees, including Directors, during the year was:
2020 2019
GBP000 GBP000
--------------------- ------- -------
Directors 4 4
Production 29 28
Administration 17 14
Sales and Technical 31 31
Average headcount 81 77
---------------------- ------- -------
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
2019 5,490 3,584 559 1,776 866 708 12,983
Additions - - - 127 460 76 663
Reclassifications - 767 - - (767) - -
Disposals - - - (137) - - (137)
As at 31 December
2020 5,490 4,351 559 1,766 559 784 13,509
------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Accumulated amortisation
As at 31 December
2019 - 460 444 744 - 369 2,017
Charge for the
year - 182 51 283 - 129 645
Disposals - - - (137) - - (137)
As at 31 December
2020 - 642 495 890 - 498 2,525
------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
Net book value
As at 31 December
2019 5,490 3,124 115 1,032 866 339 10,966
------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
As at 31 December
2020 5,490 3,709 64 876 559 286 10,984
------------------- --------- ----------- --------------- ------------------- ------------ ---------- -------
The reclassification to Brands represents newly generated Product Brands from Development projects.
More information about Goodwill can be found in note 13 to the financial statements.
34. Property, plant and equipment
Assets
Land Fixtures, in the
and Plant fittings course
buildings and machinery and equipment of construction Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- --------------- --------------- ----------------- -------
Cost
As at 31 December
2019 1,857 3,296 538 - 5,691
Additions - 61 51 479 591
Transfer of assets
in construction - - - - -
Disposals (3) (2) (1) - (6)
As at 31 December
2020 1,854 3,355 588 479 6,276
---------------------------- ----------- --------------- --------------- ----------------- -------
Accumulated depreciation
As at 31 December
2019 253 1,135 315 - 1,703
Charge for the
year 30 340 80 - 450
Disposals - (2) (1) - (3)
As at 31 December
2020 283 1,473 394 - 2,150
---------------------------- ----------- --------------- --------------- ----------------- ------- Net book value As at 31 December 2019 1,604 2,161 223 - 3,988 As at 31 December 2020 1,571 1,882 194 479 4,126 ---------------------------- ----------- --------------- --------------- ----------------- -------
Held within land and buildings is an amount of GBP500,000 (2019: GBP500,000) in respect of non-depreciable land. In 2019, the Company disposed of property that had not been in use for a number of years following the closure of offices previously used by Kiotechagil. This property had been in use by a charity rent free in return for reduced business rates. The property had a net book value of GBP207,000 and a loss of GBP61,000 has been recognised in the prior year's income statement.
35. Investment in subsidiaries
Unlisted
investments
--------------------------------------------------------
GBP000
-------------------------------------------------------- -------------
Cost
As at 1 January 2019 8,009
Investment in Subsidiaries 4,205
-------------------------------------------------------- -------------
As at 31 December 2019 12,214
Write-off of dormant subsidiary investments (12)
As at 31 December 2020 12,202
-------------------------------------------------------- -------------
Provisions for diminution in value
As at 1 January 2019, 31 December 2019 and 31 December
2020 2,616
-------------------------------------------------------- -------------
Net book value
As at 1 January 2019 5,393
-------------------------------------------------------- -------------
As at 31 December 2019 9,598
-------------------------------------------------------- -------------
As at 31 December 2020 9,586
-------------------------------------------------------- -------------
During the year, investment balances in dormant subsidiaries that no longer feature as part of the Group strategy were written off, these totalled GBP12,000 (2019: GBPnil) and relate to Optivite Animal Nutrition Private Limited and Optivite Latinoamericana SA de CV.
Total investments in Subsidiaries in the year were GBPnil (2019: GBP4,205,000). This prior year investment primarily relates to a debt-to-equity conversion totalling GBP3,199,000 related to the US Subsidiary, Anpario Inc. Additional investment of GBP977,000 was made in 2019 to Subsidiary, PT. Anpario Biotech Indonesia, to meet requirements for 100% foreign ownership. Other amounts were invested as part of the establishment of subsidiaries in Turkey, Mexico and Germany.
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 17, 383 Kent Street, Sydney, NSW, 2000 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 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
------------------------------------------------------------------- ------------------
Optivite International Limited - Company Number 0234608
*
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, United
S80 2RS Kingdom
------------------------------------------------------------------- ------------------
Anpario Inc
2 W. Washington Street, Suite 400, Greenville, SC 29601 US
------------------------------------------------------------------- ------------------
Indirectly held
------------------------------------------------------------------- ------------------
Meriden (Shanghai) Animal Health Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
------------------------------------------------------------------- ------------------
Optivite Animal Nutrition Private Limited**
1103-04 Windsor Apartment, T-28, Shastri Apartment, Andheri
- West Mumbai Mumbai City MH 400053 India
------------------------------------------------------------------- ------------------
Optivite Latinoamericana SA de CV**
20 Boulevard de la Industria, Cuautitlan-Izcalli, 54716 Mexico
------------------------------------------------------------------- ------------------
Optivite SA (Proprietary) Limited
South
PO Box 578, Cape Town 8000 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 2020 in accordance with Section 479A of The Companies Act 2006.
** Dormant companies.
36. Deferred tax
2020 2019
---------------------------------
GBP000 GBP000
--------------------------------- ------- -------
As at 1 January 1,284 1,083
Income statement credit 256 178
Deferred tax (credited)/charged
directly to equity (70) 23
As at 31 December 1,470 1,284
-------------------------------------- ------- -------
Accelerated Fair Other
tax value Cashflow timing
allowances gains hedge Losses differences Total
-------------------------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ ------- --------- ------- ------------- -------
As at 1 January 2019 633 548 1 - (99) 1,083
Income statement credit 172 3 - - 3 178
Deferred tax charged directly
to equity - - 27 - (4) 23
As at 31 December
2019 805 551 28 - (100) 1,284
Income statement credit 142 120 - - (6) 256
Deferred tax charged directly
to equity - - 16 - (86) (70)
As at 31 December
2020 947 671 44 - (192) 1,470
-------------------------------- ------------ ------- --------- ------- ------------- -------
2020 2019
---------------------
GBP000 GBP000
--------------------- ------- -------
Deferred income tax
asset (192) (100)
Deferred income tax
liability 1,662 1,384
Net deferred income
tax liability 1,470 1,284
-------------------------- ------- -------
37. Inventories
2020 2019
GBP000 GBP000
------------------------------------- ------- -------
Raw materials and consumables 1,932 1,996
Finished goods and goods for resale 584 410
Inventory 2,516 2,406
--------------------------------------- ------- -------
38. Trade and other receivables
2020 2019
GBP000 GBP000
----------------------------- ------- -------
Trade receivables -
gross 3,975 3,896
--------------------------------- ------- -------
Less: expected credit
losses (65) (17)
Trade receivables -
net 3,910 3,879
Receivables from Subsidiary
undertakings 7,720 5,744
Taxes - 59
Other receivables 12 18
Prepayments 525 254
Total trade and other
receivables 12,167 9,954
--------------------------------- ------- -------
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 and there was no impairment provision as at 31 Dec 2020 (2019: GBPnil).
The movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually
assessed assessed Total
GBP000 GBP000 GBP000
---------------------------- ------------- ------------- -------
As at 1 January 2019 - 37 37
Provisions for receivables
created 6 11 17
Amounts written off
as unrecoverable - (38) (38)
Amounts recovered during
the year - 1 1
As at 31 December 2019 6 11 17
Provisions for receivables
created 26 38 64
Amounts written off
as unrecoverable - (4) (4)
Amounts recovered during
the year - (13) (13)
Foreign exchange (losses)
and gains - 1 1
As at 31 December 2020 32 33 65
------------------------------- ------------- ------------- -------
39. Trade and other payables
2020 2019
GBP000 GBP000
---------------------------------------- ------- -------
Trade payables 2,540 2,013
Amounts due to subsidiary undertakings 4,110 4,093
Taxes and social security costs 172 95
Other payables 47 57
Accruals and deferred income 1,564 651
Trade and other payables 8,433 6,909
---------------------------------------- ------- -------
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
2020 2019
GBP000 GBP000
----------------------------- -------- --------
Treasury shares 1,189 185
Joint Share Ownership Plan 7,530 7,530
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (2,117) (1,972)
Cash flow hedge reserve (185) (117)
Other reserves 4,168 3,377
----------------------------- -------- --------
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:
2020 2019
Note GBP000 GBP000
------------------------------ ------ ------- -------
Amounts owed by Subsidiaries 38 7,720 5,744
Amounts owed to Subsidiaries 39 4,110 4,093
--------------------------------- ------ ------- -------
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 Karen Prior, Group Finance Director +44(0) 1909 537380 Peel Hunt LLP (NOMAD) +44 (0)20 7418 8900 Adrian Trimmings Andrew Clark Will Bell
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
FR FIFFLVDIDLIL
(END) Dow Jones Newswires
March 17, 2021 03:00 ET (07:00 GMT)
1 Year Anpario Chart |
1 Month Anpario Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
