TIDMANP
Anpario plc (AIM: ANP)
Anpario plc, the international producer and distributor of
natural feed additives for animal health, hygiene and nutrition is
pleased to announce its interim results for the six months to 30
June 2015.
Financial and operational highlights1
Financial highlights
-- 11% rise in adjusted EBITDA2 to GBP1.9m (2014: GBP1.7m)
-- 9% improvement in gross profit to GBP5.0m (2014: GBP4.6m)
-- 8% increase in profit before tax from continuing operations to GBP1.6m
(2014: GBP1.5m)
-- 5% increase in underlying earnings per share from continuing operations3
to 7.53p (2014: 7.14p)
-- Cash balances of GBP7.9m at 30 June 2015 (31 Dec 2014: GBP6.6m)
Operational highlights
-- Strong profit growth in the Americas and Asia Pacific of 17% and 11%
respectively
-- UK division continues to develop strongly with 27% growth in gross
profit
-- China subsidiary progresses with 31% growth in sales
-- Brazilian subsidiary secures ownership of product registrations and
import licence
-- Group focused on higher margin additive products following sale of
Organic feed division
Richard S Rose, Chairman, commented:
"The second half has started well and we are confident of
maintaining the momentum of the first six months' performance. Our
strong balance sheet, backed by the cash generative nature of the
business leaves Anpario well positioned to finance further organic
growth and also able to consider selective investments or earnings
enhancing acquisitions as they arise."
Chairman's Statement
Anpario has delivered a good performance for the six months to
30 June 2015 with further profit growth.
The Group is a leading international supplier of nutritional and
biosecurity led natural products to food producers worldwide,
offering a comprehensive solution to their problems. The global
agricultural markets offer exciting prospects for growth: demand
for meat protein is expanding worldwide and food producers are
under increasing pressure to ensure production is aligned with best
practice to maximise performance and minimise disease risk.
Anpario's strategy of establishing subsidiaries in its key sales
regions continues to deliver value with strong organic growth in
China, the UK and the US. The Group is now focused on the
manufacture and sale of higher margin feed additive products having
disposed of its UK Organic feed business.
Financial Review
Profit before tax from continuing operations increased by 8% to
GBP1.6m (2014: GBP1.5m). Adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA) rose by 11% to GBP1.9m
(2014: GBP1.7m). During the period there has been a 4% reduction in
revenue as the business continues to focus on selling specialist
feed additives into growth markets. This strategy, coupled with the
positive effect of operational gearing has resulted in a gross
profit improvement of 9% to GBP5.0 m (2014: GBP4.6m) with gross
margin advancing by over five percentage points to 44.7% (2014:
39.3%).
In March 2015 the group disposed of its interest in the
manufacture of Organic feed in the UK. The potential maximum cash
consideration of GBP0.75m includes GBP0.25m deferred consideration
relating to a performance linked earnout. Based on management's
latest forecast of the expected earnout, GBP0.13m has been
recognised in the accounts for the six months to 30 June 2015.
Basic earnings per share from continuing operations increased by
7% to 7.53p (2014: 7.02p). Underlying earnings per share increased
by 5% in the period.
The balance sheet remains strong and debt free and at the period
end the cash balance had reached GBP7.9m (30 June 2014: GBP5.7m).
The Group has maintained its policy of capital investment to
enhance efficiency with GBP0.5m spent in the period principally in
plant improvement, product development and protection of global
brand and product trademarks.
Operations - International Agriculture
The division continued its positive progress in its key regions
of Asia Pacific and Latin America generating profit growth of 11%
and 17% respectively in the first six months compared with the
equivalent period last year. Within Latin America, sales to
customers in Argentina, Bolivia, Chile, Colombia, and Costa Rica
each delivered double-digit growth. There was a similar positive
performance in Asia with sales in Bangladesh, India, Indonesia and
the Philippines advancing strongly.
The Philippines achieved a 48% increase in volume in the first
half of the year and demonstrates the increases in volumes which
can be generated by working alongside partners to directly access
end users. A great deal has been learned from this specific
initiative, which will now be applied selectively in other
countries during the second half of the year, focusing on specific
product groups to drive further advances in sales and profit.
The objective over recent years has been to progressively
rebalance sales away from higher volume, low margin commodity type
products to focus on the added value, higher margin opportunities.
This performance mirrors a similar trend in the UK which delivered
a strong 27% increase in gross profit in the half year from a 3%
reduction in volume and 5% increase in revenue.
Anpario's toxin binder category provides a clear example of the
effect of this rebalancing strategy where the flagship brands,
Neutox and Ultrabond, increased volume by 21% and 36% respectively,
whilst the non-branded products reduced volume by 69%. The net
result for the category was a reduction of 13% in volume and 3% in
revenue but an impressive 16% increase in gross profit.
The ongoing political challenges in parts of the Middle East and
Africa limited progress in Egypt, Iran and Nigeria in particular.
Within Europe, the import ban implemented by the Russian government
has affected sales to that country and also to some of its
neighbours. The Group continues its prudent approach limiting its
financial exposure in high risk countries, including Greece. The
geographical diversity of the Group continues to demonstrate its
value and there are early signs of improvement in some of these
troubled territories which the Group is well placed to capitalise
on.
In the US, our initial focus has been on the swine and poultry
segments where we have made sales. Our technology has been well
received by a number of key agricultural groups whom we are working
closely with to demonstrate the performance and health benefits of
our products. The removal of antibiotics from meat production in
the US continues to be high on the agenda of many producers,
especially in the poultry segment. In addition to launching
Orego-Stim in the US and our key acidifier range, we have recently
decided to launch Credence, our tablet disinfectant, which
sanitises the drinking lines in poultry houses and water troughs
for livestock and can also be used as a surface disinfectant. It is
these features which have particularly interested US customers, who
are looking for a package of measures to help them reduce the use
of antibiotics and keep animals healthy for improved
performance.
Our US subsidiary has also begun to target the ruminant sector,
offering products which have performed well in the dairy segment in
the UK and Ireland. Initial feedback from customers is encouraging
and a number are testing the efficacy of these products.
Operations - UK Agriculture
The division has maintained its momentum in the first six months
of the year and delivered strong double-digit growth in gross
profit through its focus on the value added product groups within
the portfolio. This success has been driven by the implementation
of the life stage management initiative of our acidifier and
phytogenic range in swine and poultry along with good progress in
the ruminant sector with Ultrabond, our mycotoxin binder. These
performance improvements enable farmers to maximise the price paid
for milk, which is particularly pertinent in current market
conditions.
The aim is to replicate this success throughout Continental
Europe where there is an opportunity to access end users more
easily and this has resulted in the consolidation of
responsibilities for Europe and the UK as a single reporting
division. This will enable greater resources to be applied to
utilise the experience gained in the UK throughout Europe.
The divestment of the Organic animal feed division, Vitrition,
in March has removed the effect on Anpario of the volatility
inherent in that market and enabled the UK Agriculture division to
focus on the strength of its specialty feed additive portfolio.
Innovation and development
A key platform for growth, as outlined in the strategic review
in the 2014 annual report, is to combine science and marketing to
add value to our offering and to differentiate Anpario from its
competitors. Our research effort has been an important element in
this process as is the need for greater specialisation in our key
product areas. During the first half of the year, the Group has
taken steps to realign the structure of the International Division
on a species rather than product basis. The increased expertise in
these areas is already providing a consistent solution that is
focused on the needs of our customers and distributors. The
improvement in the calibre of support available to the Group has
already been successfully deployed in our subsidiaries in the US
and China, with Brazil to follow later in the year. The Chinese
subsidiary has successfully weathered the recent pricing volatility
within the swine sector with an impressive 31% growth in local
revenue in the first half of the year. Advancements into the
poultry and feed mill sectors have started to contribute positively
and look promising areas for growth.
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The Group has prioritised its research effort by working closely
with customers and leading universities to demonstrate the quality
and value of its product portfolio in enhancing the health and
performance of livestock. The flagship product groups of acidifiers
and phytogenics are uniquely positioned as they offer a complete
solution for all life stages of the animal, from birth to breeding,
yet provide specific products that have been formulated with each
life stage in mind, enabling the individual requirements of each
consumer to be met, maximising their returns.
Our products have demonstrated an improvement of both primary
and secondary antibody responses to specific challenges, a
significant finding in disease management that is currently being
evaluated further. The implication of improving the immunity of
animals to disease not only supports the improvement in performance
of animals consuming our products but would also facilitate the
opportunity to reduce the use of medications such as antibiotics in
animal feed when our products are included.
Outlook
The second half has started well and we are confident of
maintaining the momentum of the first six months' performance. Our
strong balance sheet, backed by the cash generative nature of the
business, leaves Anpario well positioned to finance further organic
growth and also able to consider selective investments or earnings
enhancing acquisitions as they arise.
Richard S Rose Chairman16 September 2015
1All prior-year values have been restated to reflect the
disposal of the Organic division as discontinued operations.
2Adjusted EBITDA represents operating profit GBP1.58m (2014:
GBP1.48m) adjusted for: share based payments GBP0.14m (2014:
GBP0.07m); depreciation, amortisation and impairment charges of
GBP0.19m (2014: GBP0.17m).
3Underlying earnings per share from continuing operations
represents profit from continuing operations for the period before
unwinding of discount on contingent consideration divided by the
weighted average number of shares in issue.
Unaudited consolidated
income statement
for the six months
ended 30 June 2015
restated1 restated1
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
Notes GBP000 GBP000 GBP000
Continuing operations
Revenue 3 11,143 11,609 23,449
Cost of sales (6,164) (7,052) (13,953)
Gross profit 4,979 4,557 9,496
Administrative (3,396) (3,078) (6,447)
expenses
Operating profit 1,583 1,479 3,049
Finance income 27 27 48
Finance cost of - (21) (21)
contingent
consideration
Profit before 1,610 1,485 3,076
income tax
Income tax expense (151) (195) (107)
Profit for the 1,459 1,290 2,969
period from
continuing operations
Discontinued
operations
Profit for the
period from
discontinued
operations
(attributable 8 368 84 191
to owners
of the parent)
Profit for the period 1,827 1,374 3,160
Profit attributable
to:
Owners of the parent 1,827 1,374 3,160
Profit for the period 1,827 1,374 3,160
Basic earnings 4 7.53p 7.02p 16.14p
per share from
continuing operations
Diluted earnings 4 7.31p 6.37p 14.76p
per share
from continuing
operations
Basic earnings 4 9.43p 7.48p 17.18p
per share
Diluted earnings 4 9.16p 6.78p 15.71p
per share
Unaudited consolidated
statement
of comprehensive
income
for the six months
ended 30 June 2015
restated1 restated1
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
GBP000 GBP000 GBP000
Profit for the period 1,827 1,374 3,160
Items that may be
subsequently
reclassified
to profit or loss:
Exchange difference (39) (1) (42)
on translating
foreign operations
Total comprehensive 1,788 1,373 3,118
income
for the period
Attributable to 1,788 1,373 3,118
the owners
of the parent:
Total comprehensive
income
attributable to equity
shareholders
arises from:
- Continuing 1,420 1,289 2,927
operations
- Discontinued 368 84 191
operations
Total comprehensive 1,788 1,373 3,118
income
for the period
1Prior
Year comparatives
have been
restated following
the disposal
of a discontinued
operation
as disclosed
in note 8.
Unaudited consolidated balance sheet
as at 30 June 2015
as at as at as at
6/30/2015 6/30/2014 12/31/2014
Notes GBP000 GBP000 GBP000
Intangible assets 5 10,014 9,386 9,826
Property, plant and equipment 6 3,083 3,196 3,018
Deferred tax assets 179 204 179
Non-current assets 13,276 12,786 13,023
Inventories 1,646 1,585 1,711
Trade and other receivables 6,975 7,286 7,699
Cash and cash equivalents 7,938 5,698 6,631
Current assets 16,559 14,569 16,041
Total assets 29,835 27,355 29,064
Called up share capital 7 5,040 4,592 4,622
Share premium 7 7,528 3,973 4,051
Other reserves (3,807) (348) (389)
Retained earnings 16,289 13,353 14,462
Total equity 25,050 21,570 22,746
Deferred tax liabilities 1,044 990 1,044
Non-current liabilities 1,044 990 1,044
Trade and other payables 3,474 4,358 5,129
Current income tax liabilities 267 437 145
Current liabilities 3,741 4,795 5,274
Total liabilities 4,785 5,785 6,318
Total equity and liabilities 29,835 27,355 29,064
Unaudited
consolidated
statement
of
changes
in
equity
for the
six
months
ended 30
June
2015
Called up share capital Share premium Other reserves Retained earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance 4,573 3,922 (345) 11,979 20,129
at 1
January
2014
Profit - - - 1,374 1,374
for
the
period
Currency - - (1) - (1)
translation
differences
Total - - (1) 1,374 1,373
comprehensive
income
for the
period
Issue of 19 51 - - 70
share
capital
Share-based - - (2) - (2)
payment
adjustments
Transactions 19 51 (2) - 68
with
owners
Balance 4,592 3,973 (348) 13,353 21,570
at 30
June
2014
Profit - - - 1,786 1,786
for
the
period
Currency - - (41) - (41)
translation
differences
Total - - (41) 1,786 1,745
comprehensive
income
for the
period
Issue of 30 78 - - 108
share
capital
Purchase - - (116) - (116)
of
treasury
shares
Share-based - - 116 - 116
payment
adjustments
Dividends - - - (677) (677)
relating
to 2013
Transactions 30 78 - (677) (569)
with
owners
Balance 4,622 4,051 (389) 14,462 22,746
at 31
December
2014
Profit - - - 1,827 1,827
for
the
period
Currency - - (39) - (39)
translation
differences
Total - - (39) 1,827 1,788
comprehensive
income
for the
period
Issue of 418 3,477 - - 3,895
share
capital
Joint-share - - (3,415) - (3,415)
ownership
plan
Share-based - - 36 - 36
payment
adjustments
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Transactions 418 3,477 (3,379) - 516
with
owners
Balance 5,040 7,528 (3,807) 16,289 25,050
at 30
June
2015
Unaudited consolidated
statements
of cash flows
for the six months
ended 30 June 2015
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
GBP000 GBP000 GBP000
Cash generated 1,074 1,338 3,500
from operating
activities
Income tax paid (123) (91) (253)
Net cash generated from 951 1,247 3,247
operating activities
Purchases of property, (198) (271) (289)
plant and equipment
Proceeds from disposal - 19 34
of property,
plant and equipment
Net proceeds from disposal 344 - -
of discontinued operations
Payments to acquire (275) (158) (574)
intangible assets
Interest received 27 27 48
Net cash used in investing (102) (383) (781)
activities
Purchase of treasury shares - - (116)
Acquisition of (3,415) - -
shares by JSOP
Proceeds from issuance 3,895 70 178
of shares
Dividend paid to Company's - - (677)
shareholders
Net cash used in financing 480 70 (615)
activities
Net increase in cash 1,329 934 1,851
and cash equivalents
Effect of exchange (22) (15) 1
rate changes
Cash and cash equivalents 6,631 4,779 4,779
at
the beginning of the period
Cash and cash equivalents 7,938 5,698 6,631
at the end of the period
restated1 restated1
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
Cash generated GBP000 GBP000 GBP000
from operating
activities
Profit before income 1,623 1,592 3,319
tax including
discontinued operations
Net finance cost (27) (6) (27)
Depreciation, amortisation 195 186 357
and impairment
Profit on disposal - - (16)
of property,
plant and equipment
Share-based payments 36 (2) 114
Fair value of contingent 130 - -
consideration
Changes in working capital:
Inventories 60 214 129
Trade and other receivables 673 (321) (755)
Trade and other payables (1,616) (325) 379
Net cash generated from 1,074 1,338 3,500
operating activities
1.
General information
Anpario plc ("the Company") and its subsidiaries (together "the
Group") manufacture and supply high performance natural
feed additives for the agricultural market with products
to improve the health and output of animals.
The Company is traded on the London Stock Exchange Aim
market and is incorporated and domiciled in the UK.
The address of the registered office is Manton Wood Enterprise
Park, Worksop, Nottinghamshire, S80 2RS.
2.
Basis of preparation
The consolidated financial statements comprise the accounts of
the Company and its subsidiaries drawn up to 30 June 2015.
The consolidated financial statements have been prepared on the basis
of the accounting policies set out in the Group's financial
statements for the year ended 31 December 2014, which are
available on the Company's web site at www.anpario.com.
This condensed consolidated interim financial information does not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2014 were approved by the Board of Directors on 4 March
2015 and delivered to the Registrar of Companies. The report of
the auditors on those accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement
under section 498 (2) or (3) of the Companies Act 2006.
The consolidated interim financial information for the period
ended 30 June 2015 is neither audited nor reviewed.
3. Segment information
UK and Eire International Total
GBP000 GBP000 GBP000
for the six months
ended 30 June 2015
Total segmental revenue 2,051 9,798 11,849
Inter-segment revenue (199) (507) (706)
Revenue from external customers 1,852 9,291 11,143
Adjusted EBITDA 399 1,514 1,913
Depreciation, amortisation (2) (193) (195)
and impairment charges
Income tax expense (29) (122) (151)
Total assets 8,424 23,120 29,835
Total liabilities (1,317) (4,001) (4,785)
for the six months ended
30 June 2014 (restated)
Total segmental revenue 1,582 10,451 12,033
Inter-segment revenue - (424) (424)
Revenue from external customers 1,582 10,027 11,609
Adjusted EBITDA 129 1,599 1,728
Depreciation, amortisation (22) (159) (181)
and impairment charges
Income tax expense (19) (176) (195)
Total assets 7,857 19,498 27,355
Total liabilities (1,429) (4,356) (5,785)
Year ended 31 December
2014 (restated)
Total segmental revenue 3,733 21,155 24,888
Inter-segment revenue (281) (1,158) (1,439)
Revenue from external customers 3,452 19,997 23,449
Adjusted EBITDA 276 3,324 3,600
Depreciation, amortisation (46) (303) (349)
and impairment charges
Income tax credit/(expense) 59 (166) (107)
Total assets 7,907 21,157 27,355
Total liabilities (1,526) (4,792) (5,785)
A reconciliation of adjusted
EBITDA to profit
before income tax is
provided as follows:
restated1 restated1
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
GBP000 GBP000 GBP000
Adjusted EBITDA for reportable 1,913 1,728 3,600
segments
Depreciation, amortisation (195) (181) (349)
and impairment charges
Share-based payment charges (135) (68) (202)
Finance income 27 27 48
Finance cost of contingent - (21) (21)
consideration
Profit before income tax from 1,610 1,485 3,076
continued operations
4. Earnings per share
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
Weighted average number of 19,366 18,370 18,393
shares in Issue (000's)
Adjusted for effects of 585 1,881 1,717
dilutive potential
Ordinary shares (000's)
Weighted average number 19,951 20,251 20,110
for diluted
earnings per share (000's)
Profit attributable to 1,459 1,290 2,969
owners of the Parent
from continuing operations
(GBP000's)
Result of discontinued 368 84 191
operations
Profit attributable to owners 1,827 1,374 3,160
of the Parent (GBP000's)
Basic earnings per share from 7.53p 7.02p 16.14p
continuing operations
Diluted earnings per share 7.31p 6.37p 14.76p
from continuing operations
Basic earnings per share 9.43p 7.48p 17.18p
Diluted earnings per share 9.16p 6.78p 15.71p
six months to six months to year ended
6/30/2015 6/30/2014 12/31/2014
GBP000 GBP000 GBP000
Underlying profit attributable
to owners of the Parent
Profit attributable to 1,459 1,290 2,969
owners of the Parent
Unwinding of discount on - 21 21
contingent consideration
Prior year tax adjustments - - (318)
Underlying profit from 1,459 1,311 2,672
continuing operations
Result of discontinued 368 84 191
operations
Underlying profit attributable 1,827 1,395 2,863
to owners of the Parent
Underlying earnings per share 7.53p 7.14p 14.53p
from continuing operations
Diluted underlying 7.31p 6.47p 13.29p
earnings per share
from continuing operations
Underlying earnings per share 9.43p 7.59p 15.57p
Diluted underlying 9.16p 6.89p 14.24p
earnings per share
5. Intangible
assets
Group Goodwill Brands Customer Patents, trademarks Development costs Total
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