Anpario (LSE:ANP) — Interim Results for the six months to 30 June 2026

0:00 Yeah. Good afternoon, and welcome to the ANPARIO PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. Before we begin, I'd like to submit the following poll. I'd like to hand you over to Richard Edwards, CEO. Good afternoon, sir. Thank you. Yeah. Welcome to ANPARIO's interim results for the first half year of twenty twenty six. Well, Mark will run through the numbers initially, and then I will sort of go through the re some of the regional performances. I'm sure there'll be a lot of interest in some of what we said about Asia, mycotoxin binders.

0:42 And then I'll I'll finish off with a little bit on sort of innovation, product development, and the outlook. And, hopefully, we'll have time for some questions towards the end once we finish the presentation. Mark, over to you then. Let's get it underway. Okay. Thanks everyone for joining. As Richard said, we've the agenda there. I walked through the finance section, the region, and then Rich will take over for the regional performance and innovation development. I'm sure you've seen the key highlights there, so I'll skip through to the first slide in my section.

1:18 So let's just walk you through the P and L. Revenue increased 7% in the period to 24,300,000 coming on the back of a couple of years where we achieved higher growth than that, you know, both organically and inorganically. Thanks for the contribution from BioVet. But, know, it's still a really positive movement. You know, we target high single digit growth on a long term basis. And and some years will be better, and some some years are gonna be challenges. And and that's come through in terms of the segmental performance. We've had India, Middle East, and Africa performing extremely well, up 56%, continuing the trend that's been going for a number of years in that region. Its overall contribution to the group has significantly increased over that period, and they've had a broad based performance across existing and new territories that they've opened up in the period.

2:09 The Americas have been up 7% as well. A lot of that weighted towards performance in The US, benefiting from some changes we've made in the management structure following that by the acquisition and the team that we've acquired as part of that process. In Europe, the broker has been a bit more flat and with some up and downs in that territory. And then Asia, as we talked about in the report, down seven down 9%, but that was mostly due to weak toxin binders. Actually, if you exclude the toxin binder performance in Asia, then Asia would have been up 7%. And there's some specifics that Richard talked to later in the presentation around that. But highlighted we highlighted in the analysis in the statements for the interim report that the remaining toxin binder sales in Asia are 3%.

2:56 So that, you know, there's not a huge amount of additional sales that could potentially be lost there. That being said, toxin binders are an important important category for us. We believe we've got a very good product. We just need to, you know, work on that a bit more in Asia. There's some specific pressures in in that territory there. But the rest of the, you know, the range is doing well. In particular, there's some leading product brands, Auriga Symforce, and and as well the BioVit range, which there's a few different product brands in there. They represent 80% of the sales mix and grew at a rate of 17% over the period, just showing the growth in what is our highest price, most premium and typically highest margin products in the range that we sell. Gross profits have been impacted by headwinds. We saw when we announced the full year results, it's also just after the outbreak of the conflict with Iran. That has had some challenges.

3:48 There was some initial initial costs and and and sustained costs. And there's a slide shortly, I I can talk through that. Same on administrative expenses. We've got a slide coming up. But in short, admin costs were up 2%. However, if you exclude some nonrecurring fees incurred during the period, then they're actually down 3%, which has helped overall profitability improve. We've got adjusted EBITDA up 22% in the period, and that's followed through to the dilution adjusted EPS of 30%. We did share buyback during the period. When we got to the end of June, we'd completed 2,100,000 out of the total £3,000,000 program. Our program was completed in July. There's no benefit of that yet in terms of the earnings per share. We'll get a half year benefit because it's time weighted by the end of the year and the full year impact for next year. In terms of the dividends, then continue to increase that by 6% up to 3.8% 3.8p to be paid in November, continuing a trend of somewhere near we're getting close to twenty years now of successive dividend increases.

4:53 And obviously, we've the buyback as well as a way to return cash to shareholders and that could take up an increase in importance in our capital allocation policy moving forward. Moving on to gross profits and margins. Just want to draw out really what's been going on since 2022, which is when we had that drop in gross margins. It's been steadily increasing through that period. Obviously, at the beginning of last year, the first half of last year, we got up to 51.4%.

5:24 Really, as a business, we're targeting being above 50%. That's not to say we're trying to achieve to get to 55%. We're we're conscious that we wanna drive overall profitability. So if we've got the ability to to drive volume with sharp pencils, then then we will do that and and go after business. But really, 50% is where we target running the business. There's been competing pressures in this period. As I said, initially, we had some higher costs for the orders that were on the water at the time. We didn't have to do this, but we felt it was right for the customers in The Middle East just that we suffered the cost of getting the product to its final destination. So I think it's probably about £50,000 hit of doing that. That's obviously gone down really well because following that, all the increased logistics costs we've had in the area and elsewhere are passed on to our customers due to the terms of our contracts, and that's not affected demand for our products in the area, obviously, with that 56 growth as we've as we've talked about. But it does mean that we are having an increased level of logistics to charge in terms of revenue.

6:30 And, obviously, we charge to our cost, so there's no extra gross profit, for on a higher revenue basis, which does have a a slight negative impact on margins. We've also had, other cost pressures. There's been inbound logistics surcharges because of energy prices. We've also had, you know, some inflation midyear inflation on a number of products that have an energy component to their cost base, and in particular, the acid based subosset range, which was, you know, one of the major issues that we had in 2022. But it's important to draw out some differences between what's happened now and what's been happening in the past. I mean, firstly, acid based uvotics are a much smaller percentage of the overall business, representing only around 20% of group sales now, whereas they were probably close to 40% back in 2022.

7:20 And at the same time, although there was an energy cost impact, on those inputs, those acid inputs, majoratively, the prices were already increasing because of supply shocks to the the world's largest suppliers. Of course, called force majeure events, one because of the fire at their plants. And so there was already a supply shock in the market and significantly elevate prices. The the higher energy costs really just elevate that to a slight higher level and and made it persist. So we're not operating under the same conditions we had before. And at the same time as well, we've got, as I said, acid acid base, you've got six or a small portion of the business. The area of the business that has been growing along side the acquisition of the BioBook range is the more premium, high priced and also high with the higher margin products. And so we've had kind of competing headwinds and tailwinds both on a long term basis and in this current period, which should meant actually, we've maintained gross margins at a similar rate to the end of last year. And that's where we see it moving forward. We as I said, we wanna talk with targeting 50% gross margin, and we can see that there's competing pressures.

8:36 There's obviously ongoing energy, higher energy costs. We can see the prices of oil have gone up further today, and so that could have an impact, but we've also reacted with price rises towards the end of the first half of the year. So the base case for us as a business is to maintain those margins as we move forward. Moving on to admin expenses. As I said at the beginning, overall admin expenses up 2%, but 3% down excluding those nonrecurring professional fees. The the one of the majors reductions has been foreign exchange. In the in the prior period, we had some foreign exchange losses, and we've had some gains in this period, and that's a full swing of 500,000 reducing that the variances between the period. And then in terms of the legal and professional fees, that'd be other area that we've been saving as the benefit of both some in house resource that's really coming to the fore and being quite effective in reducing the amount amount of expense we're going out to external advisers. At the same time, there's there's an aspect of that which is increasing use of AI. And to give an example of that, it's not to say that we we're not using professional advisers in the same way that we did in the past, but we're going better prepared so that instead of, if there's a matter having to ask, you know, what do we need to know, tell us all about it, then we can go more prepared, understanding, you know, what we expect the situation to be and really asking people to check what

10:06 we believe to be true. So that's helping reduce the amount of spend that we've got on legal and professional fees. A number of other expenditures are relatively flat. You know, you can see that, you know, naught point less than naught point naught million of an increase across a handful of other costs. And then we've got people costs. Again, within there, there's competing movements. Sorry. We've got an overall increase of 6%. Within that, employment costs have actually increased 12%. We've had a number of areas around the group where we've been increasing our resource base, such as in The Americas, building out the platform at those operations in BioVet, but also in places like Latin America, we've had people that have come on board where we used to operate through a distributor there. We've now taken on those sales, and the direct sales in those markets and taken on some of the staff that used to work for our distributors. So, again, increasing admin costs. But as a benefit, we're getting a higher higher revenue and higher profits, on those direct now direct sales. So we've had some, increases as we expand in the group and also some inflationary, elements to that increase in employment costs. And offsetting that, you know, we've had two very fantastic years, and this first half has been very strong.

11:22 But, nevertheless, it's required a slightly lower level of bonus accruals at the end of the period. And really, you know, the majority of bonuses are paid out on full year profit performance. So it's one of the reasons why we we do have some contingency if there's a slightly weaker performance in the second half, then some of that bonus costs will come off as to counterbalance them. And then moving further through my presentation then in terms of cash flow, obviously, an increase in operating cash flow before working capital changes, up to 4,500,000. And then we've had absorption in the period of 3,100,000, mostly timing related impacts in regards to receivables and payables. There's nothing structurally I would necessarily point to that I would say there's something to on that would, you know, not unwind and and be on a long term basis.

12:11 We've had slightly longer receivables days. Again, really just a timing timing impact. There's a range of different sales we make around the world, you know, some on smaller and higher days, creditor days. And really, it's just a case of the the profile at the at the end of the the six month period. Nothing structurally. There's been good cash flow collection through q three, and so nothing fundamentally to point out there. And then as in terms of payables, then it's kind of a factor of just the the spending patterns that we've had, and then also lower accruals in terms of things like those bonuses. In terms of capital expenditure, then it remains low within the business. If you've been following us for a number of years, there was a period when we had a higher r and d and higher sort of tangible CapEx on things like plant automation.

13:05 There's been a bit of an increase in this period up to $400,000 But really looking the outlook over the next few years is really for CapEx to remain at a similar level as it has been both this year and last year. And obviously, we've had the outflow of 2,100,000 in the period for the share buyback, out which we would have grown cash in the period. But unless finishing the period with 11,000,000 and then looking to continue to grow that as we conclude the rest of this year. That's the end of my section. Obviously, we're very happy to answer any questions that get raised in the at the end of the the presentation. Over to Richard. Thank you, Mark. Yeah. If you can just move on. So just looking at in in summary and overview across the the segmental the four segments that we do. Obviously, was disappointing, down 9%.

14:06 Middle East had a good performance as has The Americas and particularly sort of The US, and then Europe was sort of there thereabouts, slightly down, just pitched in the middle. So, Mark, if we just move I think it's Asia, isn't it, the first slide? So a bit more detail in Asia. There's a couple of trends. There's a couple of things happening in Asia. Firstly, you know, as we highlighted sort of the Middle East region with high energy costs, Generally, the Asia region is a net importer of energy, so they have got high energy costs which will be impacting the producers. There is some also bit more raw material price starting increase inflation that might actually increase a bit more with the El Nino effect.

14:52 So they're getting they're getting impacted, the producers of energy. If you look at I'll show the the region that did the best or the country did well. It's Malaysia. It's not without design that they've got good oil and gas supplies. And, of course, they they control their energy costs in terms of the consumer and producer. So it's not surprising. I'm I'm pretty similar to Australia, actually. It's not surprising those countries are doing doing better given the energy outlook at the moment. The other impact and and possibly even bigger on Asia is China. China is now an exporter of pork and chicken. That's never really happened before. It's always had to import itself in terms of put additional pork, particularly from The US and chicken from other places around the world. But since African swine fever, they have really industrialized and improved a lot of their biosecurity and I think taken production of piglets from 15 piglets a year per sow up to nearly 30 or something. So they are actually producing more than what they consume.

16:04 That I mean, their economy is a little bit weak as well, so they're probably not consuming as much as maybe they would would if it was going gangbusters. So they're starting to export around Asia to some of their nearest markets, you know, like Vietnam, Philippines, Korean places. And that is obviously putting a bit of pressure or some pressure on the local producers in the in those countries in in in terms of the selling price. So we, you know, so we we sort of

16:33 I mean, as Mark said, if we did if it wasn't for the toxin binder decline, we would have been ahead in Asia. Toxin binders in Asia, because of the humidity and the conditions and they tend to go for buy the cheaper grain and use cheaper grain, which is has more toxins. And toxin binder is is is really in every ton of every feed there. It's in places like The US, Europe, it's really only put in if there's if we're identifying that there's gonna be a toxin issue and it's gonna be a raised level of toxin issues, or then say, well, we'll put it in to come yeah. Overcome that particular issue on for that period of time. But in Asia, they put it in all times. So it's a little bit more commoditized product. There's yeah. There are, you know, a lot of people going after that market. I think in this at the beginning of the year, we did have quite a big customer from that we've had over the past few years that was all based on price.

17:26 We we weren't gonna go down to the level of the pricing that it was come that that people competing with. So so some of that so that business sort of was lost did hit our toxin binder business. So it you can find pockets where you can charge a bit more of a premium price for a better product, but the products that are going in there on price are, you you know, would be very simple, straightforward products, not as good as ours and probably don't even work. And it may be that some of these customers find actually they've they've had a performance issue because the amount of toxins that they've got in there. So so, yeah, some of that business could have come back. You you've really gotta look for the less price sensitive customer and try and get an added value in products in such as ours. We can compete, you know, at a lower price, but we but, you know, the the prices that we want some of the prices we've seen are just ridiculously low within and certainly one one price we think that the supplier will not be making any money. So we're not gonna go into that's not where we where we compete on that. I think because there is a bit of a question of, you know, how much is toxin binder as a component of the Asia sales. It's I think it's it's left at 3%.

18:42 It is a it is an area we still want to do, you know, develop and growth growing tops and binders, but more at the premium end. So it's probably a bit of work on that to do in terms of different marketing differentiation and communication, but also finding those less price sensitive customers. And if I just quickly, you know, go over to somewhere like Mexico, we know there's some opportunities in Mexico better for better priced products. So that's an example. It does just depend, but as as I say, Asia would be, as a rule of thumb, a bit mad on on on low value sort of tops and binders. But, you know, all is not lost. If you might just go back because we have red lights. I mean and I can speak a bit more about this later, but I Amplify and Red Light in this market are two opportunities. Amplify is basically the new fat emulsifier product, so it helps you to get more energy out of out of fats, which will go into the the formulation.

19:40 And given the the way that we feel that the raw material price is going up, they're probably gonna start specifying more sort of fat into the into the diet. And amplify can help leverage that and get and and help them get more energy out of that or the animal get more energy out of it by emulsifying those fats. So something that amplify is is a product that we're gonna push in that region and that you know, we we've already started to sell it into The Middle East, and we feel Asia is, given the conditions, a good opportunity. Red light, again,

20:16 is basically a powdered mineral that is a natural insecticide that people are starting to move away, I think I mentioned, from the chemical treatment of insecticides in the grain stores and in the poultry sheds and also fumigation. A, because of health and safety reasons, but b, they're not being as effective. So we are seeing where the insects like beetles, weevils are actually able to overcome the, you know, the treatment by chemical means of an insecticide. I think in, you know, in the easy case, they basically anesthetizes the insects and after a number of hours or a couple of days and it insects up again and moving around and stuff. Red light doesn't do that. It uses a physical, more mechanical way of killing the killing the insect by blocking the pores so it can't produce its waxy coated surface which keeps it hydrated.

21:13 So the bait the the insect basically dehydrates and that's it. It's dead, gone, permanently terminated. Red light is what we're finding as well, not only, yeah, obviously safer, more effective, and it's more cost effective as well. One of the one of the things that we're currently doing is working with an engineering company actually in The Philippines as an application method so we can blow red light in as these grain stores are filled up as the grain goes in and corn goes in

21:43 and and and get that dispersion. So that's something we're sort of just working on and developing that that that that capability. But we feel that, you know, it's not only it started in The Philippines where we noticed this trend away from chemical means or customers asking for this. It's now you know, we're now working on this in Thailand, and and it'll it will roll across Asia. So, again, another product that, you know, we we've got the team working on that can counter you you you you know, the pressures at the moment on on on mycotoxin binders. So, hopefully, that sort of explains what's going on in Asia. If we go to America's mark. Yeah. Look. America's doing doing well, particularly, you know, in The US with some of the buy back side. We've seen some good good opportunities. We're really pleased with what's going on with the buy back products. And particularly, again, they're more added value areas such as ruminator and and Quadrical.

22:46 The what we we did have, and we sort of mentioned that we did have a little bit of suffering in Mexico as we moved over from away from the distribution model into going direct. There was, you know, I think the one that we we had two distributors in that region. One that tended that was based in Mexico, it tended to look after Central

23:08 America. So places like Panama, Honduras, you know, Ecuador, Colombia, and then the other one that was more just focused on Mexico. The similar time last year, the Mexican the Mexican focused one also said they didn't want to continue with our products. They've been a a distributor for, quite a long time. A number of years ago, they were bought out by an Indian Indian pharmaceutical company, an antibiotic company, and the, you know, the remit has finally come down to them to say that we

23:38 you know, they they they only wanna be focusing on pharmaceutical and antibiotics. It suited us because they were really only doing sort of one product that they've been doing for years and weren't doing any more of it. So but they sold all of their stock, you know, at the beginning of the year and and pushed all that through. So when we picked up the business and there's a little bit of dislocation, bit of a bit of disruption that has sort of slowed down or impacted in in the first half, but we're really sort of back on track and we are starting to win some new business actually then, quite a sizable business in in in Mexico. We're also recruiting a sales manager

24:16 to support Mexico as a as a single country whilst the team that came over from distributors looking after Central America, they now come on the all employed as Mark said, sort of tackling, you know, places like Panama, Ecuador, Colombia, and and those other regions. So, you you know, this opens up a broader range of products that we can sell in there. It allows us to supply direct. It allows us to, you know, man manage that price volume sort of balance of actually, if we're a little bit more competitive because we aren't gonna distribute the margin, can we get more volume? And and, really, you know, one of one of the areas that we we think should be good for growing Oregon stem because the the incumbent distributors did not really push it. It was probably too complex product in terms of gut health and and microbiology that they they they would tended to focus more on organic acids, which should be in their history on on toxin binders.

25:15 So we we feel there's that opportunities up in that area. Brazil, we need to it's only it's declined a little bit. It's a slow pace. We feel we're at the bottom of that. We've made some management changes and a new sort of commercial strategy is being implemented in into that region. So we're quite hopeful that we can start to rebuild, but it'll be beginning it'll be next year before we see any major sort of improvement in Brazil. But the new management team in there refocus sort of strategy. And there's a good opportunity to get the buy back products into Brazil into the ruminant sector. So I think, Mark, we Yep. Europe. If we just look at Europe, it's just, you know, the bit 2% drop, but we did there are some countries, and particularly The UK, where we're having a good strong performance there.

26:14 Just I did I'll pick up this question when I because I did sort of flick through and I saw that about the changes with ABF selling their monogastric feed mills. We feel this will be positive for us because they they those mills are being sold to sort of owner managed family owned companies. Some of those some of them like Lloyd's Animal Feeds that we already supply. So breaking those down to these owner managed and and family owned businesses sort of makes it easy for us to get in there and sell rather than trying to sell to a committee, which you tend to get in some of these bigger organizations that are very slow to make a decision. And you you also get, you know, within a a big organization, you may have a manager or a nutritionist, and they change every so often. And sometimes when you've got the business, that's fine. But a new person may come in and said, well, I've got a relationship with a different supplier. I wanna change from, you know, phytogenic to an organic acid or probiotic.

27:15 It tends to be more stable with and more relationship driven with the family. And so we feel that there is an opportunity that with with them breaking up the and selling off these feed mills. And and that's in The UK. So there's a lot, and we will be resourcing up a little bit of that to try and target that that business. And then the others are just, you know, certain areas where maybe dropped some business behind or they've or they've slowed down. Spain, I think I mentioned before again, was a distributor disruption issue, and we need to get sort of back in there and pick up on on those on those customers and and drive forward. But, yeah, hopefully, with the distributor out the way, we can be more com you know, com being competitive on price shouldn't be an issue.

28:05 It's just a case of building building those relationships. And we got a guy down there who's based in Spain and looking at Italy and various other places. So so we're not you know, with with Europe, there's still there's still plenty to go at. It is a bit more difficult when you're trying to do when you when you when you're based in The UK, you've got the English Channel or the North Sea, and there's 27 different languages on that. But we are looking at how we can organize more effectively in Europe. And I think, just switch on to the star performer, Middle East. Yeah. Things, are good for Middle East producers. First off, they want to be, self sufficient, and and they're very much focused on food security, so there's a lot of investment going into into their production systems.

28:55 They are buying you know, they they haven't had any issue put possibly like Asia, which is the other side of the coin. If you if you look at things, haven't had as much issue in terms of, you know, higher energy costs because they're sat on oil and gas, but also raw materials. They are buying, you know, a lot of the raw materials are coming out of Ukraine, so it's a corn, soaring things coming out of Ukraine and Russia, then that's going into The Middle East and those prices are are very, very competitive because and and will continue to be because Ukraine and Russia got all the water, all the rain that we didn't get during the summer. So they got bumper harvest. I think they're up, I don't know, 16% in terms of harvest for wheat and corn. So so we we expect Middle East to, you know, still be strong.

29:49 The other side of that is, you know, how they they would have imported frozen sort of chicken from Brazil and places. But because of the ports and the disruption of some of those ports, then that's not that's not getting in as much. So their own producers are having a good time and and and, yeah, hopefully, excuse the pub making hay while whilst the sun shines out there. So that's that's one of the reason why we had some good performance there. India has obviously helped in terms of it's it's a new emerging market in terms of agriculture. And and for us, we've had some good good business there with our partner. And there's still quite a, yeah, few opportunities. Well, there's there's still a lot of opportunity within in there over, you know, over the future.

30:35 So and a couple of new territories like Bahrain and and Sudan where we just started to supply in there. The good thing on, yeah, Middle East is we have now finally got first sales of Quadical, the BioVet calcium bones. It took us a bit of time to get registration and just to and also it's not only registration sometimes. It's things like what do we put on the labels? What are we claiming on the labels? Will this pass the local regulations and stuff? So it's also part of that. And we then hope that we get Quadrical first, you know, sales before the end of the year, we hope, in Saudi Arabia. And also just flipping into Vietnam, there is some trial work. There there's there's a big farm using testing over there.

31:23 So so, yeah, we, you know, we like The Middle East at the moment, and India is is doing well. So that's I think that I don't think there's much more to say on the regions, but there may be some questions coming out that we can answer, pick up at the end. So I sort of mentioned about Amplify. You know, we we did have first and repeat orders in Middle Eastern markets. There's a number of other markets around that we feel that product should should do well. It may take a little bit of time, but as I say, hopefully, the demand and people will give us that air in in the Asia region because they're gonna have to get more out of the the the ration for the animal in a in a more cost effective way and something like Amplify can help that. QuadraCal, I've mentioned, so I don't need to go through that.

32:12 The we've had the further stuff on origostim and origostim plus across sort of multiple species. There is you know, we are doing we are looking at we're doing quite well in the organic side of dairy. I mean, we we would always in The US, we've always been selling sort of the egg and poultry side into organic. We're now getting, you know, a lot of interest and and hopefully increasing demand from the organic side into dairy and potentially into beef. So the beef market is not is another opportunity into The US. And so our our August team has, you know, a lot to go out there. And I think there's there is sort of trial work. And and I think a few months ago, we were we were in was it beef or an organic place out where the medication on the calves and the mortalities was way down after they'd used OreoStim.

33:10 So there's still there's still trial work sort of going on in there, but hopefully sales will follow on from that. Red light, as I say, hope for continued market adoption. We have been getting sales in the first half into into The Philippines, and as I say, where where people are evaluating and looking at it elsewhere in in that region. The the heat stress, obviously, we've had a really hot summer, some more than others. And particularly in Europe, when you see sort of temperatures of forty forty degrees c, you wouldn't avoid we wouldn't have ordinarily looked at yeah. There's a there's a heat stress problem for dairy dairy cattle cattle in general, and can we develop a product. But this was a a combination development from BioVet and ANPARIO, and it's a combination of plant extracts.

34:06 It's currently being trialed or is on a few commercial farms in in Wisconsin. The results, such words, are looking good that, yeah, it's helping to reduce stress in the animal. They're not panting as much when they take this product. It also makes them drink more. And if they drink more, they're cooling down, but also they're gonna be producing more milk, which is obviously important in terms of yield. So this product we feel is, you know, a real a real potential opportunity. I don't think there's anything quite like it in the market, but it's it's certainly after this year, it's become more of an issue, heat stress. And, actually, I was having lunch, when was it, last last Thursday in London with a big integrator from Bangladesh who's who does supply into the dairy feed market that is customers.

34:59 And without us even prompting and saying we had this product, he says, yeah. One of issues we've got over over those heat stress. Have you got anything for heat stress? So this product, you know, is is there's more markets to go out with this market in terms of geographically because the way the temperature has gone in the last ten years into the summer, you know, you you wouldn't necessarily thought, well, could it be sold in France and Germany and places like that and even The UK? Well, now we think it it potentially has got a much wider market both geographically and in terms of seasonality all year round because you are obviously Northern Hemisphere and Southern Hemisphere markets. So we are so we're we're quite so we yeah. Yeah. The big the the hopefully, the big benefit of that we'll start to see next year in the Northern Hemisphere as we run into the summer. But we're just finishing the we're we're I'll be over at the end of September into Wisconsin and build to sort of catch up on how those trials have gone, but it could be we start getting out into other areas around the world with that product. That also links in with I think we did mention in in the innovation side that we're sponsoring a PhD.

36:09 The guy the PhD candidate works for us anyway. He's in aquaculture. You know, supports our aquaculture business around the world, and he's doing it at Plymouth University based on, you know, Oregon stem going into formulations to try and reduce the heat stress in the fish, shrimp, what have you, are gonna be impacted by because of global warming temperature in this in in the water is gonna start impacting performance and production in in the agriculture market. So it is gonna be it's gonna be a theme moving forward in in terms of looking at productivity and sustainability and overcoming heat stress. So something that we feel benefits on PARIO, actually.

36:57 So I think, Mark, just quickly onto the outlook. So soft to start, two words that can crash your share price of which when we wrote them, we didn't think think they would have that impact. We did think that maybe it would know, it would would be a little bit negative. It all it is is in the first two you know, July well, firstly, go back a year. Quarter one quarter three was our best month ever. It was very strong. So quarter three is this year is against a strong comparator. The July and August were a little weaker, softer, as we said, than we than we had anticipated. We're not sure some of this, you know, obviously, we've seen this this impact in Asia.

37:47 Some of it might just be the summer lull and the heat and the World Cup or whatever, but we were a bit a bit cautious because we just thought it's gone on for two months. We're still ahead of last year, the end of August, and September is looking, you know, better and stronger. But we had a very, very good September last year that was 5,000,000. I don't we we don't expect to hit 5,000,000, but we wanna get, you know, some way to that. So so we just felt put that cushion out and given what's going on in The Middle East, it's probably only got a little bit worse over the weekend, and and how that some of that is impacting Asia. Then we just felt we put a cautionary note out. But other areas like The Middle East, funnily enough, are doing well, Americas, feel The UK. So we're hoping that our geographic diversity will compensate and some of the business initiatives and the pipeline that we're driving through will will sort of compensate for the weak areas like Asia.

38:44 You know, we feel that sales will be a bit softer, but what we've done in terms of, you know, the analysts are still putting in the same profitability for the years with forecast. You know, if we had to if we felt it was a at this stage, it was a profit warning, we'd have to go out and say, we're not gonna hit the profits. As Mark said, in terms of bonuses, lower bonuses, some of the costs, we think we'll you know, it should compensate. But we don't know here from here on in what's gonna happen in terms of fuel costs, energy costs, and things that that's happening in the mid in in The Middle East, how that will impact the rest of global global GDP. But as I said, it was a softer start, so we felt it was right to telegraph that. We don't we don't, at the half year, normally say where we're that, you know, about the expectations because we tend to do that in January.

39:37 Particularly, you know, that's what we do. We've done traditionally. We tend to give stronger indication in January after we've had the year end because we can have because we're shipping abroad, even though we might have manufactured the product in December, sent it to the port, it's on the quayside. If it doesn't go across the rail, gets onto a ship, then that sale falls into the following year. And a few years ago, we had a million pounds worth of sales where that happened, which is a £500,000 of profit. So, you know, we never traditionally we we've never sort of historically indicated, you know, that we are gonna meet expectations or be in line or whatever at this stage. We have to wait till later on in the year and and normally January because of that cutoff.

40:26 But we have obviously spoken to the analysts and said this is what we feel in terms of, you know, where the sales are going at the moment given the softer start and how that would impact through to Bosma. And they've done their numbers and they've obviously worked out where they are. So so as I say, we feel, you know, still optimistic. There is some difficult macro conditions. We've got these new territories, you know, certainly, America or Central America where we've now going direct. We've got commensurate sales through our Turkish subsidiary. We'd have a Turkish distributor which is still doing business there, but we set up a specific or we we already had a subsidiary, but we've now enacted it and we are acting as an importer, the sort of agent, and then appointing resellers, the sub distributors that will be that that will be given a particular product market or species market or geographic market. So this allows us to optimize Turkey as as a country, and it's all it's big, you know, in terms of agricultural output, but it's it's on a number of different levels, and that's why we felt we needed to set up this organize a subsidiary in this way as an important. We take, you know, additional margin because we're doing that. And we can sell the full range whereas we're if we'd have gone through traditional distribution route, we wouldn't necessarily have have have had the access for all our products into that market.

41:55 So, yeah, further projects to support growth in India and to say some of these the new product developments like FighterCool, you know, the the red light product that hopefully will will help to, know, support support growth and and the business going forward. So I think, you know, the long in long term, no yeah. Nothing is we don't feel anything has changed. The we have a set of products where the market is moving towards us that are environmentally friendly, natural, sustainable, very effective. And we've now, you know, put down more sort of sales channels where we're in control. We're going to the end user or the sub distributors within that country. And and we, you know, we can drive that over over a period of time to continue to create, you know, long term shareholder value.

42:46 So I think that sort of wraps that up in terms of the formal presentation. If we can go to go to the questions I just sent some questions that were on there have gone off, so I presume I've answered them. I'm I'm assuming I have. So, the the first one is saying from Peter w, would you say you're guiding more conservative than usual even if trading is going well so far? I wouldn't say any more than usual. I'd say we would always yeah. We we have in the past guided a bit more conservative over the past two years. We probably haven't because we could see the growth and there was quite a settled, you know well, in this world, there was quite a settled environment in terms of geo geopolitics until, you know, the Iran war started kicking off. So in that period between start of the Ukraine war and when energy prices went up and then down, it was, you know, it was easy for us to we we could see the growth very strong in the first or nine months here. So we we probably guided up and we did upgrade a number of times. So I wouldn't say we're guiding more conservatively than usual. I'd say when we guide conservatively, we've done that, you know, we've done that before. It it it's it's as I say, the first two months just gave us a little bit of a check and the visibility

44:18 going forward is is is can be quite difficult for us to know because we don't see orders. We're not a SaaS computer company. We've got annual yeah. I annual recurring revenue, and we're not a contract job where we know what contracts we're going forward. So I would say we're guiding fairly and realistically more than anything. And but I, yeah, I do hope it is conservative by the end of the year and that we've busted those numbers and and broken them. But at the moment, we got yeah. Take what we've said in the guidance as as where we feel we are and and what the analysts are saying. Next one, Mike, this might be for you. I can do this. Yeah. Yeah. No problem. Yeah. So so I think we point out that those leading brands represented 80% of the sales mix. So, yeah, they they did so the question just for everybody is why did 17% growth in the leading brands translate into only 7% group growth?

45:10 So, yeah, 80% grew at 17%, then we had the toxin binders in Asia, which obviously declined enough to turn Asia from a positive to a negative. And then there was a small basket of other products, which declined us, you know, a slight rate, I think, about negative 3%. So it's really just a mix. And the toxin binder movement, to be clear, is quite significant. We did have quite a lot of a toxin binder sales into Asia. They tended to be lower margin, but it was a high revenue base. So that's the profile of what's happened in terms of that mix. And the thing we can be confident on is those products are the you know, we the toxin binder, we do as I said, we think we've got a great product there, and, potentially, we need to work on the position of it in Asia where it's a different fundamental different market for toxin binders.

46:05 But we, you know, out with that Asia performance, toxin binders did grow marginally. But the products that have been doing fantastically well are those higher, higher premium products that are the market leaders we feel in in their various different segments. So hopefully that answers that question. Mark, I think yours is the next one as well. Yeah. Okay. So the next question. There was quite a lot of variation in the ratio of profit before tax and sales to external customers across your four geographic segments. Yes. In the operating segments, note four, The Americas have had the lowest margin and Europe the highest. Can you give us some background into this? I think it's fair to say, yeah, The Americas there's there's contrast in parts of that in the sense that the America is obviously growing fantastically well.

46:54 It's a high margin area for us compared to some of segments in terms of gross margins. But at the same time, there's generally a high level of resource cost. You know, people people, you know, just naturally are more expensive to employ in places like The US. And they'll also now, particularly with having buyer onboard, you know, there's a production site there. There's an administrative team. There's a location. There are resources that aren't necessarily the same elsewhere. If you look at how we report our operating segments, we've got Asia, Americas, India, Middle East, Africa as as one group, and then Europe as well. What we and then we've got the central cost. The central cost really is everything that's, you know, the background architecture of the business, and the operating segments are really traditionally just the commercial front end sales parts of the business. And if we have a subsidiary in a particular area, so say, for example, in Asia, then we've got a number of subsidiaries. So because that directly associated, then it it gets allocated into that that segment.

47:56 But what we don't do is take the central costs that we have, the technical team, you know, finance team, etcetera, and a portion across the the different segments. So where you have Americas that have their own, you know, the largest set of operations we have outside of the The UK, then there's a higher cost base. So and as we've been talking about, you know, we have been doing things to invest in the platform there, building out the infrastructure within The Americas. That has already paid off in terms of the revenue performance, but we reckon that'll continue to drive performance in the coming years. So, you know, we expect that to increase. Where we have Europe, for example, the European sales team is not actually that large, we're not reallocating in, you know, IT costs, etcetera, into it. So because they don't have the money at one entity, the Irish entity, then the resource is specifically dedicated only to Europe between the relatively small sales team and only having one actual subsidiary entity dedicated to it, then it becomes sort of lower administrative cost base.

49:06 So, yeah, it depends on the dynamics. Hopefully, that's answered the question. Yeah. Then the next Can question in you hear me? Yeah. I just wanna Yeah. Yeah. The next question do you wanna answer that while I? Yeah. In in this half year report, you mentioned toxins in the Asia section several times. I can see no reference to toxins at all in the full year report. I want to make sure I understand the significant of tox significance of toxins in Asia. So I think we've highlighted that it's 3% for this period as in h one twenty twenty six, then the toxin binder sales in Asia were 3% of the group, and Asia was, you know, roughly a third of of the entire group. So it's about 9% of Asia specifically.

49:54 So there isn't we we don't expect this to happen, but if we lost the all toxin buying the sales in Asia, that would be, you know, a a potential 3% hit to the group top line. But, obviously, you know, that's not a situation we expect to occur. You know, we as I said, we think we've got a great product, and we're gonna look to stop building that back and pushing and position it right so that people understand the value that that our product does bring of the sort of lower price commodity and lower efficacy alternatives that have been switched to. Rich, I think next one's for you, but you I think you've answered it to a degree already on the red light. Yeah. No. We we we see certainly in in Asia where this change of move is is happening. Obviously, you know, because of the humid, hot conditions and the the more insects and insects, weevils, beetles and red mite issues probably than than some other places around the world. So now we have this product for twenty, thirty years.

50:57 It's basically a mineral, so it's quite a simple product that the way we we have a supply that produces it for, you know, with us and and we have had it for a while. It's just that the market is now moving towards us. People had had used we have got the odd customers use it for twenty years for various things. But it's just, as I say, the the the change in efficacy with chemical and fumigation and the health and safety and the cost of those is is is is making people look at the alternative solutions. So the the key bit will be this also this mechanical innovation that we're doing in terms of applying it into the grain stores. And that is a big opportunity for us. But so we do we do see, yeah, a good future for Red Light. It's early days, but, you know, we are selling quite a lot of things into Philippines, aren't we, Marco?

51:53 We have to know less. Yeah. Yeah. Sales of red light has been growing. Yeah. And the feedback is positive. You know, we're gonna get positive feedback. The is it so that is there any reason for there being no mention of agriculture in the interim statement? Actually, we did I did mention I think I did mention agriculture in terms of heat stress. So it was in there. There's nothing in terms of the trading. You know, it's going I'd like it to go faster. We are you you know, there's there's one of our products, Auriga Simforte, is being used in hatcheries. We wanna try and get it into the grow out ponds, but it's it is quite an expensive product. Although, we have done some work on concentrating that up so that it it will become a more cost effective product.

52:44 And we think that then that could be used in the grow out ponds more cost effectively. But sometimes when you move from with from hatcheries into, you know, where it's a bit more controlled condition into ponds out in, yeah, yeah, in the countryside, the you don't always get the results consistently. And if we found this with and we've and I think that with our recent force, we found this as well. But it it's still there's still, you know, opportunities. Brazil is actually quite a good opportunity. I think it's catfish in The US and The United States down Louisiana and those those sort of Southern states that I think I think it's Augustine plus two plus two x plus is is being trialed there. So, no, there is stuff going on. It's just not there was just other bigger bigger things that we sort sort of wrote wrote about in in the interim report. We don't always report on everything on every bit of thing each report. It's only if there's probably some bigger news that we feel is gonna feed through, it's worth mentioning or not.

53:55 I'll take this next one then, Richard. Yeah. Patrick asks, capital allocation, are you considering a further buyback in, like, below share price on the recently curtailed m and a opportunity? I mean, obviously, I can't say anything can't say anything because it'd be price sensitive, but what what I can say is that, you know, we're gonna kinda mention a little bit before. You know, the the the priority for us is to be looking at buying businesses, acquisitions like BioVet because they work fantastically well. However, the number of BioVet's out there are low, And Richard, particular, and myself, you know, supporting them, is an active strain of work at all times and has been for a number of years. That's that's that's no surprise there. In the absence of that, you know, we haven't got as much CapEx requirements as I said. We're gonna look to continue to grow the dividend because we've had near near 20 of successive dividend growth. But I think it's fair to say that, yes, buybacks have been well received by most investors, and pretty much overwhelmingly very supportive of the buyback.

55:00 And that's, you know, very much been noted by the board. And I think, you know, it's been moved forward in terms of capital allocation returns to shareholders, and it could could well play a feature again. Just moving to the next one. Has there been any change in the consensus earnings expectations, the 26, 27 that you mentioned at the time of the June AGM? Yeah. I'll answer this one. As Richard said, yeah, we do talk a bit more explicitly when we are doing the trading updates in January and June because, you know, we have a lot of firmer ground on which to operate. So in in June, we said we're ahead of sell you know, sales and profit expectations, which as you've seen from the results, that's absolutely been the case. In terms of the outlook for 2026 and '27, then there's been no change to profitability in any of the consensus expectations.

55:55 There's just been a slight reduction in revenue. The next question will help answer why that's the case. Effectively, the analysts have seen the announcement we've said about this softer start and have interpreted that as a a trim to revenue, but confidence still on the overall profit expectations. So no no change on profit, slight slight reduction in revenue. The next question I'll take again, and this is in regards to the bonus and just clarity on that and what's been happening both compared to the previous period and into the second half. So just to be clear, we've had some very fantastic years, and this first half of twenty twenty six has been a little bit softer in terms of revenue growth. We've got two elements of our bonus program of revenue element for the sales team and for the rest of the staff and management. It's profit based.

56:49 And so we've seen just in the first six months a slightly lower requirement for a bonus accrual compared to the first half of last year. And one of the reasons that we think we've got increased confidence in case of a weaker continuation of performance is that those bonus accruals paid out on an annual basis. And so if we're not hitting the right levels of profit that we need to, then that bonus cost will come out of the P and L. And as such, yeah, just contingency for the overall full year results. So hopefully, that explains that in a in a little bit more clearer manner. Richard, probably the one for you. Yeah. ANPRO, congrats. It's slow on on this day.

57:35 The multinational supply, even though they're talking to a lot of buyers across Europe, they they, you know, they they are going to these big organizations where it's take yeah. It can take long, yeah, long discussions. I think it's this week they are with our regional manager that they're meeting a number of companies that they've having discussions with at what's called Spas, which is in the is it Brittany near Nantes and Ren that there's a big French agricultural sort of European agri exhibition and stuff and show. And they and and our guys are there with this the the distribution company talking to and and customs some of the cooperatives in France and some of the big producers about and they're they're on they are now down to some sort of specific projects and supplies. So, yeah, touch wood. Hopefully, we hope something will come out of that, but it has been slower than we'd expected. It doesn't stop us, you know, trying to doing anything in Europe quite quite frankly because we can sort of still go direct on some of the main products. But it it's it's it's it's been slower than what I'd have what we'd hoped.

58:51 They it is I suppose I'm not they're not surprised. Think they're a little bit surprised that it these big organizations that we sell into take ages to make a decision and to change and to switch over and things. So they've found that. So we'll know I'll get more feedback after this exhibition. We'll sort of review at the end of the year to see if that's the the right structure. We are looking at sort of how we how we should we restructure the way that we look at Europe and start putting more people down in some of these countries and stuff. And so there is there is some work going on within the company on on that. But but, hopefully, you know, to say this this distribution multinational supplier, they're a big company. They got their contacts into the buyers. They need to sort of work with some of the nutritionists, and that's where we're supporting them on. But we'll know, you know, so yeah. So by the end of the year, how we're gonna review it, see how that's gone. But, yeah, bit slower on progress than I would have hoped.

59:49 In terms of any acquisitions planned or lift the walls, we can't really say, but this yeah. Can say there's sort of nothing imminent at the moment. There's one or two we're having light conversations with, but there's people are a bit, yeah, slow to make a decision to move forward with doing anything. And in in a lot of cases, they wanna improve their profits so they can get the valuation that they want in their heads so that we have to sort of wait till till till they've gone through that process. But there's there's there's nothing at the moment. We got plenty to go out in terms of selling buybacks products internationally and pushing our, you know, organic growth and our implementing our organic strategy in terms of sales channels and things.

1:00:36 Hopefully, that's onto that one. In terms of the 400,000 nonrecurring professional fees, that was yeah. Look. It was, it was a transaction that didn't go ahead in the end, and so all the fees were incurred, and that's really all I can say about that. I could just need to point you just to what we've we've said in the statement, but that was aborted and stopped. And so we incurred those and nothing's gone ahead. Bill h, there has been an upsurge in overseas takeover activity in UK small cap sector given your current lowly share rating. Do you feel vulnerable to an unwarranted takeover overture? We're getting on with the day job, basically.

1:01:23 And and the share price is yeah. It's it is very frustrating because I think Mark worked out we're below seven times EBITDA and, you know, some of the deals that have gone through at, yeah, 12 times EBITDA in our sector. So, yeah, we do we do we we do sort of feel vulnerable, but there's there's there's a regulation process to go through and hopefully, people will see that mismatch and we'll yeah. Investors or fund managers will buy into the stock and think, well, this is a good price and sit there and and close that gap. But, yeah, with I don't I don't feel particularly vulnerable because we we can always argue where, you know, where the business is going or what it is, but there may be people out there that are looking at us private equity. Just to clarify as well just on the seven times EBITDA.

1:02:18 I think sometimes people don't realize how cheap we are because you have to take remove the JSOP shares and then we add add them back to the to the amount that dilutive. And then, obviously, we have the cash on the balance sheet as well. I think once you make those adjustments, then, yeah, we do look cheap. And so it makes from an acquisition perspective, in terms of us going out, it makes it difficult as well because, you know, there's there's deals going through at sort of twelve twelve times EBITDA, and and we're down currently at just around seven. So it makes it and it's dilutive for some of those deals we're we're to look at. Okay. Hopefully, that sort of answered that. Pat Pat Kay, how is Super El Nino expected to impact revenues or costs or both?

1:03:05 I mean, it it doesn't necessarily impact us directly, but it does indirectly as you probably alluded to that. Basically, you know, Asia will suffer because it will yeah. Generally, it suffer because the rice harvest will be down. There's there's more wet. I think over there, rain that will go over there. So Asia will suffer, but then on the other side, The Americas will benefit. And I think we've seen Brazil and Argentina have some very good harvest, very strong harvest. So we just feel and this is the reason why we are geographically diversified or try to maintain that and build on that as well as species geographic species that are diversified and product diversified is because you do get these effects in super El Nino. You know, we have the El Nino's before. We've had Super El Nino's before, but it gets compensatory impacts one area. Like, we think Asia will get more impacted this time. The Americas will will be fine, and we've already had good harvest, you know, in Ukraine and and and and Russia.

1:04:08 So it it will it may impact our revenues in certain regions, but, hopefully, I'll get compensated elsewhere. I can't see it in in impacting our costs. It's really the impact on the producer and how well how their profitability is going and and and and and that. So but it's you know, all in all, it's you know, we don't feel there's anything anything to worry about. And if it is impacted, it's a short term impact and we move on. And, hopefully, people are investing in this for the future and the longer term and not just each year and trying to trade El Nino. Don't try and trade our stocks based on El Nino. There's probably better things to trade on with El Nino. Like, the prediction markets, isn't it?

1:04:57 So, hopefully, that sort of answered that that question. And I think that's that seems to be the last question. So just to thank everyone for your, you know, for your attending and listening. Hopefully, we've given you, you know, fair sort of reflection of where we are and where we feel we're going. And I don't know it's there's there's that soft start sort of comment, but, you know, we feel confident we can keep driving the business forward and and developing it. And just if you are shareholders. Thank you for continued support, in the company, and we'll keep trying to do our best. And I'll hand back to to Charles. Perfect. Thank you, Richard and Mark, for updating investors today. Please ask investors not to close this session as you now be automatically redirected to provide your feedback. On behalf of the management team of ANPARIO PLC, we would like to thank you for attending today's presentation, and good