Thu, 19th Sep 2013 07:00

19 September 2013

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 2013.

Financial Highlights

  • 32% increase in underlying earnings per share1 to 6.94p (2012: 5.25p)
  • 28% rise in adjusted EBITDA2 to £1.7m (2012: £1.3m)
  • 27% improvement in gross profit to £4.5m (2012: £3.6m)
  • 20% uplift in sales revenue to £13.0m (2012: £10.8m)
  • Cash balances of £5.6m at 30 June 2013 (Dec 2012: £3.7m)

Operational Highlights

  • Profit growth delivered by all key divisions
  • Established wholly owned subsidiary in Brazil and regional office in Malaysia
  • Further good progress in China
  • Successful launch of new toxin binder range
  • Continuing strategy of building local sales and support operations

Richard Rose, Chairman, commented:

“The Group’s performance in the first half of the year has been strong with the key strategic initiatives beginning to deliver the expected benefits; some earlier than anticipated. Getting closer to our customers in target regions continues to be the priority for the Group. The second half has started well continuing the performance of the first half and we expect this growth to be maintained.

The healthy cash balance and continuing cash generative nature of the business leaves Anpario well positioned to finance further organic growth and also to make selective investments and earnings enhancing acquisitions, should suitable opportunities arise, which will drive progress and continue to enhance the value of Anpario for its shareholders.”

Chairman’s Statement

Anpario has delivered a strong performance in the six months to 30 June 2013. The result reflects the success of a number of recent key strategic initiatives including the formation of a wholly owned Chinese subsidiary, the re-structuring of our UK Agriculture Division and the acquisition of Meriden Animal Health in 2012. These initiatives are consistent with our strategy to supply high performance natural feed additives in order to deliver improving overall levels of return, whilst also demonstrating the resilience of our geographic and product diversity.

The Group’s strategy to establish sales and technical resource closer to the customer is already generating success in a number of territories including Brazil, the third largest animal production country in the world. The strengthening of our trading brands through focused marketing along with increasing market penetration of our current products and the staged launch of new products will only serve to create further opportunities.

Financial Review

In the six months to 30 June 2013 sales advanced to £13.0m (2012: £10.8m). This is primarily due to a 13% increase in like for like specialist feed additive sales and the Meriden acquisition. As a result of the improvement in sales mix, 89% of total sales are now generated from speciality feed additive products contributing 98% of gross profit.

Gross profit has continued to increase, rising from £3.6m to £4.5m, reflecting the effect of organic growth and the Meriden acquisition. Gross margin percentage also continued to rise, improving from 33.0% to 35.1% as a result of the product sales mix and further production efficiencies.

Adjusted EBITDA2 increased by 28% to £1.7m (2012: £1.3m). The only significant adjustments to reported operating profit relate to the Meriden acquisition costs in 2012 and the associated accounts charge for amortisation of goodwill. The increase in administrative expenses reflects the Meriden operations and the Group’s investment in key technical and sales resources.

Underlying earnings per shareincreased by 32% to 6.94 pence per share from 5.25 pence per share.

The balance sheet remains strong and debt free with good cash generation. The Group ended the period with a cash balance of £5.6m (Dec 2012: £3.7m).

Operations – International Agriculture

The Division made good progress with its three trading brands, Kiotechagil, Meriden and Optivite, delivering growth. Within our geographic portfolio, the Asia Pacific operations continued to perform strongly with sales and gross profit growth of 20% and it is now the largest contributor in terms of sales revenue and profitability.

In the second quarter, the Group received approval from the Malaysian authorities to establish a regional office in Kuala Lumpur. This new business unit will support the process of establishing local sales and technical support for our customers in the Asia Pacific region. Resources are currently being strengthened in the region and will allow the Group to be closer to its markets and work more effectively with its customers. Increased emphasis in the region is already demonstrating its value with encouraging sales growth of Anpario products in China, Indonesia, South Korea, Malaysia, Thailand, and Vietnam.

Anpario’s wholly owned subsidiary in China has continued its impressive progress, achieving sales growth of 72% compared to the same period last year. The performance is significant considering recent events in China including the outbreak of avian influenza and pork prices reaching their lowest levels in recent years.

In Brazil, the Group is confident of achieving further progress having recently received approval to establish a wholly owned subsidiary in Sao Paulo. Product trials in Brazil have demonstrated the efficacy of a number of our products including Bactacid, pHorce, Prefect and Salkil, giving customers a high return on investment for all life stages of pigs and poultry. These results have proved beneficial in supporting our leading acidifier brands not only within the local market but also to the region and contributing to raising the awareness and capability of Anpario’s trading brands.

The economic challenges in Europe remain. Financial prudence has been exercised by continuing to restrict credit lines and payment terms to customers where the economic situation warrants particular caution. Accordingly, resource is being concentrated on those countries with the greatest profit potential, and this has resulted in an overall double digit growth in profitability for the region. The Group will continue to utilise a similar strategy across all trading brands and regions. This financial strategy has been implemented in the Middle East which remains difficult although conditions are improving in some countries, which are re-opening their markets for trade. Anpario has achieved a 41% increase in sales in the area compared to the same period last year.

The integration of Meriden is continuing with the Division contributing notably to our half year figures. A particularly pleasing element of this has been the growth in sales from customers in Africa, albeit from a low base. Significant sales progress in Algeria, Kenya and Nigeria has opened up further geographic opportunities for the Group as we have previously not had a presence in these territories.

Operations – UK Agriculture

This division has made excellent progress with double-digit growth in gross profit highlighting the advance made by a strategic re-positioning of the business to focus on value-added products. The division has utilised the launch of a new toxin binder, Ultrabond, as a vehicle to penetrate a variety of sectors including the ruminant and home-mix markets with great effect. This strategy will continue to remain a focus for the division as it strives to increase market share for the remaining products in its portfolio.

Economic pressures within the UK organic animal feed market continue to challenge the commitment of suppliers and farmers. Following an exceptional performance in 2012, the progress of Vitrition, our Organic Division, has slowed as it continues to manage the uncertainty within the customer base. However, the Division remains committed to supplying the organic meat production industry and through strong operational management remains in a prime position to consolidate its share further as the challenges in the market continue.

Central Operations

The re-structuring of the technical team is now complete and its profile has been raised with the majority of new staff holding appropriate veterinary or science qualifications. This team will enhance the level of scientific support for our sales teams and end users, and accelerate our product development programme. The benefits in our product development programme are already being demonstrated with, for example, our new toxin binder range delivering year on year growth of 38% in sales revenue.

The Group has completed the appointment of brand managers for each of its trading brands. The quality and effectiveness of the product range has enabled the Group to attain its current position. Now, with the introduction of a broader marketing focus, our trading brands will be able to leverage these benefits to greater effect, ensuring an increased awareness of the Group around the world whilst transforming our products into stronger brands.

Outlook

The second half of the year has started well, continuing the performance of the first half and we expect this growth to be maintained. The Group’s focus continues to be on building a stronger local sales and technical presence in the key meat producing regions around the world.

The healthy cash balance and continuing cash generative nature of the business leaves Anpario well positioned to finance further organic growth and also to make selective investments and earnings enhancing acquisitions, should suitable opportunities arise, which will drive progress and continue to enhance the value of Anpario for its shareholders.

Richard S Rose

Chairman

19 September 2013

1 Underlying earnings per share represents profit for the period before: exceptional items; unwinding of discount on contingent consideration and prior year tax adjustments divided by the weighted average number of shares in issue.

2 Adjusted EBITDA represents operating profit £1.53m (2012: £0.88m) adjusted for: share based payments £0.04m (2012: £0.03m); acquisition related costs of £nil (2012: £0.32m); and depreciation, amortization and impairment charges of £0.15m (2012: £0.12m).

Unaudited consolidated income statement
for the six months ended 30 June 2013
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
Notes £000 £000 £000
Revenue 3 12,952 10,818 23,509
Cost of sales (8,404) (7,250) (15,849)
Gross profit 4,548 3,568 7,660
Administrative expenses (3,016) (2,366) (4,910)
Exceptional items (321) (1,157)
Operating profit 1,532 881 1,593
Finance income 22 15 39
Finance cost of contingent consideration (48) (110)
Profit before income tax 1,506 896 1,522
Income tax credit/(expense) (289) (249) 582
Profit for the period from continuing operations 1,217 647 2,104
Profit attributable to:
Owners of the parent 1,217 647 2,104
Profit for the period 1,217 647 2,104
The consolidated income statement has been prepared on the basis that all operations are continuing operations.
Basic earnings per share 4 6.67p 3.31p 11.62p
Diluted earnings per share 4 6.26p 3.28p 11.11p
Underlying earnings per share 4 6.94p 5.25p 13.32p
Diluted underlying earnings per share 4 6.50p 5.21p 12.73p
Unaudited consolidated statement of comprehensive income
for the six months ended 30 June 2013
six months to six months to year ended
30/06/2013 30/06/2012

31/12/2012

 

£000 £000 £000
Profit for the period 1,217 647 2,104
Exchange difference on translating foreign operations (8) 28 24
Total comprehensive income for the period 1,209 675 2,128
Attributable to the owners of the parent: 1,209 676 2,128
Non-controlling interests (1)
Total comprehensive income for the period 1,209 675 2,128
Unaudited consolidated balance sheet
as at 30 June 2013
as at as at as at
30/06/2013 30/06/2012 31/12/2012
Notes £000 £000 £000
Intangible assets 6 9,132 9,778 9,076
Property, plant and equipment 7 2,926 2,797 2,784
Deferred tax assets 228 318 228
Non-current assets 12,286 12,893 12,088
Inventories 1,773 1,304 1,632
Trade and other receivables 6,064 6,980 6,993
Cash and cash equivalents 5,645 2,831 3,694
Current assets 13,482 11,115 12,319
Total assets 25,768 24,008 24,407
Called up share capital 4,565 4,555 4,555
Share premium 3,904 3,828 3,884
Other reserves (472) (638) (496)
Retained earnings 11,159 8,911 9,942
Equity attributable to owners of the parent company 19,156 16,656 17,885
Non-controlling interest 49
Total equity 19,156 16,705 17,885
Trade and other payables 373 425
Deferred tax liabilities 1,034 1,290 1,044
Non-current liabilities 1,034 1,663 1,469
Trade and other payables 5,082 5,243 4,912
Current income tax liabilities 496 397 141
Current liabilities 5,578 5,640 5,053
Total liabilities 6,612 7,303 6,522
Total equity and liabilities 25,768 24,008 24,407
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 2013
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 2012 4,555 3,828 (695) 8,264 50 16,002
Profit for the period 647 647
Currency translation differences 29 (1) 28
Total comprehensive income for the period 29 647 (1) 675
Share-based payment adjustments 28 28
Transactions with owners 28 28
Balance at 30 June 2012 4,555 3,828 (638) 8,911 49 16,705
Profit for the period 1,457 1,457
Currency translation differences (5) 1 (4)
Total comprehensive income for the period (5) 1,457 1 1,453
Sale of treasury shares 56 97 153
Share-based payment adjustments 50 50
Dividends relating to 2011 (436) (436)
Acquisition of interest in subsidiary from non-controlling interest 10 (50) (40)
Transactions with owners 56 147 (426) (50) (273)
Balance at 31 December 2012 4,555 3,884 (496) 9,942 17,885
Profit for the period 1,217 1,217
Currency translation differences (8) (8)
Total comprehensive income for the period (8) 1,217 1,209
Issue of share capital 10 20 30
Share-based payment adjustments 32 32
Transactions with owners 10 20 32 62
Balance at 30 June 2013 4,565 3,904 (472) 11,159 19,156
Unaudited consolidated statements of cash flows
for the six months ended 30 June 2013
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
£000 £000 £000
Cash generated from operating activities 2,200 73 1,740
Income tax refunded 57 606 430
Net cash generated from operating activities 2,257 679 2,170
Acquisition of subsidiary, net of cash acquired (2,126) (2,276)
Purchases of property, plant and equipment (238) (37) (117)
Proceeds from disposal of property, plant and equipment 12 18
Payments to acquire intangible fixed assets (113) (65) (166)
Interest received 22 15 39
Net cash used by investing activities (329) (2,201) (2,502)
Sale of treasury shares 153
Proceeds from issuance of shares 30
Dividend paid to company’s shareholders (436)
Acquisition of interest in subsidiary from non-controlling interest (40)
Net cash used in financing activities 30 (323)
Net increase/(decrease) in cash & cash equivalents 1,958 (1,522) (655)
Effect of exchange rate changes (7) (4) (8)
Cash and cash equivalents at the beginning of the period 3,694 4,357 4,357
Cash and cash equivalents at the end of the period 5,645 2,831 3,694
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
Cash generated from operating activities £000 £000 £000
Profit before income tax 1,506 896 1,522
Net finance cost/(income) 26 (15) 71
Depreciation, amortisation and impairment 152 118 1,005
Loss on disposal of property, plant and equipment 1 2
Share-based payments 32 28 78
Changes in working capital:
Inventories (131) (1) (330)
Trade and other receivables 926 (2,080) (1,192)
Trade and other payables (311) 1,126 584
Net cash generated from operating activities 2,200 73 1,740
Notes to the financial statements
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 2013.
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 2012, which are available on the company’s web site at www.anpario.com.
Of the new standards, amendments and interpretations that are in issue and mandatory for the financial year ending to 31 December 2013, there is no financial impact on these consolidated interim financial statements.
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 2012 were approved by the Board of Directors on 17 April 2013 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 2013 is neither audited nor reviewed.
3. Segment information
UK and Eire International Total
£000 £000 £000
for the six months ended 30 June 2013
Total segmental revenue 2,950 10,271 13,221
Inter-segment revenue (269) (269)
Revenue from external customers 2,950 10,002 12,952
Adjusted EBITDA 200 1,524 1,724
Depreciation, amortisation and impairment charges (19) (133) (152)
Income tax (21) (268) (289)
Total assets 8,882 16,886 25,768
Total liabilities (2,373) (4,239) (6,612)
for the six months ended 30 June 2012
Total segmental revenue 3,291 7,784 11,075
Inter-segment revenue (257) (257)
Revenue from external customers 3,291 7,527 10,818
Adjusted EBITDA 224 1,124 1,348
Depreciation, amortisation and impairment charges (38) (80) (118)
Income tax expense (41) (208) (249)
Total assets 7,134 16,874 24,008
Total liabilities (2,170) (5,133) (7,303)
for the 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 expense 97 485 582
Total assets 7,352 17,055 24,407
Total liabilities (1,529) (4,993) (6,522)
A reconciliation of adjusted EBITDA to profit before tax is provided as follows:
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
£000 £000 £000
Adjusted EBITDA for reportable segments 1,724 1,348 3,109
Depreciation, amortisation and impairment charges (152) (118) (1,005)
Share-based payment charges (40) (28) (99)
Finance income 22 15 39
Finance cost of contingent consideration (48) (110)
Closure and restructuring costs (55)
Acquisition costs (321) (357)
Profit before tax 1,506 896 1,522
4. Earnings per share
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
Weighted average number of shares in issue (000’s) 18,236 19,570 18,110
Adjusted for effects of dilutive potential ordinary shares (000’s) 1,217 143 832
Weighted average number for diluted earnings per share (000’s) 19,453 19,713 18,942
Profit attributable to owners of the Parent (£000’s) 1,217 647 2,104
Basic earnings per share 6.67p 3.31p 11.62p
Diluted earnings per share 6.26p 3.28p 11.11p
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
£000 £000 £000
Underlying profit attributable to owners of the parent
Profit attributable to owners of the parent 1,217 647 2,104
Exceptional items 321 1,157
Amortisation of acquisition intangibles 31
Share based payment charges 28
Unwinding of discount on contingent consideration 48 110
Prior year tax adjustments (959)
Underlying profit 1,265 1,027 2,412
Underlying earnings per share 6.94p 5.25p 13.32p
Diluted underlying earnings per share 6.50p 5.21p 12.73p
5. Exceptional items
six months to six months to year ended
30/06/2013 30/06/2012 31/12/2012
£000 £000 £000
Closure and restructuring costs 55
Acquisition costs 321 357
Impairment provision 745
321 1,157
6. 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 2013 5,490 2,210 686 116 1,622 10,124
Additions 17 96 113
As at 30 June 2013 5,490 2,210 686 133 1,718 10,237
Accumulated amortisation/impairment
As at 1 January 2013 27 91 26 904 1,048
Charge for the period 17 34 6 57
As at 30 June 2013 44 125 32 904 1,105
Net book value
As at 30 June 2013 5,490 2,166 561 101 814 9,132
As at 1 January 2013 5,490 2,183 595 90 718 9,076
7. 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 2013 2,034 900 387 3,321
Additions 3 207 27 237
Disposals (53) (1) (54)
As at 30 June 2013 2,037 1,054 413 3,504
Accumulated depreciation/impairment
As at 1 January 2013 162 246 129 537
Charge for the period 14 55 26 95
Disposals (53) (1) (54)
As at 30 June 2013 176 248 154 578
Net book value
As at 30 June 2013 1,861 806 259 2,926
As at 1 January 2013 1,872 654 258 2,784

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