Final Results

Anpario plc (AIM: ANP)

Anpario plc, the international producer of natural feed additives for animal health, hygiene and nutrition is pleased to announce its results for the year ended 31 December 2012.

Financial highlights

• 39% increase in adjusted EBITDA¹ to £3.1m (2011: £2.2m)
• 24% increase in profit after tax for the year to £2.1m (2011: £1.7m)
• 44% increase in diluted underlying earnings per share² to 12.73p (2011: 8.87p)
• Cash balance of £3.7m at year end (2011: £4.4m)
• 25% increase in the proposed final dividend to 3.0p per share (2011: 2.4p)

Operational highlights

• Meriden Animal Health Limited (“Meriden”) acquisition performing to plan
• Double digit growth in profitability from Asia Pacific, Latin America and Middle East regions
• Chinese subsidiary increases revenue by 122%
• Organic feed division increases operating profit by 70%
• Production efficiency improvements reduce unit operating costs

Richard Rose, Chairman, commented:

“The Group’s performance has been excellent and shows that the investments made to our production plant and our focus on value-added feed additives is delivering the expected benefits. The acquisition of Meriden has enhanced our product range and global market share. The Group has made a strong start to the current year and is very well positioned to capitalise on the opportunities in all its markets. The balance sheet remains strong with no debt and the cash generative nature of the business allows us to make those selective investments and earnings enhancing acquisitions which will drive progress and continue to enhance shareholder value.”

Chairman’s statement

Anpario performed strongly in the year to 31 December 2012, both in the UK and Internationally, again delivering an excellent set of results. This outturn demonstrates the quality of our strategy, built on delivering performance through a combination of organic growth and selective acquisitions. The results include a maiden nine month contribution from Meriden Animal Health Limited (“Meriden”), which was acquired at the end of March 2012. Meriden’s performance has been most encouraging and in line with our expectations; the business has added its leading natural product brand to our extensive range while also extending our global market share. The acquisition of Meriden was financed entirely from Anpario’s own cash resources and was immediately earnings enhancing.

Our focus continues to be on delivering organic growth through carefully and selectively building Anpario’s presence in those regions and countries which offer the greatest potential for the Group. This plan encompasses the recruitment of local account managers and establishing subsidiaries or joint ventures locally to support our distribution network.

Financial review

Profit after tax for the year to 31 December 2012 increased by 26 per cent to £2.1m (2011: £1.7 m) on sales up by 23 per cent at £23.5m (2011: £19.2m). Underlying earnings per share² increased by 49% to 13.32p per share (2011: 8.94p per share) and diluted underlying earnings per share² increased by 44% to 12.73p per share (2011: 8.87p per share). There was also advance in gross profit, which was ahead by 33% to £7.7m (2011: £5.8m) reflecting the contribution from Meriden’s portfolio, production efficiencies and a richer product mix in the UK.

Adjusted EBITDA¹ advanced by 39% to £3.1m (2011: £2.2m), while like-for-like adjusted EBITDA (excluding Meriden) improved 18% to £2.6m (2011: £2.2m). An impairment of £0.7m has been recognised in the accounts in respect of capitalised legacy expenditure on the development of Aquatice, our aquaculture brand. This relates to uncertainty over the generation of future economic benefit deriving from certain aspects of expenditure incurred prior to March 2009. Legal and professional costs of £0.4m have been incurred in respect of the acquisition of Meriden and purchasing the non-controlling interest in our South African subsidiary. The Group has benefited from prior year tax adjustments totalling £0.9m relating to the use of losses and research and development tax credits.

The balance sheet remains strong and debt free with a year-end cash balance of £3.7m (2011: £4.4m) after a net cash outlay of £2.6m to acquire Meriden and associated costs.

The Board is pleased to recommend a final dividend of 3p per share, an increase of 25% over the previous year’s payment of 2.4p. Shareholder approval will be sought at the Annual General Meeting, to be held on 27 June 2013, to pay the final dividend on 28 July 2013 to shareholders on the register at 5 July 2013.

Operations – International Agriculture

Significant growth was achieved during the year by our operations in the key markets of Latin America and Asia Pacific which, along with the Middle East, have produced double digit percentage advances in profitability compared with the previous twelve months. These territories, including China, will continue to be regions of priority as the combination of their size, population growth, increasing economic affluence and demand for meat protein, offer great potential for our agricultural sector.

China is the Group’s number one priority country, where poultry production is greater than Europe’s output and pig production is double that of Europe. Our subsidiary in China delivered sales growth of 122% compared with the level of the previous year. This subsidiary is now making a positive contribution and generating cash for the Group. The Kiotechagil brand is now firmly established in the five key Chinese provinces that we have focused on since launch. In 2013 the business will continue to concentrate on increasing market penetration, as well as selective expansion into other provinces. In addition, the Optivite brand will be introduced to China in order to target a different market segment using a separate distribution channel. Solid foundations have now been built and we look forward to further success in this crucial market.

The Middle East remains an important market and we are heartened by a number of sound performances in that region which have been achieved despite the political uncertainty in some countries. European markets continue to be challenging as economic growth remains generally low with little early prospect of improvement. We are striving to build Anpario’s business in Europe through innovation, marketing and a relentless focus on growth and margin opportunities. Responding to regional issues is a feature of being a global business and as can be seen in the Group’s financial results, the resilience of our business is underpinned by its broad geographic spread and the stability of the global agricultural sector as a whole.

A feature of our international expansion has been our strategy of building local presence in key territories. We have embarked on a process of regionalisation whereby account management teams are now organised to focus on a specific area. Working with our partners and distribution network we are establishing local operations where appropriate. This approach is enabling the Group to be much closer to its customers and end markets, allowing us to better understand the local market and through short lines of communication, respond rapidly to opportunities and changing circumstances. In addition, the Group will increasingly concentrate its resources on those countries that offer the greatest potential for sales and profit growth, thereby improving the management of these high potential markets. We have already experienced success as a result of these changes which is reinforcing our efforts to accelerate the process.

The Group also has an additional presence in China through Meriden’s distributor based in Guangzhou. Meriden China has strong representation with the top twenty feed mills and has continued to grow its business. Our central technical team has been working with Meriden to develop some new products to help broaden its range. The initial testing ground has been with the Meriden Australia joint venture, where some new products have recently been launched. Meriden is performing well and has opened up new markets on the African continent.

Our aquaculture interests, formerly a separate division developing and marketing the Aquatice® brand, have now been combined with those of Meriden. This logical development will be more financially efficient and allow greater sales focus as Aquatice® is marketed alongside Meriden’s Orego-Stim®, Aquatract and Phyconomix. Customer trials are continuing with all three brands in South East Asia and although significant sales growth is some way off, we do believe farmers will gradually adopt these innovative products into their fish farm feeding regimes.

Operations – UK Agriculture

This Division has made excellent progress throughout the year with growth in sales and gross profit reflecting the re-positioning of the business to focus on value-added products. Towards the end of the year, the Division took steps to target the home-mix market more aggressively by recruiting specific resource to provide a focused service and support for home-mix customers. Entry into this market will help to diversify the revenue stream and strengthen our product and service offering.

Economic pressures within the UK organic animal feed market have persisted and year-on-year industry processing numbers fell by 20%. Vitrition, our Organic Division, has defied the trend and through strong control of its cost base has capitalised on operational improvements and specific targeting to successfully broaden and diversify its customer base. The Division delivered an exceptional set of results, with operating profit increasing by 70%. Vitrition is a leading player in this market and is committed to supplying the organic meat production industry and consolidating its market share.

Central operations

The efficiency improvements implemented over the past two years in our UK production plant have further enhanced operational gearing and, coupled with volume increases, the Group has significantly benefited from these changes. Further modest investment is currently being made in the UK with the introduction of a process control and inventory management system, which will streamline our production process further and automate certain functions.

Product development for all the brands is on-going and a feature of our growth strategy; it is expected to underpin the momentum of our trading businesses as the pipeline of new products is selectively and carefully launched into the market. This process has already begun and is showing promise as some of these new products start to increase their contribution to Group sales. In addition, there has been restructuring of the technical team to make it better able to support the sales teams and end users.

Marketing of our products and trading brands is extremely important in the global agricultural market and having absorbed Meriden’s marketing expertise, the decision has been taken to strengthen and expand the marketing function. A recruitment programme is now underway to appoint a brand manager for each of the Group’s trading brands. These brand managers will work closely with the sales teams to raise the profile of our marketing activities and consequently increase customer awareness of what we have to offer markets around the globe.

Outlook

The Group has a made a strong start to the current year with sales growth across all divisions. Our focus continues to drive organic growth by aggressively pursuing market share in key target regions and capitalising on the operational gearing that our scalable production plants offer. Whilst geopolitical and financial concerns remain, the resilience of our business, with its geographic spread, will help to offset these regional factors. The Group is very well positioned to capitalise on the opportunities in all its markets. The balance sheet remains strong with no debt and the cash generative nature of the business allows us to make those selective investments and earnings enhancing acquisitions which will drive progress and continue to enhance shareholder value.

Richard S Rose

Chairman

17 April 2013

¹ Adjusted EBITDA represents operating profit £1.6m (2011: £1.8m) adjusted for: share based payments £0.1m (2011: £0.1m); acquisition and restructuring related costs of £0.4m (2011: £0.1m); and depreciation, amortisation and impairment charges of £1.0m (2011: £0.2m).

² Underlying earnings per share represents profit for the year £2.1m (2011: £1.7m) before: acquisition and restructuring related costs £0.4m (2011: £0.1m); impairment of intangibles £0.7m (2011: £nil) unwinding of discount on contingent consideration £0.1m (2011: £nil); and prior year tax adjustments £0.9m (2011: £0.1m) divided by the weighted average number of shares in issue. Diluted underlying earnings per share represents underlying earnings per share as stated above adjusted for the effect of potentially dilutive shares.

Consolidated income statement
for the year ended 31st December 2012
				2012			2011
		Notes		£000			£000
Revenue		3		23,509			19,198
Cost of sales				(15,849	)		(13,443	)
Gross profit				7,660			5,755
Administrative expenses				(4,910	)		(3,880	)
Exceptional items		5		(1,157	)		(88	)
Operating profit				1,593			1,787
Finance income		8		39			39
Finance cost of contingent consideration		8		(110	)		–
Profit before income tax				1,522			1,826
Income tax credit/(expense)		11		582			(150	)
Profit for the year from continuing operations				2,104			1,676
Profit attributable to:
Owners of the parent				2,104			1,667
Non-controlling interests				–			9
Profit for the year				2,104			1,676
The consolidated income statement has been prepared on the basis that all operations are continuing operations.
Basic earnings per share		9		11.62p			9.22p
Diluted earnings per share		9		11.11p			9.15p
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 £1,734,000 (2011: £1,696,000).
Consolidated statement of comprehensive income
for the year ended 31st December 2012
				2012			2011
				£000			£000
Profit for the year				2,104			1,676
Exchange difference on translating foreign operations				24			(42	)
Total comprehensive income for the year				2,128			1,634
Attributable to the owners of the parent:				2,128			1,635
Non-controlling interests				–			(1	)
Total comprehensive income for the year				2,128			1,634

Consolidated and parent company balance sheets
as at 31 December 2012
				Group						Company
				2012			2011			2012			2011
		Notes		£000			£000			£000			£000
Intangible assets		12		9,076			7,161			6,553			7,161
Property, plant and equipment		13		2,784			2,840			2,769			2,837
Investments in subsidiaries		14		–			–			4,299			233
Deferred tax assets		20		228			318			228			318
Non-current assets				12,088			10,319			13,849			10,549
Inventories		15		1,632			1,088			1,213			971
Trade and other receivables		16		6,993			4,439			6,507			4,466
Cash and cash equivalents		17		3,694			4,357			1,484			4,185
Current assets				12,319			9,884			9,204			9,622
Total assets				24,407			20,203			23,053			20,171
Called up share capital		23		4,555			4,555			4,555			4,555
Share premium				3,884			3,828			3,884			3,828
Other reserves		25		(496	)		(695	)		(494	)		(669	)
Retained earnings		24		9,942			8,264			9,676			8,378
Equity attributable to owners of the parent company				17,885			15,952			17,621			16,092
Non-controlling interest				–			50			–			–
Total equity				17,885			16,002			17,621			16,092
Trade and other payables		19		425			–			425			–
Deferred tax liabilities		20		1,044			994			776			994
Non-current liabilities				1,469			994			1,201			994
Trade and other payables		18		4,912			3,207			4,197			3,085
Current income tax liabilities				141			–			34			–
Current liabilities				5,053			3,207			4,231			3,085
Total liabilities				6,522			4,201			5,432			4,079
Total equity and liabilities				24,407			20,203			23,053			20,171

Consolidated and parent company statements of changes in equity
for the year ended 31st December 2012
Group		Called up share capital		Share premium		Other reserves			Retained earnings			Non-controlling interest			Total equity
		£000		£000		£000			£000			£000			£000
Balance at 1st January 2011		4,209		2,957		5,054			2,517			51			14,788
Profit for the year		–		–		–			1,667			9			1,676
Currency translation differences		–		–		(32	)		–			(10	)		(42	)
Total comprehensive income for the year		–		–		(32	)		1,667			(1	)		1,634
Issue of share capital		346		871		–			–			–			1,217
Purchase of treasury shares		–		–		(166	)		–			–			(166	)
Joint share ownership plan		–		–		(1,210	)		–			–			(1,210	)
Share-based payment adjustments		–		–		100			–			–			100
Release of special reserve to retained earnings		–		–		(4,441	)		4,441			–			–
Dividends relating to 2010		–		–		–			(361	)		–			(361	)
Transactions with owners		346		871		(5,717	)		4,080			–			(420	)
Balance at 31st December 2011		4,555		3,828		(695	)		8,264			50			16,002
Profit for the year		–		–		–			2,104			–			2,104
Currency translation differences		–		–		24			–			–			24
Total comprehensive income for the year		–		–		24			2,104			–			2,128
Sale of treasury shares		–		56		97			–			–			153
Share-based payment adjustments		–		–		78			–			–			78
Dividends relating to 2011		–		–		–			(436	)		–			(436	)
Acquisition of interest in subsidiary from non-controlling interest		–		–		–			10			(50	)		(40	)
Transactions with owners		–		56		175			(426	)		(50	)		(245	)
Balance at 31st December 2012		4,555		3,884		(496	)		9,942			–			17,885
Company		Called up share capital		Share premium		Other reserves			Retained earnings			Non-controlling interest			Total equity
		£000		£000		£000			£000			£000			£000
Balance at 1st January 2011		4,209		2,957		5,048			2,602			–			14,816
Profit for the year		–		–		–			1,696			–			1,696
Total comprehensive income for the year		–		–		–			1,696			–			1,696
Issue of share capital		346		871		–			–			–			1,217
Purchase of treasury shares		–		–		(166	)		–			–			(166	)
Joint share ownership plan		–		–		(1,210	)		–			–			(1,210	)
Share-based payment adjustments		–		–		100			–			–			100
Release of special reserve to retained earnings		–		–		(4,441	)		4,441			–			–
Dividends relating to 2010		–		–		–			(361	)		–			(361	)
Transactions with owners		346		871		(5,717	)		4,080			–			(420	)
Balance at 31st December 2011		4,555		3,828		(669	)		8,378			–			16,092
Profit for the year		–		–		–			1,734			–			1,734
Total comprehensive income for the year		–		–		–			1,734			–			1,734
Sale of treasury shares		–		56		97			–			–			153
Share-based payment adjustments		–		–		78			–			–			78
Dividends relating to 2011		–		–		–			(436	)		–			(436	)
Transactions with owners		–		56		175			(436	)		–			(205	)
Balance at 31st December 2012		4,555		3,884		(494	)		9,676			–			17,621

Consolidated and parent company statements of cash flows
for the year ended 31st December 2012
		Group						Company
		2012			2011			2012			2011
		£000			£000			£000			£000
Cash generated from operating activities		1,740			2,451			355			2,418
Income tax refunded/(paid)		430			(436	)		598			(431	)
Net cash generated from operating activities		2,170			2,015			953			1,987
Acquisition of subsidiary, net of cash acquired		(2,276	)		–			(3,150	)		–
Purchases of property, plant and equipment		(117	)		(474	)		(115	)		(474	)
Proceeds from disposal of property, plant and equipment		18			11			18			11
Payments to acquire intangible fixed assets		(166	)		(212	)		(162	)		(212	)
Interest received		39			39			38			39
Net cash used by investing activities		(2,502	)		(636	)		(3,371	)		(636	)
Purchase of treasury shares		–			(166	)		–			(166	)
Sale of treasury shares		153			–			153			–
Acquisition of shares by JSOP		–			(1,210	)		–			(1,210	)
Proceeds from issuance of shares		–			1,217			–			1,217
Dividend paid to company’s shareholders		(436	)		(361	)		(436	)		(361	)
Repayment of borrowings		–			(3	)		–			(3	)
Acquisition of interest in subsidiary from non-controlling interest		(40	)		–			–			–
Net cash used in financing activities		(323	)		(523	)		(283	)		(523	)
Net (decrease)/increase in cash & cash equivalents		(655	)		856			(2,701	)		828
Effect of exchange rate changes		(8	)		(30	)		–			–
Cash and cash equivalents at the beginning of the year		4,357			3,531			4,185			3,357
Cash and cash equivalents at the end of the year		3,694			4,357			1,484			4,185
		Group						Company
		2012			2011			2012			2011
Cash generated from operating activities		£000			£000			£000			£000
Profit before income tax		1,522			1,826			1,042			1,842
Net finance cost/(income)		71			(39	)		72			(39	)
Depreciation, amortisation and impairment		1,005			301			933			294
Loss/(Profit) on disposal of property, plant and equipment		2			(1	)		2			(1	)
Share-based payments		78			100			78			100
Changes in working capital:
Inventories		(330	)		98			(242	)		71
Trade and other receivables		(1,192	)		788			(2,041	)		754
Trade and other payables		584			(622	)		511			(603	)
Net cash generated from operating activities		1,740			2,451			355			2,418

Notes to the financial statements

For the year ended 31 December 2012

1 General information

Anpario plc (“the Company”) and its subsidiaries (together “the Group”) produce natural feed additives for animal health, hygiene and nutrition.

The Company is traded on the London Stock Exchange AIM market and is incorporated and domiciled in the UK. The address of its registered office is Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS.

2 Summary of significant accounting policies

2.1 Basis of preparation

The Group has presented its financial statements in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements are prepared on a going concern basis under the historical cost convention.

The financial information set out below does not constitute the Group’s statutory accounts for the year ending 31 December 2012 or 31 December 2011. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the annual general meeting. The auditors have reported on those accounts. Their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in a period of the revision and future periods if the revision affects both current and future periods.

The principal accounting policies of the Group are set out below, and have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements.

2.2 Basis of consolidation

The consolidated financial statements comprise the accounts of the Company and its subsidiaries drawn up to 31 December 2012.

(a) Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. The group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the group’s voting rights relative to the size and dispersion of holdings of other shareholders give the group the power to govern the financial and operating policies, etc. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

2.3 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue on despatch of goods to the customer.

2.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision-maker. The chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.

2.5 Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into Pounds Sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are included in the profit or loss for the period.

(a) Functional and presentational currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘functional currency’). The consolidated financial statements are presented in Pounds Sterling, which is the Company’s functional and presentational currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised as part of the fair value gain or loss.

(c) Group companies

The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated into the presentation 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

(a) Patents, trademarks and registrations

Separately acquired patents, trademarks and registrations are shown at historical cost. Patents, trademarks and registrations have finite useful life 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.

(b) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets acquired. Goodwill is reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate a potential impairment. Goodwill is carried at cost less accumulated impairment losses and is allocated to the appropriate cash-generating unit for the purpose of impairment testing. Any impairment is recognised immediately through the income statement and is not subsequently reversed.

(c) Development costs

Development costs are stated at cost less accumulated amortisation and impairment. Development costs are recognised if it is probable that there will be future economic benefits attributable to the asset, the cost of the asset can be measured reliably, the asset is separately identifiable and there is control over the use of the asset. The assets are amortised when available for use on a straight-line basis over the period over which the Group expects to benefit from these assets. Research expenditure is written off to the Income statement in the year in which it is incurred.

Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the product so that it will be available for use;
• management intends to complete the product and use or sell it;
• there is an ability to use or sell the product;
• it can be demonstrated how the product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the product are available; and
• the expenditure attributable to the product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the product include the development employee costs and an appropriate portion of relevant overheads.

(d) Brands

Brands are stated as costs 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, except where they are deemed to have an indefinite life and consequently are not amortised. Brands with an indefinite useful life are reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate a potential impairment. However, they are allocated to appropriate cash-generating units and subject to impairment testing on an annual basis. Any impairment is recognised immediately through the income statement and is not subsequently reversed.

(e) Customer relationships

Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. Customer relationships are deemed to have a finite useful life and are carried at original fair value less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected useful life of 10 years.

2.7 Impairment of non-financial assets

The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment, if so; the asset’s recoverable amount is estimated. The recoverable amount is the higher of its fair value less costs to sell and its value in use. For intangible assets that are not yet available for use, goodwill or other intangible assets with an indefinite useful life, an impairment test is performed at each balance sheet date.

In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised in the income statement whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation and or amortisation) had no impairment loss been recognised in prior years. For goodwill, a recognised impairment loss is not reversed.

2.8 Investments

Investments in subsidiaries are stated at cost less provision for diminution in value.

2.9 Joint ventures

The group’s interests in jointly controlled entities are proportionately consolidated. The group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the group’s financial statements. The group recognises the portion of gains or losses on the sale of assets by the group to the joint venture that is attributable to the other venturers. The group does not recognise its share of profits or losses from the joint venture that result from the group’s purchase of assets from the joint venture until it re-sells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets, or an impairment loss.

2.10 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Land is not depreciated. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

Buildings		50 years or period of lease if shorter
Plant and machinery		3-10 years
Fixtures, fittings and equipment		3-10 years

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.

2.11 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. The cost of finished goods comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business.

2.12 Trade receivables

Trade receivables are recognised and carried at original invoice amounts less an allowance for any amount estimated to be uncollectable.

2.13 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable 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.

2.14 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.

2.15 Derivative financial instruments

The Group uses derivative financial instruments to manage certain exposures to fluctuations in foreign currency exchange rates, although these have not been designated as qualifying cash flow hedges. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value and gains or losses recognised in the income statement.

2.16 Leasing and hire purchase

The Group has entered into hire purchase contracts and leases certain property, plant and equipment.

Assets obtained under finance leases and hire purchase contracts, where the Group has substantially all the risks and rewards of ownership are capitalised as property, plant and equipment and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in borrowings net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the income statement so as to produce constant periodic rates of charge on the net obligations outstanding in each period.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

2.17 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.

2.18 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 and associates 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 substantially 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 and associates, 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.

2.19 Employee benefits

(a) Share-based payments

The group issues equity-settled share-based payments and shares under the Joint Share Ownership Plan (“JSOP”) 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. Proceeds received on the exercise of share options are credited to share capital and share premium.

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 accounts.

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 change will be treated as a cash-settled transaction.

(b) 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.

2.20 Equity

Share capital is determined using the nominal value of ordinary shares that have been issued.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issue of shares are deducted from the share premium account, net of any related income tax benefits.

The premium arising on the issue of consideration shares to acquire a business is credited to the merger reserve.

Amounts arising on the restructuring of equity and reserves to protect creditor interests are credited to the special reserve.

Exchange differences arising on the consolidation of foreign operations are taken to the translation reserve.

The share based payment reserve is credited with amounts charged to the income statement in respect of the movements in the fair value of equity-settled share-based payments and shares issued under the JSOP.

The JSOP shares reserve arises when the Company issues equity share capital under the JSOP, which is held in trust by The Kiotech International plc Employees’ Share Trust (“the Trust”). The interests of the Trust are consolidated into the Group’s financial statements and the relevant amount treated as a reduction in equity.

2.21 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.

2.22 Financial risk management

The Group is exposed to a number of financial risks, including credit risk, liquidity risk, exchange rate risk and capital risk.

(a) Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and deposits with financial institutions. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has an established credit policy under which each new customer is analysed for creditworthiness before the Group’s payment and delivery terms and conditions are offered. Where possible, risk is minimised through settlement via letters of credit and purchase of credit insurance. The Group’s investment policy restricts the investment of surplus cash to interest bearing deposits with banks and building societies with high credit ratings.

(b) 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.

(d) 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 forward contracts as considered appropriate to mitigate the risk.

(e) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

2.23 Critical accounting estimates and judgements

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:

(a) 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.

(b) Income taxes

The Group is subject to income taxes predominately in the United Kingdom but also in other jurisdictions. Significant estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated queries by the tax authorities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different for the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

2.24 Impact of accounting standards and interpretations

At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations to existing standards are mandatory for the first time for the accounting year ended 31 December 2012:

				Effective from
IFRS 1 (amended 2010)		‘Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters’		1 July 2011
IFRS 7 (amended 2011)		’Transfer of Assets’		1 July 2011

The adoption of these standards and interpretations has not had a significant impact on the Group.

At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations were in issue but not yet effective:

				Effective from
IFRIC 20 (issued 2011)		‘Stripping Costs in the Production Phase of a Surface Mine’		1 January 2013
IAS 1 (amended 2011)		‘Presentation of Items of Other Comprehensive Income’		1 July 2012
IAS 12 (amended 2010)		‘Deferred Tax: Recovery of Underlying Assets’		1 January 2013
IAS 19 (amended 2011)		‘Employee Benefits’		1 January 2013
IAS 27 (issued 2011)		‘Separate Financial Statements’		1 January 2014
IAS 28 (issued 2011)		‘Investments in Associates and Joint Ventures’		1 January 2014
IAS 32 (amended 2011)		‘Offsetting Financial Assets and Financial Liabilities’		1 January 2014
IFRS 1 (amended 2012)		‘Government Loans’		1 January 2013
IFRS 7 (amended 2011)		‘Disclosures – Offsetting Financial Assets and Financial Liabilities’		1 January 2013
IFRS 9 (issued 2009) and subsequent amendments (issued 2011)		‘Financial Instruments’		*1 January 2015
IFRS 10 (issued 2011)		‘Consolidated Financial Statements’		1 January 2014
IFRS 11 (issued 2011)		‘Joint Arrangements’		1 January 2014
IFRS 12 (issued 2011)		‘Disclosures of Interests in Other Entities’		1 January 2014
IFRS 13 (issued 2011)		‘Fair Value Measurement’		1 January 2013
* Not yet endorsed by the EU.

A review of the impact of these standards, amendments and interpretations continues. At this stage the Directors do not believe that they will give rise to any significant financial impact.

There are a number of minor amendments to other standards which are part of the International Accounting Standards Board’s annual improvements project issued on 17 May 2012. The improvements comprise amendments that result in accounting changes for presentation, recognition or measurement purposes, as well as terminology or editorial amendments related to a variety of individual IFRS standards. The amendments are effective for annual periods beginning on or after 1 January 2013. No material changes to Accounting Policies are expected as a result of these amendments.

In 2012, the Group did not early adopt any new or amended standards and does not plan to early adopt any of the standards issued but not yet effective.

3. Segment information

All revenues from external customers are derived from the sale of goods in the ordinary course of business to the agricultural markets and are measured in a manner consistent with that in the income statement.

Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board considers the business from a geographic perspective.

Management considers adjusted EBITDA to assess the performance of the operating segments, which comprises profit before interest, tax, depreciation and amortisation adjusted for share-based payments and exceptional items.

Inter-segment revenue is charged at prevailing market prices.

		UK and Eire			International			Total
		£000			£000			£000
Year ended 31 December 2012
Total segmental revenue		6,874			17,114			23,988
Inter-segment revenue		–			(479	)		(479	)
Revenue from external customers		6,874			16,635			23,509
Adjusted EBITDA		305			2,804			3,109
Depreciation, amortisation and impairment charges		(26	)		(979	)		(1,005	)
Income tax credit		97			485			582
Total assets		7,352			17,055			24,407
Total liabilities		(1,529	)		(4,993	)		(6,522	)
Year ended 31 December 2011
Total segmental revenue		6,704			12,871			19,575
Inter-segment revenue		–			(377	)		(377	)
Revenue from external customers		6,704			12,494			19,198
Adjusted EBITDA		340			1,901			2,241
Depreciation, amortisation and impairment charges		(55	)		(246	)		(301	)
Income tax expense		(22	)		(128	)		(150	)
Total assets		7,311			12,892			20,203
Total liabilities		(1,415	)		(2,786	)		(4,201	)
A reconciliation of adjusted EBITDA to profit before tax is provided as follows:
					2012			2011
					£000			£000
Adjusted EBITDA for reportable segments					3,109			2,241
Depreciation, amortisation and impairment charges					(1,005	)		(213	)
Share-based payment charges					(99	)		(153	)
Finance income					39			39
Finance cost of contingent consideration					(110	)		–
Closure and restructuring costs					(55	)		(88	)
Acquisition costs					(357	)		–
Profit before tax					1,522			1,826

The entity is domiciled in the UK.

The total of non-current assets other than financial instruments and deferred tax assets (there are no employment benefit assets and rights arising under insurance contracts) located in the UK is £11,857,000 (2011: £9,998,000) and the total of these assets located in other countries is £3,000 (2011: £3,000).

Share-based payment charges of £99,000 (2011: £153,000) includes £21,000 (2011: £53,000) of professional fees that have been expensed during 2012.

4. Expenses by nature
		2012		2011
		£000		£000
Changes in inventories of finished goods		(100)		(65	)
Raw materials and consumables used		13,077		10,798
Employee expenses (note 7)		3,416		2,828
Research and development expenditure		6		46
Transportation expenses		1,735		1,359
Other operating expenses		2,209		1,848
Operating lease payments		46		52
Depreciation, amortisation and impairment charges		1,005		301
Share-based payment charges		99		153
Acquisition costs		357		50
Loss on foreign exchange transactions		66		41
Total cost of sales, distribution and administrative expenses		21,916		17,411
5. Exceptional items
		2012		2011
		£000		£000
Closure and restructuring costs		55		88
Acquisition costs		357		–
Impairment provision		745		–
		1,157		88

The Group has continued the closure and restructure of locations and functions, incurring costs in the year of £55,000 (2011: £88,000).

An impairment of £745,000 has been recognised in the accounts in respect of capitalised expenditure on the development of Aquatice, our aquaculture brand, relating to costs incurred prior to March 2009.

Legal and professional costs of £357,000 have been incurred in respect of the acquisition of Meriden and purchasing the non-controlling interest in our South African subsidiary.

6. Auditors’ remuneration
During the year the Group obtained the following services from the Company’s auditors:
		2012		2011
Group		£000		£000
Fees payable to Company’s auditor for the audit of Parent Company and Consolidated financial statements		43		31
Fees payable to Company’s auditor for other services:
– The audit of Company subsidiaries		8		–
– Tax compliance service		13		13
		64		44
7. Employees
Number of employees
The average monthly number of employees including Directors during the year was:
		2012		2011
Group		Number		Number
Production		29		30
Administration		27		21
Sales and Technical		32		23
Total average headcount		88		74
Company
Production		29		30
Administration		19		20
Sales and Technical		17		16
Total average headcount		65		66

Employment costs
		2012			2011
Group		£000			£000
Wages and salaries		3,045			2,485
Social security costs		257			233
Other pension costs		114			110
Share-based payment charges		99			153
		3,515			2,981
8. Finance income / (cost)
		2012			2011
		£000			£000
Interest receivable on short-term bank deposits		39			39
Finance income		39			39
Unwinding of discount on contingent consideration		(110	)		–
Finance cost of contingent consideration		(110	)		–
Net finance (cost)/income		(71	)		39

The unwinding of the discount on the contingent consideration is not a borrowing related cost however, is required to be classified as finance cost. Further details are included in note 29.

9. Earnings per share
		2012			2011
Weighted average number of shares in issue (000’s)		18,110			18,085
Adjusted for effects of dilutive potential ordinary shares (000’s)		832			139
Weighted average number for diluted earnings per share (000’s)		18,942			18,224
Profit attributable to owners of the Parent (£000’s)		2,104			1,667
Basic earnings per share		11.62p			9.22p
Diluted earnings per share		11.11p			9.15p
		2012			2011
		£000			£000
Underlying profit attributable to owners of the parent
Profit attributable to owners of the parent		2,104			1,667
Exceptional items		1,157			88
Unwinding of discount on contingent consideration		110			–
Prior year tax adjustments		(959	)		(138	)
Underlying profit		2,412			1,617
Underlying earnings per share		13.32p			8.94p
Diluted underlying earnings per share		12.73p			8.87p
10. Dividend payable
		2012			2011
		£000			£000
2010 final dividend paid: 2.0p per 23p share		–			361
2011 final dividend paid: 2.4p per 23p share		436			–
		436			361

A dividend in respect of the year ended 31st December 2012 of 3.0p per share, amounting to a total dividend of £562,000 is to be proposed at the Annual General Meeting on 27 June 2013. These financial statements do not reflect this dividend payable.

11. Income tax (credit)/expense
		Group
		2012			2011
		£000			£000
Current tax
Current tax on profits for the year		191			247
Adjustment for prior years		(618	)		(118	)
Total current tax		(427	)		129
Deferred tax
Origination and reversal of temporary differences		186			41
Adjustment for prior years		(341	)		(20	)
Total deferred tax (note 20)		(155	)		21
Income tax (credit)/expense		(582	)		150

Adjustments in respect of prior years represents the recognition of previously unrecognised losses and benefits from enhanced research and development tax credits.

The tax on the Company’s profit before tax, differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the Company as follows:

		2012			2011
Factors affecting the (credit)/charge for the year		£000			£000
Profit before tax		1,522			1,826
Tax at domestic rates applicable to profits in the respective countries – 24.5% (2011: 26.5%)		373			484
Tax effects of:
Non-deductible expenses		180			104
Capital allowances		–			(41	)
Research and development tax credits		(222	)		(266	)
Prior year tax adjustments		(959	)		(138	)
Other tax adjustments		46			7
Tax (credit)/charge		(582	)		150

Corporation tax is calculated at 24.5% (2011: 26.5%) of the estimated assessable profit for the year.

During the year, as a result of the change in the UK corporation tax rate from 24% to 23% that was substantively enacted on 3 July 2012 and planned to be effective from 1 April 2013, the relevant deferred tax balances have been re-measured. Deferred tax balances at the year end have been measured at 23%.

Further reductions to the UK tax rate were announced in the 2012 Autumn Statement and the March 2013 Budget. The changes propose to reduce the rate to 21% from 1 April 2014 and to 20% from 1 April 2015. These changes had not been substantively enacted at the Balance Sheet date and, therefore, is not recognised in these Financial Statements. The impact of this change on the deferred tax position of the Group is not expected to be material.

12. Intangible assets
Group		Goodwill		Brands		Customer relationships		Patents, trademarks and registrations		Development costs		Total
		£000		£000		£000		£000		£000		£000
Cost
As at 1 January 2011		4,144		1,501		176		59		1,280		7,160
Additions		–		–		–		5		207		212
As at 31 December 2011		4,144		1,501		176		64		1,487		7,372
Additions		–		–		–		31		135		166
Acquisition of subsidiary (note 29)		1,346		709		510		21		–		2,586
As at 31 December 2012		5,490		2,210		686		116		1,622		10,124
Accumulated amortisation/impairment
As at 1 January 2011		–		–		18		9		126		153
Charge for the year		–		–		18		7		–		25
Impairment provision		–		–		–		–		33		33
As at 31 December 2011		–		–		36		16		159		211
Charge for the year		–		27		55		10		–		92
Impairment provision		–		–		–		–		745		745
As at 31 December 2012		–		27		91		26		904		1,048
Net book value
As at 31 December 2012		5,490		2,183		595		90		718		9,076
As at 31 December 2011		4,144		1,501		140		48		1,328		7,161
As at 1 January 2011		4,144		1,501		158		50		1,154		7,007

Company		Goodwill		Brands		Customer relationships		Patents, trademarks and registrations		Development costs		Total
		£000		£000		£000		£000		£000		£000
Cost
As at 1 January 2011		4,144		1,501		176		59		1,280		7,160
Additions		–		–		–		5		207		212
As at 31 December 2011		4,144		1,501		176		64		1,487		7,372
Additions		–		–		–		27		135		162
As at 31 December 2012		4,144		1,501		176		91		1,622		7,534
Accumulated amortisation/impairment
As at 1 January 2011		–		–		18		9		126		153
Charge for the year		–		–		18		7		–		25
Impairment provision		–		–		–		–		33		33
As at 31 December 2011		–		–		36		16		159		211
Charge for the year		–		–		17		8		–		25
Impairment provision		–		–		–		–		745		745
As at 31 December 2012		–		–		53		24		904		981
Net book value
As at 31 December 2012		4,144		1,501		123		67		718		6,553
As at 31 December 2011		4,144		1,501		140		48		1,328		7,161
As at 1 January 2011		4,144		1,501		158		50		1,154		7,007

Goodwill is allocated to the Group’s cash-generating units (CGU’s) identified according to trading brand. The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond a five-year period are extrapolated using estimate growth rates of 1.5% per annum (2011: 1.5%).

The discount rate used of 12% (2011: 12%) is pre-tax and reflects specific risks relating to the operating segments.

Goodwill is allocated as follows:

Goodwill
Acquisition of Kiotechagil operations		3,552
Acquisition of Optivite operations		592
As at 31 December 2011		4,144
Acquisition of Meriden operations		1,346
As at 31 December 2012		5,490

Brands relate to the fair value of the Optivite brands acquired in the year ended 31 December 2009 and Meriden brands acquired in the year ended 31 December 2012. These are deemed to have between 20 years and an indefinite useful life due to the inherent intellectual property contained in the products, the longevity of the product lives and global market opportunities. Brands are assessed for impairment with goodwill in the annual impairment review as described above.

Amortisation of brands, customer relationships and patents, trademarks and registrations is included in administrative expenses, totalling £92,000 (2011: £25,000) for the Group and £25,000 (2011: £25,000) for the Company.

The carrying amount of development costs of a range of products has been reduced to its recoverable amount through recognition of an impairment provision during the year of £745,000 (2011: £33,000), this relates to uncertainty over the generation of future economic benefit deriving from certain aspects of expenditure incurred prior to March 2009. The provision, included within adminstrative expenses, was based on managment forecasts of the remaining development costs and expected future economic benefits arising to the Group.

13. Property, plant and equipment
Group		Land and buildings		Plant and machinery		Fixtures, fittings and equipment		Total
		£000		£000		£000		£000
Cost
As at 1 January 2011		1,862		514		473		2,849
Reclassification		98		78		(176)		–
Additions		47		369		58		474
Disposals		–		(21)		–		(21)
As at 31 December 2011		2,007		940		355		3,302
Additions		27		70		20		117
Acquisition of subsidiaries (note 29)		–		–		15		15
Disposals		–		(110)		(3)		(113)
As at 31 December 2012		2,034		900		387		3,321
Accumulated depreciation/impairment
As at 1 January 2011		9		120		101		230
Reclassification		11		27		(38)		–
Charge for the year		28		94		33		155
Disposals		–		(11)		–		(11)
Impairment provision		88		–		–		88
As at 31 December 2011		136		230		96		462
Charge for the year		26		98		44		168
Disposals		–		(82)		(11)		(93)
As at 31 December 2012		162		246		129		537
Net book value
As at 31 December 2012		1,872		654		258		2,784
As at 31 December 2011		1,871		710		259		2,840
As at 1 January 2011		1,853		394		372		2,619
Company		Land and buildings		Plant and machinery		Fixtures, fittings and equipment		Total
		£000		£000		£000		£000
Cost
As at 1 January 2011		1,862		435		470		2,767
Reclassification		98		78		(176)		–
Additions		47		369		58		474
Disposals		–		(18)		–		(18)
As at 31 December 2011		2,007		864		352		3,223
Additions		27		69		19		115
Disposals		–		(44)		–		(44)
As at 31 December 2012		2,034		889		371		3,294
Accumulated depreciation/impairment
As at 1 January 2011		9		60		89		158
Reclassification		11		27		(38)		–
Charge for the year		28		87		33		148
Disposals		–		(8)		–		(8)
Impairment provision		88		–		–		88
As at 31 December 2011		136		166		84		386
Charge for the year		26		96		41		163
Disposals		–		(24)		–		(24)
As at 31 December 2012		162		238		125		525
Net book value
As at 31 December 2012		1,872		651		246		2,769
As at 31 December 2011		1,871		698		268		2,837
As at 1 January 2011		1,853		375		381		2,609

Held within land and buildings is an amount of £700,000 (2011: £700,000) in respect of non-depreciable land.

During 2011 an exercise was undertaken to reclassify certain assets between categories.

In 2011, a closure and restructing cost, being a provision for impairment of £88,000, was made against the value of a long leasehold property which is no longer required in the normal course of business. The property remains in property, plant and equipment as current market conditions mean it is uncertain as to whether the property will be sold or rented.

14. Investment in subsidiaries
Company		Unlisted investments
		£000
Cost
As at 1 January 2011 and at 31 December 2011		2,625
Acquisition of subsidiaries (note 29)		4,066
As at 31 December 2012		6,691
Provisions for diminution in value
As at 1 January 2011 and 31 December 2011		2,392
Charge for the year		–
As at 31 December 2012		2,392
Net book value
As at 31 December 2012		4,299
As at 31 December 2011		233
As at 1 January 2011		233

Holdings of more than 20 per cent
The Company holds more than 20 per cent of the share capital of the following companies:
		Country of registration or incorporation		Principal activity		Percentage held		Shares  held Class
Company
Anpario UK Limited		England and Wales		Dormant		100		Ordinary
Kiotech Limited		England and Wales		Dormant		100		Ordinary
Aquatice Limited		England and Wales		Dormant		100		Ordinary
Agil Limited		England and Wales		Dormant		100		Ordinary
Kiotechagil Limited		England and Wales		Dormant		100		Ordinary
Optivite Limited		England and Wales		Dormant		100		Ordinary
Optivite International Limited		England and Wales		Dormant		100		Ordinary
Anpario Ireland Limited		Ireland		Dormant		100		Ordinary
Kiotechagil (Shanghai) Agriculture Science and Technology Limited		China		Technology Services		100		Ordinary
Optivite Animal Nutrition Private Limited		India		Technology Services		100		Ordinary
Optivite Latinoamerica SA de CV		Mexico		Technology Services		98		Ordinary
Optivite SA (Proprietary) Limited		South Africa		Technology Services		100		Ordinary
Meriden Animal Health Limited		England and Wales		Technology Services		100		Ordinary
Meriden Trading Pty Limited		Australia		Technology Services		50		Ordinary

Anpario Ireland Limited was incorporated on 12 January 2012 with one hundred subscriber shares of €1

On 1 January 2012 the Group increased its holding in Optivite SA (Proprietary) Limited from 60% to 100%. Refer to note 28 for further details.

The group has a 50% interest in a joint venture, Meriden Trading Pty Limited. The following amounts represent the group’s 50% share of the assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement.

		2012			2011
		£000			£000
Current assets		86			–
Total assets		86			–
Current liabilities		117			–
Total liabilities		117			–
Net liabilities		(31	)		–
Income		138			–
Expenses		(161	)		–
Profit after income tax		(23	)		–

There are no contingent liabilities relating to the group’s interest in the joint venture, and no contingent liabilities of the venture itself.

15. Inventories
				Group						Company
		2012		2011				2012		2011
		£000		£000				£000		£000
Raw materials and consumables		1,131		752				1,008		752
Finished goods and goods for resale		501		336				205		219
		1,632		1,088				1,213		971

The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to £12,977,000 (2011: £10,733,000) for the Group and £10,569,000 (2011: £10,239,000) for the Company.

16. Trade and other receivables
				Group				Company
		2012		2011		2012		2011
		£000		£000		£000		£000
Trade receivables		6,509		4,207		4,863		3,815
Less: provision for impairment of trade receivables		(109)		(55)		(102)		(51)
Trade receivables – net		6,400		4,152		4,761		3,764
Receivables from subsidiary undertakings		–		–		1,411		454
Receivables from joint ventures		107		–		–		–
Taxes		216		106		153		88
Prepayments and accrued income		270		181		182		160
		6,993		4,439		6,507		4,466
The ageing analysis of net trade receivables is as follows:
				Group				Company
		2012		2011		2012		2011
		£000		£000		£000		£000
Up to 3 months		4,783		3,327		3,842		2,865
3 to 6 months		1,426		799		813		725
Over 6 months		191		26		106		174
Trade receivables – net		6,400		4,152		4,761		3,764

As of 31 December 2012 trade receivables of £1,037,000 (2011: £880,000) for the Group and £793,000 (2011: £854,000) for the Company were past due but not impaired. These relate to longstanding customers for who there are no recent history of default. The ageing analysis of these receivables is as follows:

				Group						Company
		2012		2011				2012		2011
		£000		£000				£000		£000
Up to 3 months		907		710				694		698
3 to 6 months		89		157				68		150
Over 6 months		41		13				31		6
		1,037		880				793		854

As of 31 December 2012 trade receivables of £109,000 (2011: £55,000) for the Group and £102,000 (2011: £51,000) for the Company were impaired and fully provided for. The individually impaired receivables mainly related to historic debt for which recovery is still being sought. The Group mitigates its exposure to credit risk by extensive use of credit insurance and letters of credit to remit amounts due. The ageing of these trade receivables is as follows:

				Group						Company
		2012		2011				2012		2011
		£000		£000				£000		£000
3 to 6 months		7		–				–		–
Over 6 months		102		55				102		51
		109		55				102		51

Movement on the Group provision for impairment of trade receivables as follows:
				Group					Company
		2012		2011			2012		2011
		£000		£000			£000		£000
At 1 January		55		244			51		230
Provisions for receivables created		91		12			84		8
Amounts written off as unrecoverable		(26)		(155)			(22)		(155)
Amounts recovered during the year		(11)		(46)			(11)		(32)
At 31 December		109		55			102		51

The carrying amounts of net trade and other receivables are denominated in the following currencies:

				Group					Company
		2012		2011			2012		2011
		£000		£000			£000		£000
Pounds Sterling		3,164		2,415			3,150		2,415
Euros		1,622		669			873		669
US Dollars		1,416		697			738		680
Other currencies		198		371			–		–
At 31 December		6,400		4,152			4,761		3,764

The other classes within trade and other receivables do not contain impaired assets.

17. 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.

18. Trade and other payables (current)
				Group					Company
		2012		2011			2012		2011
		£000		£000			£000		£000
Trade payables		3,334		2,469			2,604		2,305
Amounts due to subsidiary undertakings		–		–			103		89
Taxes and social security costs		201		139			172		139
Other payables		614		–			603		–
Accruals and deferred income		763		599			715		552
		4,912		3,207			4,197		3,085

Included within ‘Other payables’ above is £601,000 (2011: £nil) in respect of contingent consideration arising on the acquisition of Meriden.

19. Trade and other payables (non-current)
				Group					Company
		2012		2011			2012		2011
		£000		£000			£000		£000
Other payables		425		–			425		–
		425		–			425		–

Non-current ‘Other payables’ relates to contingent consideration arising on the acquisition of Meriden.

20. Deferred income tax
						2012		2011
Group						£000		£000
At 1 January						676		655
Arising on acquisition of Meriden (note 29)						295		–
Income statement charge (note 11)						(155)		21
At 31 December						816		676
Deferred tax liabilities / (assets)
		Accelerated tax allowances		Fair value gains		Losses		Total
		£000		£000		£000		£000
At 1 January 2011		496		448		(289)		655
Income statement charge (note 11)		71		(21)		(29)		21
At 31 December 2011		567		427		(318)		676
Income statement charge (note 11)		(192)		(53)		90		(155)
Arising on acquisition of Meriden (note 29)		2		293		–		295
At 31 December 2012		377		667		(228)		816
Classified as:
Deferred income tax asset								(228)
Deferred income tax liability								1,044

Corporation tax is calculated at 24.5% (2011: 26.5%) of the estimated assessable profit for the year.

During the year, as a result of the change in the UK corporation tax rate from 24% to 23% that was substantively enacted on 3 July 2012 and planned to be effective from 1 April 2013, the relevant deferred tax balances have been re-measured. Deferred tax balances at the year end have been measured at 23%.

Further reductions to the UK tax rate were announced in the 2012 Autumn Statement and the March 2013 Budget. The changes propose to reduce the rate to 21% from 1 April 2014 and to 20% from 1 April 2015. These changes had not been substantively enacted at the Balance Sheet date and, therefore, is not recognised in these Financial Statements. The impact of this change on the deferred tax position of the Group is not expected to be material.

A deferred tax asset has been recognised for losses carried forward on the grounds that sufficient future taxable profit is forecast to be realised.

Losses

The Group and Company have unutilised tax losses totalling £nil (2011: £1,712,000).

						2012		2011
Company						£000		£000
At 1 January						676		655
Income statement charge						(128)		21
At 31 December						548		676
Deferred tax liabilities / (assets)
		Accelerated tax allowances		Fair value gains		Losses		Total
		£000		£000		£000		£000
At 1 January 2011		496		448		(289)		655
Income statement charge		71		(21)		(29)		21
At 31 December 2011		567		427		(318)		676
Income statement charge		(165)		(53)		90		(128)
At 31 December 2012		402		374		(228)		548
Classified as:
Deferred income tax asset								(228)
Deferred income tax liability								776

21. Capital commitments
The Group had authorised capital commitments as at 31st December 2012 as follows:
		2012	2011
		£000	£000
Property, plant and equipment		134	–
Total		134	–

22. Financial commitments

At 31 December 2012 the Group had future aggregate minimum lease payments under non-cancellable operating leases as follows:

		2012			2011
		£000			£000
Less than one year		57			37
Between on and five years		59			39
Greater than five years		1			–
Total		117			76

The lease expenditure charged to the income statement during the year is disclosed in note 4.

23. Called up share capital
		2012			2011
		£000			£000
Authorised
86,956,521 Ordinary shares of 23p each		20,000			20,000
1,859,672 ‘A’ Shares of 99p each		1,841			1,841
		21,841			21,841
Alloted, called up and fully paid
19,805,572 (2011: 18,299,952) Ordinary shares of 23p each		4,555			4,209
Issue of Ordinary shares of 23p each to JSOP		–			341
Options excercised Ordinary shares of 23p each		–			5
		4,555			4,555

On 27 September 2011 and 12 December 2011 the Company respectively issued 587,742 and 896,138 ordinary shares of 23p at the market price to the Trustees of The Kiotech International plc Employees’ Share Trust. On 28 October 2011 21,739 ordinary shares of 23 pence each were issued pursuant to the exercise of employee share options.

24. Retained earnings
		Group			Company
		£000			£000
At 1 January 2011		2,517			2,602
Profit for the year		1,667			1,696
Dividends relating to 2010		(361)			(361)
Transfer from special reserve		4,441			4,441
At 31 December 2011		8,264			8,378
Profit for the year		2,104			1,734
Dividends relating to 2011		(436)			(436)
Acquisition of interest in subsidiary from non-controlling interest (note 28)		10			–
At 31 December 2012		9,942			9,676

A Special reserve of £4,441,000 was established following a reduction in capital and Court order on 21 July 2008. Following the satisfaction of the provisions of the Court order this amount was released to retained earnings in 2011 and as such forms part of the Company’s distributable reserves.

25. Other reserves
Other reserves comprise:
				Group					Company
		2012		2011			2012		2011
		£000		£000			£000		£000
Treasury shares		(69)		(166)			(69)		(166)
Joint share ownership plan		(1,210)		(1,210)			(1,210)		(1,210)
Merger reserve		228		228			228		228
Share-based payment reserve		557		479			557		479
Translation reserve		(2)		(26)			–		–
		(496)		(695)			(494)		(669)

On 26 January 2011 the Company purchased in the market 235,000 of its own ordinary shares of 23p each for 70p each and held these in treasury. On 1 November 2012 the company sold 137,958 of its own ordinary shares of 23p each for 112p each.

Details of the Joint share ownership plan (JSOP) established in 2011 are set out in note 26.

26. Share-based payments

Movements in the number of share options outstanding are as follows:

		Weighted average exercise price		Shares 2012		Weighted average exercise price		Shares 2011
		(p)		000		(p)		000
Outstanding at 1 January		81		946		76		1,826
Granted during the year		89		150		82		60
Modified by awards under JSOP		–		–		67		(896)
Exercised during the year		–		–		32		(22)
Forfeited or cancelled during the year		–		–		86		(22)
Outstanding at 31 December		82		1,096		81		946
Excercisable at 31 December				832				340

Share options outstanding at the end of the year have the following expiry dates and weighted average exercise prices:

		Weighted average exercise price		Shares 2012		Weighted average exercise price		Shares 2011
		(p)		000		(p)		000
2015		165		44		165		44
2016		99		223		99		223
2017		104		65		104		65
2018		32		96		32		96
2019		68		262		68		262
2020		79		196		79		196
2021		76		60		76		60
2022		89		150		76		–
				1,096				946

On 30 June 2011 21,739 options were forfeited following a redundancy and on 28 October 2011 21,739 options were exercised. On 5 October 2011 options totalling 60,000 were awarded under the Company’s Enterprise Management Incentive Scheme (EMIS).

On 9th July 2012 150,000 options were awarded under the Company’s Enterprise Management Incentive Scheme (EMIS).

Under the terms of the Company’s Joint share ownership plan (JSOP) on 27 September 2011 the Company issued 587,742 ordinary shares of 23p to the Executive Directors at a price of 85.5p per share; and on 12 December 2011 a further 896,138 ordinary shares of 23p were issued to the Executive Directors at a price of 79p per share as a modification to the existing benefits under the Company’s Enterprise Management Incentive Scheme (EMIS) and Unapproved Share Scheme.

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 Kiotech International plc Employees’ Share Trust is calculated based on appropriate valuation models.

The expense is apportioned over the vesting period and is based on the number of financial instruments which are expected to vest and the fair value of those financial instruments at the date of the grant. The charge for the year in respect of share options granted and associated expenses amounts to £99,000 (2011: £153,000) of which £21,000 (2011: £53,000) is related to professional fees that have been expensed during the year.

The weighted average fair value of options granted during the year was determined based on the following assumptions using the Black-Scholes pricing model.

Plan			EMIS
Grant date			9-Jul
Number of options granted (000)			150
Grant price (p)			88.5
Exercise price (p)			88.5
Carrying cost (per annum)			N/A
Vesting period (years)			2
Option expiry (years)			10
Expected volatility of the share price			25%
Dividends expected on the shares			2.71%
Risk-free rate			0.69%
Fair value (p)			14.10
			Black-Scholes

27. Related party transactions

Group and Company

The following transactions were carried out with related parties:

P A Lawrence, Chairman of ECO Animal Health Group plc, is a Non-Executive Director of the Company and £27,625 (2011: £26,000) was paid to ECO Animal Health Group plc in respect of his services and expenses.

Electro Switch Limited, a company controlled by close family members of the Chairman, R S Rose, received the sum of £20,000 (2011: £20,000).

Amounts due to related parties at 31 December 2012 were, ECO Animal Health Group plc £6,500 (2011: £7,800), Electro Switch Limited £2,000 (2011: £2,000).

Key management comprises the Directors of Anpario plc and their emoluments are as follows:

		2012				2011
		£000				£000
Short-term employment benefits		838				407
Post employment benefits		23				25
Share-based payments		39				80
Total		900				512

Company

The following transactions were carried out with related parties:

		2012				2011
		£000				£000
Sales of goods:
– Subsidiaries		479				377
Purchases of goods:
– Subsidiaries		7				–
Purchases of services:
– Subsidiaries		–				8
Year-end balances with related parties:
Receivables from related parties (note 16):
– Subsidiaries		1,411				454
Payables to related parties (note 18):
– Subsidiaries		103				89

28. Transactions with non-controlling interest

On 1 January 2012, Optivite SA (Proprietary) Limited (“Optivite SA”) acquired the 40% non-controlling interest for a purchase consideration of £40,000 and holds these shares in treasury. The group therefore now holds 100% of the share capital of Optivite SA. The carrying value of the non-controlling interest in Optivite SA on the date of acquisition was £50,000. The Group therefore de-recognised non-controlling interests of £50,000 and recorded an increase in equity attributible to owners of the parent of £10,000.

29. Business combinations

On 29 March 2012, the Group acquired 100% of the share capital of Meriden Animal Health Limited (“Meriden”). The acquisition brings together another strong trading brand to the Anpario Group, broadening its product technology and increasing Anpario’s global market share in the feed additive sector.

On completion, the fair value of the net assets and liabilities of Meriden equalled £2,720,000 and consequently gives rise to goodwill on the transaction of £1,346,000. The acquired business contributed revenues of £4,017,000 and net profit after tax of £410,000 to the Group for the period from 30 March 2012 to 31 December 2012. Had Meriden been consolidated from 1 January 2012, the consolidated income statement would show pro-forma revenue of £24,492,000 and profit of £2,167,000.

Acquisition related costs of £357,000 have been expensed in the Consolidated income statement for the period ended 31st December 2012.

Details of net assets acquired and goodwill are as follows:

		£000
Cash paid		3,150
Contingent consideration		916
Total consideration		4,066

The assets and liabilities as at 29 March 2012 arising from the acquisition are as follows:

		Fair value		Acquiree’s carrying value
		£000		£000
Cash and cash equivalents		874		874
Property, plant and equipment		15		15
Brands		709		–
Customer relationships		510		–
Trademarks		21		21
Inventories		217		217
Trade and other receivables		1,371		1,371
Trade and other payables		(566)		(566)
Corporation tax		(136)		(136)
Deferred tax liabilities		(295)		(2)
Fair value of assets		2,720		1,794
Goodwill		1,346
Total purchase consideration		4,066
Purchase consideration settled in cash				3,150
Cash and cash equivalents				(874)
Cash outflow on acquisition				2,276

The contingent consideration arrangement requires the Group to pay in cash to the former owners of Meriden up to £1,000,000 based on Meriden’s profit before tax for two years. In addition and dependent on certain performance criteria, a further variable consideration, fair valued at £125,000 on acquisition, is to be satisfied by either the issue of 159,236 ordinary shares of Anpario or the cash equivalent.

The fair value of the overall contingent arrangement of £916,000 was estimated by applying the income approach. The fair value estimates are based on a discount rate of 14%. The potential undiscounted amount of all future payments that the Group could be required to make under this arrangement is between £nil and £1,210,000.

As of 31 December 2012, there was an increase of £110,000 in the income statement, reflecting the unwinding of the discount on the contingent consideration.

Anpario plc

David Bullen, Chief Executive Officer +44 (0)791 955 2040
Richard Edwards, Executive Vice- Chairman +44 (0)1909 537 380
FinnCap

Matthew Robinson / Henrik Persson – Corporate Finance
Stephen Norcross – Corporate Broking +44 (0)20 7600 1658

Copyright Business Wire 2013