Anpario (LSE:ANP) — Half Year Results

0:00 Good afternoon, and welcome to the ANPARIO PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press set. Company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses, which is appropriate to do so. Before we begin, I would like to submit the following poll. And I would

0:31 now like to hand you over to CEO, Richard Edwards. Good afternoon to you. Yes. Thank you. Look, thank you, everyone, for attending our interim results 2025. Mark will really kick off with the numbers and go through some of those in detail. I will then jump in later on and talk about the regional performance around the world, and then we'll close out just with a little bit of a reiteration of the strategy where we feel we're going and and the outlook. After that, we're very happy to take questions. So over to you, Mark. Okay. Yep. Like Richard said, thanks, for joining

1:10 today. I'll just take you through, firstly, the key highlights. I'm sure you've all read by now. Had a fantastic set of results with revenue up 34%, gross profit eve up even higher at 45 percent, adjusted EBITDA, again, even higher, 53% increase, and profit before tax up 62%, and that translated into a diluted adjusted earnings per share increase of 43%, and we've approved an interim dividend increase of 11%. I'll talk you through some of the financial numbers. Richard, as he says, will take you through the some of the segmental performance and then onto the outlook for the business. So first, in terms of the financial performance, as we said, revenue up 34% or 5,700,000 to 22,700,000. We've seen significant growth across most of the operating segments and a lot of territories within those. The only slight exception to that being India, Middle East, and Africa.

2:02 We saw a slight decline, but this comes on the back of really rapid growth that they experienced last year. It's more of a consolidation. There is some movements within the territory, which Rich can talk to a little bit more later. And then, again, on a like for like basis, the the four of the the major product classes that represent 90% of the like for like sales showed growth in the period. Just a few others saw saw slightly noncore that saw a bit of decline through the period. Gross profit was up 45% with gross margins on a whole group basis up to 51.4%, thanks to the contribution from BioVet, and the like for like margins have driven to 49.8% and returning to sort of pre 2022 levels. Administrative expenses, up 37%, although most of that increase relates to the buyback operations.

2:52 The like for like increase was was 9% or 600,000. The profitability, as I said, up. Adjusted EBITDA up 53% and profit before tax up 62%, and that effective tax rate marginally higher 18.9% for the period compared to last year, which is 17.9. EPS up 43% and then translate into that interim dividend payment expected with an increase of 11% to 3,600,000,000. Just breaking down the kind of constituent parts of that growth because, obviously, we have the BioVet acquisition, which was acquired on fifth of September last year. They contribute 3,000,000 of sales for this first six month period by 18% of of their growth we've experienced, and and they achieved margins in this first half of the year of 62%.

3:39 That compares to the q four contribution that they had where they contribute 2,200,000 for that that three month period. But at the time, we kinda highlighted that that was over and above the level of performance we're expecting. When we when we did the deal to acquire BioVet, they'd hit some really good sales in California around avian influenza, and, you know, that that's not come through in this first half period. It can be affected by, you know, weather and migration patterns of birds and and avian influenza outbreaks. I was speaking to the president of Pfizer the other day, and they are starting to experience avian influenza outbreaks, and and some of the bird migrations are starting to occur. So we could see the same uplift in performance through the second half. But nonetheless, BioVet are performing at the level that we expected when when we acquired the business and that performing over and above the expectations to achieve their full earn out, and that will be paid early and might be paid by the end of September. And a fantastic result, and and well done to all the BioVet staff for for the performance achieved in the period.

4:42 Pulling taking that aside, we've got the like for like fund performance of the business, which was absolutely fantastic, and we saw growth. Probably, it's one of our fastest periods of growth in absolute terms with sales up 2,700,000. And as I said, that gross profit going to 49.8 percent. It's important it's one of the last metrics. Obviously, we had a bit of a difficult period since 2000 you know, particularly in 2023 with the downgrade downgrade in in in performance in in sales and and margins. And so the gross margin recovery is particularly pleasing it was the last metric we were trying to get back to at the kind of pre 2022 fifty percent levels. So we've recovered the sales. We've recovered the gross profit, the overall profitability, and now the margins. We don't need to be looking at the rearview mirror. It's very much forward looking. We've surpassed all of the previous metrics, that the business achieved, and it's all about, you know, growing the business now in conjunction with the BioVet team and looking forward.

5:37 And just really to demonstrate as well the operational gearing that we've been talking about for many years, you can see on that like for like column, the 16% revenue increase translate into a 40% adjusted EBITDA increase, which is good to see. Just a very quick slide, sort of similar to the one at the year end, just pulling out the EBITDA movement in a bridge, showing last year's 2,700,000. We've got the contribution from the high level of sales, but at last year's margin, that added 1,300,000 with six 16% increase in sales. And then we've had that gross margin percentage increase, which has added 400,000 as well to to overall EBITDA, offset slightly by that like for like overhead increase of 600,000, giving us that 3,800,000 EBIT like for like EBITDA of 40 percent with that buyback contribution of 300,000 taking us to 4,100,000.

6:28 In terms of like for like overheads, then, overall, most most cost categories are are generally neutral. The big increase the the largest increase there has been in people, which is a combination of general wage inflation, the the the increased national insurance expense, thanks to the changes in the budget, and there's been some increase in headcount and and also some high levels of bonus provisions for the sales staff given the high level of performance we've achieved through the first half of the year. Moving on in terms of cash flow, then there's been strong strong cash generated through operating profit up to 3,700,000, which compares to 2,600,000 in the same period last year. There has been an absorption of cash into working capital, but I've got another slide in in a second that kind of gives you some more detail. There's been an an absorption into inventory, but I'll I'll discuss that further in a

7:22 second. The profile of the rest of the outflows are generally typical with tax paid of of a normal level. CapEx at a similar level to last year, slightly elevated due to some additional post sort of normalized purchases in Viovert. And then we've got the closing closing adjustment, which is on the, you know, final completion accounts, which was paid in January to BioVet as well. So taking all together, a naught 600,000 increase in cash in the period to 11,100,000. And as we've said for a number of years now, the the strategic priority is to utilize this cash from complementary acquisitions like we did with BioVet, and we'll come you know, that's that's the continued purpose of holding those good cash reserves. Onto the working capital cycles, then just really want to pull out some of the history to explain what's happened specifically in this period.

8:13 If you look on the chart on the left, you can see particularly at the end of f y twenty two, like, the number of businesses, we had a high level of working capital. We worked through that and released a lot of cash through f y twenty three, bringing the overall working capital cycle that days down to a 159. That decreased further at the end of last year, but that was probably you know, we weren't necessarily expecting that. Inventory levels, both on the raw particularly on raw materials front and on the like for like finished goods front because these numbers include BioVet, were decreased due to a high level of sales that we're experiencing and high utilization meant that the number of inventory days overall that we had was lower than we would typically plan. So as we entered the new year, we kind of expected to absorb cash into inventory both to build up those number of days, but then also at the same time, we've experienced this fantastic level of sales growth. And so the level which we've had to build back to has been increased.

9:07 So that's part of the you know, mostly the reason for the increase in inventory. As well, buy that have a slightly increased number of finished good and inventory inventory days compared to our own, so there's a bit of a like for like impact in there as well. But taken together, you know, overall, going back to a similar level that we were at the end of f y twenty three, so there's no there's no it's more of a normalization factor than, a particular increase in in, the the policies or the way we're operating during the period. That's my section, in terms of the financial results. Thanks for your time, and I'll I'll hand over to Richard.

9:49 That's great. Thanks, Mark. Yeah. Just really on the segments to take you around the world in in a whistle stop. So so you see, so three out of the four segments are up, and the EMEA area was just down 4%. But within that, there are some quite bigger movements. So there's a very strong performance from India, which we'll go through, and and and a weakness in Saudi Arabia regarding the pellet binder business. So if we just start on the detail with Asia, had significant growth in The Philippines, VarigaStim and ANPRO. The market conditions there generally improved. The new president, although I think he's been in a couple of years now, of the Marcos of the son of the Marcos family, wants to be self sufficient in, in in food security. They're capable of doing that, but I think it's about 50% of their food is also imported. So there is a move like in quite a few countries or regions around the world to become more self sufficient in terms of food security.

10:58 Probably following COVID where people were pretty worried in terms of could they feed their populations. So we're benefiting from that, but we're also benefiting from a lot some good work that we've done, with our distributor stroke integrator because it doesn't just distribute for us. They also have their own operations in poultry and pig. So that is helping and is putting they're they're using our or Augustim generally across the the board. China, they grew 15%. Again, Augustim has some toxin binder range. And as as I've mentioned in the chairman's statement or my my statement, there there are trials taking place with oximiga algae as a replacement for fish meal, which is clearly a more sustainable approach in in swine feed. That will take we don't expect anything this year. It'll probably take another nine months to twelve months before we see the follow, yeah, the follow on trials and and then maybe a decision on that. But the potential there is quite interesting in China. Indonesia just generally, again, an improving market and, yeah, better local conditions, and we've been selling a a broader range of products across, yeah, across a range of customers there. So those are sort of the highlights. The anyone down or significant is Malaysia. It's really it's probably more timing on this. They had a very strong 2024, and maybe some of this is just a bit of indigestion.

12:24 We we think its timing is working through some of that stock that they've got. So we do expect that to start to come back with orders in in the second half. So say Asia Asia doing well coming back, you know, across the region and and across a a a number of countries, and we expect that to sort of continue in the second half and into next year. The Americas, yeah, this yeah. Nearly a 100% growth, but, you know, obviously, large quite a bit of that effect is from the BioVet acquisition. But I think it grew The Americas twenty one percent organically in any case, so that that was very pleasing. But just take BioVet first, you're adding the 3,000,000 cells. As Mark said, there was a strong quarter four last year because of this avian influenza and particularly with the electrolytes and capsules that were being fed to the the cows to help them get through the impact of that avian influenza. That might come back with migratory birds. We're not sure, but it's yeah. It was a nice benefit that we hadn't necessarily appreciated when we're looking to buy the company and that, you know, buy vets products are required if there's avian influenza in the dairy herd. If you get avian influenza in the poultry flocks, that's not as good for us because they cull most of the yeah. Yeah. They'll they'll cull the

13:54 chickens. Then if they're if they're not there, then they're not obviously eating our feed additives. But this tank can be a quicker turnaround, obviously, in poultry because you can put new chickens down fairly quickly and start to grow them. But just on avid influenza, that's what impacted Italy. I'll come to that a little bit later, but that's what impacted our sales in Italy because they did have it across some of the farms that we were supplying. You know, but what's encouraging with that, the BioVet QuadraCal and the generator brand. QuadraCal is a is a calcium bolus that that is goes into cows, and Generator is a direct fed microbial in a powdered form that goes into the feed. Those grew nicely, and QuadraCal is the main first product that we are gonna launch and take internationally through the ANPARIO sort of sales and distribution network.

14:42 And so those continue to grow, there's some nice differentiation and benefits that that come out of those products we'll be strongly trying to market. So the cross selling opportunities of both ANPARIO and BIVET are being explored. BIVET have sold a little bit of and some toxin binder. But as Mark said, we've now come to the end of the earn out. They achieved that. We're very pleased with that, So we can start to push that more aggressively and and and and support them in in that way and and roll out some of these cross selling synergies that will really start in earnest now. And I'm actually there for the World Dairy Expo in Madison, which is in Wisconsin at the beginning of October. So we'll be sort of kicking off things there. And we have got a joint stand there by ANPARIO together. So that that's pleasing.

15:35 Just in terms of USA, excluding by ANP, then then the big story there is force has recovered significantly up a 138%. That's getting it back into the swine market. It was originally sort of doing a lot of work there to feed mitigant for PRRS virus. Some of the customers then removed that product thinking that, okay, PRRS is solved, and we don't need it a feed mitigant. And and so we had a weak 2024, so it's now come back. The customers now are starting to recognize it, that it also has an in gut effect and a performance effect. So you're getting, you you know, a dual benefit of, yeah, in the feed as well as in the gut. And so farmers have seen that benefit. It's a good product.

16:22 I don't think there's a competitive product on the market like it, and it's just a case of, you know, how should I say viral marketing is word-of-mouth is some of these farmers sort of, you know, recommending and saying how good it is and and then moving on to that. And that's sort of what's been happening in the in The US in the first six months of this year. Aurigastem also in in increase, particularly, you know, into the cattle, but we've been trialing a new version, Aurigastem Plus, which is a combination of the the oregano oil and saponim, and that's having some really significant benefits. And that's with a big integrator. We've done it across a lot of I I think it may be 1.7 or 2,000,000 birds.

17:09 And, you know, we've done we've done some good work on that, and we we hope to see some really good opportunities coming from that. It's it's still early days, but the the results consistently saying and and we're working down at farm level, so contract farm level. It's a liquid that goes into that, and and these farms are saying they've never had sort of better. And then the other little thing, or little thing, it's it's very it's good high margin product is avian complete, which is targeting the backyard poultry market through resellers or retailers like Tractor Supply. And we have been or our our customer there who supplies this product into the retail sector has been talking to Walmart about the product. So it's good high margin and and decent volumes, but not massively decent volumes as you get with the big integrators, but it's it's very good and lucrative business. And it also just gets that brand name up in front of the retail segment and particularly people backyard poultry market, where I think the backyard layer market is people who got a few chickens and are growing their own and then producing their own eggs is as big as the, you know, industrial, the the conventional and industrial producers, the big producers.

18:31 So people, you know, and the individuals and families are producing their own eggs as much as as as as companies in The US, partly because people wanna know where their food has come from, but also egg prices did shoot up, and it prompted people to go and get their own chickens. We can get both of those markets, and that's that's that's good for us. South America was yeah. Mexico has good growth from one of our distributors there, And we're also focusing on doing much more in Central America by going more direct, and you'll have seen in the statement we have said that we are sort of phasing out going through our main distributor in that Central America Caribbean area. And as as a result, we are setting up and I think we have we have set up a company in Panama, and we're in the process of doing that in Colombia so we can get much more direct relationships.

19:24 We did feel that the relationship with the distributor blocked us out of maybe growing our our stem cells and some toxin binder cells as much as we we we could have done we could do more. And so we, you know, we think the hopefully, the floodgates are open. We can offer a broad range of products, and we have much better visibility and understanding of pricing against volume. And if, you know, if we feel that we can get more volume by being more competitive on price, then we can make that decision rather than the distributor getting in involved in that and, you know, maybe overpricing our products so we don't get the volume. So getting that that that direct relationship brings you know, we feel brings a lot of benefits and and opportunities in there. So it's welcome that we've also got the staff that's come over from the distributor now employed through ANPARIO subsidiaries. Brazil was, again, the weakness. It's a very competitive market. We don't manufacture down there. Obviously, we manufacture in The UK and ship.

20:28 Some of our competitors are manufacturers, have production facilities down in Brazil. And that you know, we have we're subject to actually import tariffs and actually making a minimum percentage margin that the government requires us to make. So we're all just looking at how we can sort of restructure or go in a different way with certain products and looking at less price sensitive segments. And there's been a few personnel changes down there. So we're we're we're confident of a turnaround over time. We do think and the buyback guys, I think, are either there this week or next week

21:04 looking at their products getting into Brazil and the distribution network that we'll need to look at and set up there. We do have our own company there. We we which, as I say, you know, we'll we'll help. But Brazil Brazil just needs a little bit of going back to the drawing board and and and boxing clever on how we go to market to different customer segment groups and depending on the products as well. So I think that really covers all The Americas. If we look at Europe, yeah, good organic growth, 17% in the region, particularly across premium product lines in Oregon stem and the Optomega algae product for, you know, omega three DHA. That's done well, I think, in Switzerland into the dairy market and, you know, particularly for dairy care facilities.

21:57 So that that was a good driver of certainly Optomega. Israel's doing well. Yes. I was I was speaking about, yeah, Switzerland there. Israel's doing well, significantly up over the same period last year. And we did lose I think we mentioned this probably in the full year where we did we did early last year, we lost or or some lower margin business on in The UK on acid base ubiotics. But, yeah, we've grown despite that loss and our margins are obviously, you know, a lot more healthier in in that region. And The UK has been strong as as an our customers have bought more of it. So the the only sort of debt that's and there were small drops really is that Czech Republic, Estonia, and Austria. Italy, as I mentioned before, really was avian influenza wiping out some of chickens,

22:51 but they're getting restocked, and we do expect Italy to come back on stream, you know, any any moment now with with orders. So we're anticipating that. Excuse me. So next, I think yeah. The the one that the the one that got away or went down went down by 4% overall. Obviously, India held up quite a majority of of the losses in Saudi Arabia and Egypt, and that is we've been doing some big work with a big integrator there, broiler integrator. It has been sort of trial work. We're hopeful some of that will carry on, but we are mindful that those volumes are are quite strong. So we have our partner there that we set up is working hard to, you know, get into other integrators in the poultry side, the dairy, and the agriculture. So we're looking across all all the species there to a certain extent and including swine actually, which is a market that is

23:54 bigger than The UK, not a massive market compared to poultry, but bigger than UK and certainly worth going after. So we're looking at broadening out, you know, our our interest there. We do see India's long term good growth opportunity for ANPARIO. The two that really kicked us in the shins were Egypt. That is really one one of our customers. We have a couple of customers there or distributors. One of them has had payment issues, credit difficulties. It seems to be an ongoing issue with this customer quite regularly, but but we've been with them for donkey's years. But it has but we stopped supplying them, I think, earlier on this year or end of last year.

24:39 And but I but I think, Mark, we they are promising to pay. They have got orders in for later this year. They won't get those orders until they pay down some of their outstanding debt. We are told the that that those payments will be will be forthcoming. And then Saudi was really the loss of pellet buying the business with a customer

25:03 there, and a lot of that is some internal politics with us our product being replaced by a key manager there who I think appears to have been producing his own products or or has got his own supply. So there's a little bit of politics there. We're not quite sure what's going on. We are looking at that, investigating that. But this can happen in in some places where they potentially see a success of a product, and then they start to try and replace it with something that benefits them in that sense. So but we're we are sort of speaking to people in there, and we have other options as well in Saudi Arabia. So so it's a blip and disappointing, but this this this happens in, you know, from time to time.

25:52 So I think I think that's really just sort of explaining the Middle East and the regions. I will just I won't go through the strategy in too much detail because I've we've probably said it before, and I wanna get to the questions because I'm sure there's quite a few questions that people aren't answering. We, you know, we are we are totally focused on what we call specialty feed additives. It's a faster growing area of the animal nutrition market,

26:20 and it's driven, you know, by the need for increased food production as a growing population and as people's GDP increases. Oh, actually, that's why you see in India, the grow the growth in the swine market, the middle classes are switching and and actually eating more pork. And we've sort of seen that trend, and that's because they've got more money made to spend on pork meat. But it's also the drivers are, you know, again, antibiotic removal or rejection and removing other harmful substances like formaldehyde from from the food chain and from from the animal feed. So it is a niche sector. We do have clear competitive advantages in terms of we've always been focused on the more natural environmentally friendly and sustainable type solutions.

27:07 You know, we have very strong products with strong efficacy. Our global distribution network is a strength because we're part with distributors, but quite a lot are now over 50% where we'd say we go direct and we have local salespeople that can work with the end users and people using and consuming the product.

27:28 So we do have a number of, yeah, competitive advantage that we feel from compared to, obviously, competitors. And and we have a very high integrity supply chain. If any of you've been up to the production facility in Mountainwood, yeah, I would say it's the best best in the industry. It's highly automated, high quality control, quality assurance, and our and the suppliers that we work with have, you know, we have very good raw quality raw material. And that's what we mean by high integrity supply chain. The the some people say, what's the hedgehog concept? It it came from the the author that wrote the book,

28:08 good to great, where as you see at the top of the slide, we are focusing on what we can be better at than anyone else, and that is in the specialty feed additive market. If you look at a hedgehog compared to a fox, yeah, everyone thinks a fox more wily, smarter, whatever hedgehog isn't isn't that, but it does one thing well. When it's attacked, it kills up into a ball and puts its spikes out, and the fox can't do anything about it.

28:33 So that's where we are focused. And and whenever we've been in a business or bought a business, an example would be Optivite where we were into organic feed or into what we call cow fats, calcium soaps, or premix, We've tended to exit out of those because we felt we didn't have that clear competitive advantage to be able to be better than anyone else at it. And it's proven true because the only people who are good at premix are the big multinationals who, you know, have invested in equipment and plant equipment all all around the world close to the market. So we're focused on the high value added where we know about gut health, where we know about clean feed, and where we can ship from one or two sort of production sites and still compete in various parts of the world at that premium.

29:22 And so, you know, our and and as part of that is building global power brands and yeah, Auriga is obviously the great the great example, but we are putting money into force MasterCubers brands, Optimeager. And we will be doing the same with BioVet, with their generator brands, and and particularly their Quadrical bolus brand. So, you know, ANPARIO offers you know, we operate a multichannel strategy that tries to get better control of our sales channels. You've have to operate, you know, really in a multichannel strategy if you're going across 80 countries worldwide and you want to continually, you know, have consistent growth and incremental growth. So it means we've gotta be capable of selling in the large strategic markets, and that's where we tend to have, you know, our own subsidiaries or partner distributors.

30:13 We work with nutrition consultants and vets because they can be instrumental in in in specifying and using our products. As I say, we are we'll continue to sort of put local technical salespeople down on the ground in certain market because we need to understand those local nuances. And that's really what, you know, what what we're doing at the moment with the Central America area with sort of Panama. Colombia is is a big country opportunity there that we can do more on, but having guys now down there and being able to supply direct really does help us. And and just not only that, just on the BioVet side, BioVet are very strong in Wisconsin because it's one of the I think it's the second biggest dairy region after California. They're also strong in California, and they're strong on that Eastern Seaboard with Pennsylvania, New York, and particularly around the Amish. They got quite a lot of Amish customers in that area. But there are also other dairy states that aren't as big, but still warrant sales representation.

31:19 So a place like Florida, Georgia, Idaho, the the Dakotas. And that's now we've got through the earn out. We are, you know, switching on to drop and recruit salespeople into some of those other states that that warrant putting a salesperson in in there sufficient sufficient enough farms and cows to make it worthwhile for both bio vet products and ANPARIO products, and and that's what they will be doing.

31:46 And, you know, the the yeah. They're having that attention to local market. It does mean that we have a numerous business development initiatives that are aligned to those local requirements, I e, their customer led. And I've mentioned, you know, about the production centralized in in two sites that delivers significant economies of scale as well, which is helped by the automation. So just on Outlook quickly, it's really just lifting what we've put in the statement, I think. So the second half has started well, and we, you know, we've the same momentum as the first as the first half, and we're hoping that continues through to end of the year and into next. We've got several business initiatives as as I've spoken about the synergies, cross selling, certainly synergies in BioVet following that earn out completion, more local

32:38 technical and sales teams down on the ground. And I yeah. I don't need to go pass those long through those long term drivers again. They're they're there. They do keep the market. And and if you look at generally all of all the forecasts and all the market research reports, some of which you can take with a pinch of salt, but they're all saying specialty feed additives, phytogenics, mycotoxin binders got, you know, good good middle to sort of upper single digit growth percentages. There is just always, you have to put a bit of a word of caution. There's there's there are ongoing effects with current trade and tariffs disputes and these potential challenges. You know, the tariffs on The US haven't affected us. I think there is there there is obviously a cost to that that we have to pay that, but it's you know, we we it hasn't impacted us too much, and maybe gradually, we'll we'll we'll eat that back through price rises.

33:33 But you just you know, you you there are other effects that can impact us from that that you wouldn't necessarily realize from the tariffs from tariffs. And one of them, a little bit in India, their currency is depreciated 10% against the pound because they've got this 50% tariff, I think it is, with Trump. So, obviously, they their their currency has has dropped. It's it's not causing us too much issues at the moment, but you do but as I say, there are there are certain impacts. But we think overall, we're great. We're geographically diversified. So overall, we're, you know, we're positive and confident we can still make progress. And we have experience of trying to navigate all sorts of things that are thrown up in front of us challenges, but I don't think it's different with any any business any global business at the moment.

34:23 And sometimes where there's a challenge, then there's an opportunity. So I think that's that. We'll I think if we can switch and see what the questions are, I'll not let's see if probably Yeah. The first two more related to me. So I'll pick up Richard while you change your screen around. So the first question was, what what do we need to know about the working capital movements in h one? I know that trade receivables were down despite increased sales, big a increase in both types of inventory, and a reduction in trade payables. Well, obviously, we walked through the slide earlier. We should have given some answers, but the specific detail requested here. So in terms of the trade receivables, they have been down. You know, they've been generally collecting collecting in cash from from most of the customers. But the other aspect to it was the buyer that have come in with a a high level of contribution in terms of the sales mix. And in The US, payment terms are are generally thirty days or less, and so that is having a mixed impact and reducing down the trade receivables days at the end of six months because it had a higher contribution through the period relative to overall sales.

35:30 Terms of inventories, and we walked through that most for the most part, it's a normalization at the end of last year. They were down on levels that we normally expect, so we're expecting to build the levels of inventory back up. And, obviously, sales are increasing as well. But overall, from a working capital perspective, they're not expecting any significant increase further from here, just more proportional movements. In terms of the trade payables, then it's trade trade under the payables, so it includes accruals and things like the bonuses. You know, last year was a fantastic year. There were bonuses earned and paid out following the the the annual results, so they were paid paid through March and April. And as we've only halfway through the year, whilst the performance is, you know, similarly very good, we have they haven't been accrued back to the same levels as yet and they're kinda contingent on the full year performance.

36:21 So hopefully, that answers that question. The next question was, I note comments on streamlining sales and distribution channels. Do you foresee that a minor plus for this will be to reduce the expected credit losses on trade receivables, which seem to be about 7% of receivables? Yeah. Certainly, 7% of receivables is a high number. We do publish a fair amount of detail in the annual report, less in the interims, but I'll consider adding some more if if if it's useful. If you look back at the end of the year, for example, then we kind of analyze out the expected credit loss provision across three categories. Customers that we've got some form of credit insurance in place, customers that are uninsured for trade, and then there's some others that we've specifically identified for impairment because they've got credit impairment issues.

37:07 If you look at the where the normal kind of levels of trade where we've got insured and uninsured customers, then I think the the percentage of receivables is is sub 2%. Two thirds of the overall provision at the end of last year, and that would have increased percentage terms at the half year, was related to customers specifically where we've identified the requirement for a provision. And Richard obviously talked about Egypt and, you know, there are there are a number of other areas where we've had customers of, you know, a year all over in terms of being late to pay. So at that point, you know, we we start to identify them as requiring a provision. And for the most part, ANPARIO is always able to to work through that, but, you know, you know, you never know when it's prudent to to make sure we've got the provisions in place, especially if someone is more than a year after due paying you.

37:57 So so that hopefully explains a a large proportion of that credit credit losses is allocated to very specific customers, And and, hopefully, we can we can work through work through those scenarios, and and the provision is not needed. But, certainly, if if someone's not paying you, then it's it it makes sense to have a a provision in place. Going on to the next question. I'll do I'll do. One of the new ones. Okay. Yeah. Just we basically, remember the the time I I think I can't remember. Was that the day that when the Trump announces tariffs and the market and was in was dropping significantly and ANPARIO dropped, so there were there's potentially no buyers. So we we felt that it was right to sort of go into the market and mop up any excess shares that weren't being picked up, but we didn't feel that we should be driving the share price up and and and, in fact, trying to manipulate share price up. So we we just felt we wanted to support it. We also heard at the same time that there were actually fund managers who wanted to buy and were trying to buy as well, and we did we we felt that that was more important to get certain fund managers with a bigger bigger proportion and to get them get them in or or let them buy. So we didn't again, we didn't feel we should be competing against fund managers who who wanted to come in and buy the stock because you you you know, they are useful in in in the

39:27 future if you need to raise funds for acquisitions and things. So it was really a sort of defensive approach, and and the the share price sort of went back quickly up over $3.50 and and headed up into the, you know, high threes. And and so it was really just to mop up any cell and stop stop a free fall, and it it turned around quite quickly, and it was just down onto the the chart. So that's why we did it. You know? If if if the share price has stayed down low and there were no other buyers coming in, yeah, we would we would have continued to do that. You've got any few further buybacks on the concern? Not at the moment. I couldn't say anyway, but not at the moment. We feel well, there are a number of funds that have indicated to us they would like to buy in, but and they they are looking at how they can get in. The problem is they can't get hold of stock, and and that's that's the issue. Liquidity in ANPARIO, but, of course, it's a wider aim issue is is is preventing them from from getting in. So but they are and and we are on this roadshow seeing more new new fund manage more new institutions that want to speak to us.

40:38 Seems to come out the woodwork when you put out good results. So so, yeah, it's we we don't we don't feel the need to do any buybacks at this level. We'd like to, you know, get some more broaden out the the the institutional funds because we they were reduced when we did that tender tender offer a few a couple of years ago at £2.25. So if some of them now wanna come in at £5 or more, very happy to that that they can go and buy some stock off the market. I think, Mark, you hopefully, that sounds like question. Do wanna do the r and d one? Yep. No problem. Yeah. So in terms of r and d, the profile's changed a little bit in the sense that we had probably a higher, both in absolute terms and percentage terms, spend maybe a couple of years ago.

41:31 Around about now, it's it's probably about 1%. Some of that spend is go has historically gone to the balance sheet, and some of it's gone through the p and l. There's a lot of the level has reduced since we did the sort of redundancy restriction exercise. Generally, there's enough opportunity with the products that we've got to expand sales. And so the it's been more a case of focus on the products that we have and extending their applications. And and, generally, our r and d is taking a product like a RigaStim. It works in so many different animals, basically, except for cats. It's even good for human health, And it works in so many different ways, doing so many different functions that a lot of r and d goes into Rigostim and other products, extending, you know, the the market applications and the species that we we can apply those products to. So it tends to be more evolutionary than than revolutionary.

42:26 We've been doing a lot on Aqua, particularly recently with things like the rigs and Forte, but it's been about around about 1% level. And at the minute, it tends to be smaller projects. There's quite a lot of work we went into the rigs in Forte, and that was taken to the balance sheet. But there's a lot of projects these days that are kind of a smaller level, and that that are running through the p and l. But, generally, the level of spend is about 1% of revenue. I can do the next one on the on the acquisitions. Yeah. Look. We're always looking for acquisitions. There's nothing particularly hot or light. Well, I couldn't say that anyway, but hot or light. But, yeah, we are yeah. There's stuff coming across the desk. It's been in terms of the activity in the markets, it's been quiet over the last well, since Trump announced his tariffs because everyone's trying to figure out what that means.

43:13 It does look as though there will be a bit more activity with people maybe putting some of the businesses up for sale coming into the autumn and into next year. Well, that's what some of the bankers tell you, but they're trying to drum up fees. And and there there is one or two there's there's one or two bigger ones that are we know are coming up in the autumn and one that's sort of in close to closing, we think. But that that's a very that's a huge one. That's DSM and it's well well known. It's it's and and it's major majors in premix. The type of companies, well, certainly, you know, with BioVet gives us another platform. We've got a production plant there in that type of product. So there are a couple of companies in The US that we've got our eye on, and we've had initial sort of chat spoken with, but they're not ready to sell or they're telling me they're not ready to sell yet, which probably means that their profits aren't in the right place to justify the price that they would want.

44:09 But doing something like that and that allows us to consolidate the BioVet type of business, you know, one of their competitors or so into Barnabas. And the more volume we can get into that, then we can start to automate that, and then you get the economies of scale and further synergies as well as, you know, greater market share in in in The US market, which can then be driven even more by better efficiency because you're producing your your these products more in a more automated fashion as we've done at, you know, Manson Wood. So that's certainly keeping our eye out in The US. And then other subtypes of products, yeah, we'd like to, you know and I've always felt that enzymes and and a and a number of other products area will be interested interesting in something maybe potentially in aquaculture.

45:00 So we do keep an eye on this. There's there's there's certain companies out there where, you know, we'd we'd been trying to pursue, but there's it has to have a willing seller, and there's not many of those around at the moment. So it's not you know, there's nothing, say, imminent. We got a lot to do with doing the cross selling and taking buybacks products internationally, and and they selling more of our products in The US and pushing out more in Central America. That'll be the main focus. But, you know, we we we do we do look at deals and acquisitions, and we do if if something's coming up to sell that isn't in the right sort of size for us, then a lot of the advisers who are selling it do do contact me and send us information on it. So we are in the loop.

45:48 The the I can I can add on this next one? So so Rich has already kind of answered some of this, but the question from Bill H is, apart from Unicorn and Gresham Houses, a policy of institutional investors on your show register, why do you think this is is the case, and is it a potential concern if the company ever needed to tap the market from your equity? I think Richie kind of walked through a little bit answering one of the previous questions. We obviously did the tender offer previously. That kind of you know, a number of institutions did exit at that moment in time. It was a time when a lot of institutions were having redemptions. And at the same time, our mark market cap significantly dropped to where we were. The share price was up at 7p and and did drop, I one point to sub sub sub 2 sub £2.

46:34 So it meant that our market cap was too small for a for a number of the kind of large institutions that were invested in us. It became difficult for them to to to hold us anymore from a compliance perspective. But it's pleasing with the the recent share price increase that we're now back a 100 mil above a 100,000,000 market cap, which will open open us up to a number of new funds funds. There are you know, there are it's not just unicorn aggression. They're, you know, they're very strong supporters of us and and and high holders, but there are a number of others that are that are, you know, really good strong backers of of the company. Following that tender offer, we've got a high level of retail following, which is which is absolutely fantastic. Really appreciate everyone's support, and and and and tools like this are great to engage with with retail shareholders.

47:20 There is liquidity is just an issue in the sense that, you know, we we we believe there are a number of fund managers which which want to come in and pick up stock. It is a little bit difficult for them to do so because they tend to want to to come in with a, you know, a significant position rather than kind of building up a position for smaller trades. So, hopefully, you know, it's something that we're we're aware of and we'll continue to address. And to in terms of being able to tap the market for new equity, well, as we said, you know, there are funds that that, you know, would be very happy to support us with a deal. Generally, equity markets are improving as well. They're starting to be inflows into funds. So I think, you know, there there's no lack of appetite or ambition for for acquisitions, and I'm fairly confident and have conversations recently about we're always having conversations about appetite and the capacity and stuff, and I'm I'm very confident that we we'd be able to raise new equity if the right deal came along.

48:19 Richard, do you wanna take the next one? Yeah. I mean, well, I mean, yes. We are as I said, we're we're seeing we're gonna start with a quadrical. We're take we're as I said, I mentioned about global power brands. We want to certainly as an example, we take Quadrical and try and build that into a very strong brand name like we've done with. When we take it international, it will be under the ANPARIO company branding, but it'll be Quadricall as a brand name. The brand names tend to be more important in this industry than maybe the company names, and so that's why we're taking something like Quadricall. So we're gonna start with that. We'll have to sort of in certain areas, we'll have to look at new distributors that can specifically do dairy or more aligned to that and have better links. But the the areas that we're looking at, we think certainly Latin America, Brazil.

49:10 I think I mentioned that the the buyback guys, the the president and the r and d director research is down there at at a conference and sat with the ANPARIO guys as well to plan out how we how we tackle the Brazilian market for the ruminant sector, but also that Central America area that we're getting more control of visibility of is a is a is a is a high up on the list to be sort of tack attacking. And Middle East, I think we know Vietnam. There's big opportunities there. China potentially and a little bit into Europe, certainly the. So we will be going more through distribution with those products because of the nature of them into these countries. And we do we are just we've started and doing working on the registration to get these products in there.

50:05 So, yeah, very much so we see that that was one of the main drivers for buying the business because they're very US centric. They do bits. They have some sales in Czech Republic and South Korea. I think I mentioned that in the chairman's statement. So they've already got some in Asia, but we can really help them get elsewhere into where where there's bigger bigger, relatively bigger dairy markets. So I think The next question so the the next question is what are the headwinds, sorry, challenges do you expect in the next twelve to eighteen months? Example, US tariffs. So I'll answer the tariffs, so I'll let Richard sort of continue answering the question. In terms of tariffs, we did some we did some work when the tariffs were first announced, and I think the situation is unchanged. If you take account for the corporation tax saving that would be made, then the impact of the FY '24 and for the previous five years was around a £150,000 impact to the through profitability and through higher costs.

51:07 So so not not terrible. You know, it's not ideal alongside the the high insurance. You know, these results would have been further improved, but we're managing that. You know, we are able to there are various things we can do to offset and mitigate and and navigate those challenges. You know, the the resource is significant and robust enough that the tariffs are not having a material impact on on the results. There there are secondary and other impacts that come from tariffs and trade flows and things, and and there are offsets and things like some cheaper freight rates around the world and various sort of factors. Richard, do you wanna add anything in terms of headwinds and challenges? No. I mean, look, the the global market is, you know, very unpredictable at the moment. You just, you know It has been for a while. So you just don't know what might hit you or what, but we are very geographically spread, species spread, product spread, and and that was deliberate, you know, part of the strategy so that we do get a little bit more insulated and more resilience built into the business.

52:15 And, you know, we are experienced, like I said in the last slide, navigating all sorts of different things. So we you know, there might be things that affect us, but it will only be we feel it may only be temporary, and it might just be in a certain certain area. So other than that, it's for us, it's business as usual. There's nothing new. It's just the nature of some of these challenges and headwinds are slightly different. Yeah. That's one. Who's in charge of technical side of ANPARIO's growth? Generally, we well, we have a corporate development director who looks after marketing and the technical team. So within the technical team, we have one, two, three we have about three or four in The UK technical people who are also quite yeah. I I like them to be more commercial because the best ideas come from the customers and knowing the customer well. So they they are looking at, yeah, what should we be developing.

53:17 One of the big mistakes people make in this industry and in businesses in general, they have a big technical team r and d, and the you know, people in white coat sit in the lab, come up with a product, then go to salespeople. Right. This is a great product. Sell it. And then the salespeople say, yeah, but customers don't need that. And I've seen that in other companies. So we try and bring the ideas back from the challenge in the market down on the farm and bring it back to the, you know, into getting it resolved. We're looking with solution led. And so we but we do have PhDs, MSCs, you know, p people who have good strong backgrounds. Nate, doctor Nate Hass, president of BioVet, is a vet qualified vet. He was state veterinarian for Wisconsin.

54:09 He, is a PhD in microbiology, so he knows about microbiome. And we are probably leaders in understanding gut health and microbiome and some of the work we're doing. And so he yeah. He's very strong technically, but he's also a good leader and good commercial guy. To replay because he did come in as sort of director of research to buy a vet when the previous owner was and founder was still alive. He brought him in. So to replace the to put backfill Nate's position about a year ago, I think it was, they recruited doctor Lewis, who is head of director of research and product development. So in on that side of the business, they got a very strong strong guy. He's actually down in Brazil, I think, with Nate at the moment. So in terms of looking at the on the probiotic side, that guy came from well, his work for Christian Hansen. So it's a very good background.

55:06 We've just recruited a girl in Manson Wood in The UK that came from AB Agri's innovation department, and they I think they disbanded that innovation department. So we have managed to we're very lucky to sort of snap her up and bring her in, but she she'll she'll get understand the commercial side certainly because she'll be out with the customers and with the sales team in ANPARIO and helping to develop products that for the, you know, for the future that that customers actually want. And we also do you know, we're linking it with universities, we are doing something actually on I think it's AI. Well, it is AI, not think. It is it is on AI and poultry, and we're doing some of that work in conjunction with a company in The Netherlands and Nottingham Trent University is doing the trial work where we can tell what's happening in the gut microbiome from chicken feces and how our products are affecting beneficially affecting the gut microbiome. So I haven't spoken I haven't really mentioned that. That's it's a bit of r and d development work that looks quite exciting.

56:13 And every every company's got to say AI, haven't they? Because it sends that share price up apparently. So but it's a bit it's not gonna send it's not gonna, you know, turbocharge ourselves to what whatever, like, in the video. But in in the future, that's where we're going. And the more we can learn about the gut microbiome and and prove how our products are are working within the gut, not just on the performance metrics and the better. So we have started some work on that, and and that's being led out of our Manson Wood team. But we'll Nate will get involved because he's The US guys have have got strong strong understanding of microbiology and and gut health. So, yeah, we feel, you know, certainly on the future scientific products and things where, you know, we we've got the right approach and practical approach to getting products commercially launched.

57:06 And I think that I mean, I'll say there's no more questions. That's that's correct, Richard and Mark. You have addressed all those questions from investors today. So thank you very much indeed for that. And of course, the company can review your questions submitted, and we'll publish those responses on the Investor Meet company platform. But Mark Richard, if I may just ask you for a few closing comments before I redirect investors for their feedback. Yeah. Just look. Thank you to the retail investors, who have supported us, and, you you know, we do don't say any secret. We do look at the bulletin boards, so we we do take on your comments and read them. Not all of them may may be. But, yeah, you know, certainly over the past few years, institutions have found it difficult support you know, buying into companies because they've had a lot of redemptions, and it's been difficult for fund managers. I think now that that that's started to subside, and they're getting inflows. So, it should be positive.

58:04 But we, you know, we we have had a high proportion of retail in investors over the last few years, following the tender offer. And and we're just thankful for that support and, you know, some of the insights you guys bring and and the support of the of of the company. And, hopefully, we're delivering, you know, capital growth and income growth for you in in in the dividend policy and and the way the share price and the and the the the business is performing. So just thank you for your support as well. That's Mark, do you want to say something? No. Just just to echo those comments here, I really appreciate the support on the back end of of everybody and and you taking the time to to to listen to the presentation and to extend an invitation that if anyone is ever passing works up and and would like to come in, then you're more than welcome to use any of the the forms of communication. We've got an investor at ANPARIO.

58:59 You know, you can pick up the phone, send us an email, and we're very happy to engage with people and show you around the the wonderful facilities that we've got in Matsonwood. So and thank you for your time. Fantastic. Mark, Richard, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete and ensure be greatly valued by the company. On behalf of the management team of ANPARIO PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.