Welcome to Anpario's interim results for the first half year of 2026. Marc will run through the numbers initially, and then I will go through some of the regional performances. I am sure there will be a lot of interest in some of what we said about Asia and mycotoxin binders. Then I will finish off with a little bit on innovation, product development, and the outlook. Hopefully we will have time for some questions towards the end once we finish the presentation. Marc, over to you then. Let's get it underway.
Okay. Thanks everyone for joining. As Richard said, we have got the agenda there. I will walk through the finance section, and then Richard will take over for the regional performance and the innovation development. I am sure you have seen the key highlights there, so I will skip through to the first slide in my section. Let's just walking through the P&L. Revenue increased 7% in the period to GBP 24.3 million, coming on the back of a couple of years where we achieved higher growth than that, both organically and inorganically. Thanks for the contribution from Bio-Vet. It is still a really positive movement. We target high single-digit growth on a long-term basis, and some years it will be better and some years there are going to be challenges. That has come through in terms of the segmental performance.
We have had IMEA performing extremely well, up 56%, continuing a trend that has been going for a number of years in that region. Its overall contribution to the group has significantly increased over that period, and they have had a broad-based performance across existing and new territories that they have opened up in the period. The Americas have been up 7% as well. A lot of that weighted towards performance in the U.S., benefiting from some changes we have made in the management structure, following that by the acquisition and the team that we have acquired as part of that process. In Europe, the growth has been a bit more flat and with some up and downs in that territory. Then Asia, as we talked about in the report, 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%. There are some specifics that Richard can talk to later in the presentation around that. We highlighted in the analysis in the statements for the interim report that the remaining toxin binder sales in Asia are 3%, so that there is not a huge amount of additional sales that could potentially be lost there. That being said, toxin binders are an important category for us. We believe we have got a very good product. We just need to work on that a bit more in Asia. There are some specific pressures in that territory there. But the rest of the range is doing well, in particular, the leading product brands, Orego-Stim, pHorce, Optomega, MascuVite, and as well the Bio-Vet range, which there are a few different product brands in there.
They represent 80% of the sales mix and grew at a rate of 17% over the period, so it is 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. When we announced the full-year results, it was obviously just after the outbreak of the conflict with Iran. That has had some challenges. There were some initial costs and sustained costs. There is a slide shortly which I can talk through that. Same with on administrative expenses, we have got a slide coming up, but in short, admin costs were up 2%. However, if you exclude some non-recurring fees we incurred during the period, then they are actually down 3%, which has helped overall profitability improve with adjusted EBITDA up 22% in the period. That has followed through to the dilution-adjusted EPS up 30%.
We obviously did the share buyback during the period. When we got to the end of June, we had completed 2.1 million out of the total 3 million program. That program was completed in July. There is no benefit of that yet in terms of the earnings per share. We will get a half-year benefit because it is 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 pence to be paid in November. Continuing a trend of somewhere near, we are getting close to 20 years now of successive dividend increases. Obviously, we have got the buyback as well as a way to return cash to shareholders and that could take up an increasing importance in our capital allocation policy moving forward.
Moving on to gross profits and margins, just want to draw out really what has been going on since 2022, which is when we had that drop in gross margins. It has been steadily increasing through that period. Obviously, the beginning of last year, the first half of last year, we got up to 51.4%. Really, as a business, we are targeting being above 50%. That is not to say we are trying to achieve to get to 55%. We are conscious that we want to drive overall profitability. So if we have got the ability to drive volume with sharper pencils, then we will do that and go after business. But really 50% is where we target running the business. There has 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 did not have to do this, but we felt it was right for the customers in the Middle East that we suffered the cost of getting the product to its final destination. So I think it was probably about a GBP 50,000 hit of doing that. That has obviously gone down really well, because following that, all the increased logistics costs that we have had in the area and elsewhere are passed on to our customers due to the terms of our contracts. That has not affected demand for our products in the area. Obviously, we have got 56% growth as we have talked about. But it does mean that we are having an increased level of logistics charge in terms of revenue, and obviously we charge that out-cost, so there is no extra gross profit from a higher revenue basis, which does have a slight negative impact on margins. We have also had other cost pressures.
There's been inbound logistics surcharges because of energy prices. We've also had some mid-year inflation on a number of products that have an energy component to their cost base, and in particular, the acid-based eubiotic range, which was one of the major issues that we had in 2022. It's important to draw out some differences between what's happened now and what's been happening in the past. Firstly, acid-based eubiotics are a much smaller percentage of the overall business, representing only around 20% of group sales now, whereas they were probably closer to 40% back in 2022. At the same time, although there was an energy cost impact on those inputs, those acid inputs, majoritively, the prices were already increasing because of supply shocks to the world's largest suppliers.
Had caused force majeure events, one because of a fire at their plant, so there was already a supply shock in the market, and significantly elevate prices. The higher energy costs really just elevated that to a slight higher level and made it persist. So we're not operating under the same conditions we had before. At the same time as well, we've got, as I said, acid-based eubiotics are a small portion of the business. The area of the business that has been growing alongside the acquisition of the Bio-Vet range is the more premium, higher priced and also with the higher margin products. So we've had competing headwinds and tailwinds, both on a long-term basis and in this current period, which has meant actually we've maintained gross margins at a similar rate to the end of last year. That's where we see it moving forward.
As I said, we're targeting 50% gross margin, and we can see that there's competing pressures. 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 non-reoccurring professional fees. One of the major reductions has been foreign exchange. 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 GBP 0.5 million, reducing that, the variances between the period.
In terms of the legal and professional fees, they're the other area that we've been saving. The benefit of both some in-house resource that's really coming to the fore and being quite effective in reducing the amount of expense we're going out to external advisors. At the same time, there's an aspect of that which is increasing use of AI. To give an example of that, it's not to say that we're not using professional advisors 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, "What do we need to know? Tell us all about it," then we can go more prepared, understanding what we expect the situation to be and really asking people to check what we believe to be true.
That is helping reduce the amount of spend that we have on legal and professional fees. A number of other expenditures are relatively flat. You can see that less than [inaudible] of an increase across a handful of other costs. We have people costs. Again, within there are competing movements. We have an overall increase of 6%. Within that, employment costs have actually increased to 12%. We have had a number of areas around the group where we have been increasing our resource base, such as in Americas, building out the platform at those operations in Bio-Vet, but also in places like Latin America. We have had people that have come on board where we used to operate through a distributor there. We have 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 distributor.
Again, increasing admin costs. As a benefit, we are getting higher revenue and higher profits on those now direct sales. We have had some increases as we expand in the group and also some inflationary elements to that increase in employment costs. Offsetting that, we have had two very fantastic years, and this first half has been very strong, but nonetheless, it has required a slightly lower level of bonus accruals at the end of the period. Really, the majority of bonuses are paid out on full-year profit performance. It is one of the reasons why we do have some contingency. If there is a slightly weaker performance in the second half, then some of that bonus cost will come off as to counterbalance that.
Moving further through my presentation then, in terms of cash flow, obviously an increase in operating cash flow before working capital changes up to GBP 4.5 million. We have had absorption in the period of GBP 3.1 million. Mostly timing-related impacts in regards to receivables and payables. There is nothing structurally I would necessarily point to that I would say there is something that would not unwind and be on a long-term basis. We have had slightly longer receivables days. Again, really just a timing impact. There is a range of different sales we make around the world. Some on smaller and higher days, creditor days, and really it is just a case of the profile at the end of the six-month period. Nothing structurally. There has been good cash flow collection through Q3, and so nothing fundamentally to point out there.
In terms of payables, then it is a factor of just the spending patterns that we have had, and also lower accruals in terms of things like those bonuses. In terms of CapEx, then it remains low within the business. If you have been following us for a number of years, there was a period when we had a higher R&D and higher tangible CapEx on things like the plant automation. There has been a bit of an increase in this period, up to GBP 0.4 million. Really looking at 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. Obviously, we have had the outflow of GBP 2.1 million in the period for the share buyback.
Out with, we would have grown cash in the period, but nonetheless, finishing the period with GBP 11 million, then looking to continue to grow that as we conclude the rest of this year. That is the end of my section. Obviously, be very happy to answer any questions that get raised in the end of the presentation. Over to Richard.
Thank you, Marc. If you can just move it on. Just looking at, in summary and overview across the four segments that we do, obviously Asia was disappointing, down 9%. Middle East had a good performance, as have the Americas and particularly the U.S. Then Europe was thereabouts, slightly down, just pitched in the middle. Marc, if we just move, I think it is Asia, is not it, the first slide?
Yeah.
A bit more detail in Asia. There are a couple of things happening in Asia. Firstly, as we highlighted 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 also a bit more raw material price starting increase in inflation that might actually increase a bit more with the El Niño effect. So they are getting impacted, the producers of energy. I will show you the region that did the best or the countries that did well. It is Malaysia. It is not without design that they have got good oil and gas supplies. Of course, they control their energy costs in terms of the consumer and producer. Probably similar to Australia, actually. It is not surprising that those countries are doing better given the energy outlook at the moment.
The other impact, and possibly even bigger on Asia, is China. China is now a net exporter of pork and chicken. That has never really happened before. It has always had to import itself, in terms of additional pork, particularly from the U.S. and chicken from other places around the world. 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. Their economy is a little bit weak as well, so they are probably not consuming as much as maybe they would if it was going gangbusters. So they are starting to export around Asia to some of their nearest markets, like Vietnam, Philippines, Korea, and places.
That is obviously putting a bit of pressure or some pressure on the local producers in those countries in terms of their selling price. As Marc said, if it was not for the toxin binder decline, we would have been ahead in Asia. Toxin binders in Asia, because of the humidity and the conditions, they tend to buy the cheaper grain and use cheaper grain, which has more toxins in. Toxin binder is really in every ton of every feed there. In places like the U.S., Europe, it is really only put in if we are identifying that there is going to be a toxin issue and it is going to be a raised level of toxin issues. So we then say, "Well, we will put it in to overcome that particular issue for that period of time." But in Asia, they put it in all the time.
It is a little bit more commoditized product. There are a lot of people going after that market. I think at the beginning of the year, we did have quite a big customer that we have had over the past few years that was all based on price. We were not going to go down to the level of the pricing that people were competing with. That business sort of was lost, did hit our toxin binder business. 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 would be very simple, straightforward products, not as good as ours and probably do not even work. It may be that some of these customers find actually they have had a performance issue because the amount of toxins that they have got in there.
Some of that business could come back. You have really got to look for the less price-sensitive customer and try and get an added value in a product in such as ours. We can compete at a lower price, but some of the prices we have seen are just ridiculously low and certainly one price we think that the supplier will not be making any money. We are not going to go into, that is not where we compete on that. I think because there is a bit of a question of how much is toxin binder as a component of the Asia sales. I think it is left at 3%. It is an area we still want to do development growth, grow in toxin binders, but more at the premium end.
There is probably a bit of work on that to do in terms of marketing differentiation and communication, but also finding those less price-sensitive customers. If I just quickly go over to somewhere like Mexico, we know there are some opportunities in Mexico for better priced products. That is an example. It does just depend, but as I say, Asia would be, as a rule of thumb, a bit mad on low value sort of toxin binders there. But all is not lost. If you might just go back because we have Red-Lite.
I can speak a bit more about this later, but AmpLIPhy and Red-Lite in this market are two opportunities. AmpLIPhy is basically the new fat emulsifier product, so it helps you to get more energy out of fats, which will go into the formulation. Given that the way that we feel that the raw material price is going up, they are probably going to start specifying more sort of fat into the diet and AmpLIPhy can help leverage that and help them get more energy out of that, or the animal get more energy out of it by emulsifying those fats. Something like AmpLIPhy is a product that we are going to push in that region. We have already started to sell it into the Middle East. We feel Asia is, given the conditions, is a good opportunity.
Red-Lite, again, 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 are not being as effective. We are seeing where the insects like beetles, weevils, are actually able to overcome the treatment by chemical means of an insecticide. I think in the easy case, it basically anesthetizes the insect and after a number of hours or a couple of days, the insect is up again and moving around and stuff. Red-Lite doesn't do that. It uses a physical, more mechanical way of killing the insect by blocking the pores, so it can't produce its waxy coated surface, which keeps it hydrated. The insect basically dehydrates, and that's it.
It's dead, gone, permanently terminated. Red-Lite is what we are finding as well, not only obviously safer, more effective, and it's more cost-effective as well. One of the things that we are currently doing is working with an engineering company, actually, in the Philippines as an application method so we can blow Red-Lite in as these grain stores are filled up, as the grain goes in and corn goes in, and get that dispersion. That's something we are sort of just working on and developing that capability. But we feel that it started in the Philippines where we noticed this trend away from chemical means or customers asking for this. We are now working on this in Thailand, and it will roll across Asia. Again, another product that we have got the team working on that can counter the pressures at the moment on mycotoxin binders.
Hopefully that sort of explains what's going on in Asia. If we go to Americas, Marc. Yeah, look, Americas doing well, particularly in the U.S. with some of the Bio-Vet side. We have seen some good opportunities. We are really pleased with what's going on with the Bio-Vet products, and particularly, again, their more added value areas such as RuminAid and QuadriCal. What we did have, and we sort of mentioned there, we did have a little bit of suffering in Mexico as we moved away from the distribution model into going direct. There was, I think we had two distributors in that region. One that was based in Mexico, but tended to look after Central America, so places like Panama, Honduras, Ecuador, Colombia, and then the other one that was more just focused on Mexico.
The similar time last year, the Mexican-focused one also said that it didn't want to continue with our products. They had been a distributor for quite a long time. A number of years ago, they were bought out by an Indian pharmaceutical company, an antibiotic company. The remit has finally come down to them to say that they only want to be focusing on pharmaceutical and antibiotics. It suited us because they were really only doing sort of one product that they had been doing for years and weren't doing any more of it. They sold all of their stock at the beginning of the year and pushed all that through. When we picked up the business, there was a little bit of dislocation, a bit of disruption that has sort of slowed down or impacted in the first half.
We are really sort of back on track, and we are starting to win some new business, actually, then quite a sizable business in Mexico. We are also recruiting a sales manager to support Mexico as a single country. Whilst the team that came over from our distributors looking after Central America, they have now come on. They are all employed, as Marc said, are sort of tackling places like Panama, Ecuador, Colombia, and those other regions. This opens up a broader range of products that we can sell in there. It allows us to supply direct. It allows us to manage that price volume sort of balance of actually, if we are a little bit more competitive because we haven't got a distributor margin, can we get more volume?
Really, one of the areas that we think should be good for growing Orego-Stim because the incumbent distributors did not really push it. It was probably a too complex product in terms of gut health and microbiology, that they would tended to focus more on organic acids, which had been their history on toxin binders. We feel there are opportunities up in that area. Brazil, it has declined a little bit at a slow pace. We feel we are at the bottom of that. We have made some management changes and a new sort of commercial strategy is being implemented into that region. We are quite hopeful that we can start to rebuild, but it will be next year before we see any major sort of improvement in Brazil.
There is a new management team in there, refocused sort of strategy, and there is a good opportunity to get the Bio-Vet products into Brazil, into the ruminant sector. I think, Marc, we-
Yep. Europe.
If we just look, Europe's just 2% drop, but there are some countries, and particularly the U.K., where we are having a good, strong performance there. I will pick up this question when I, because I did sort of flick through and I saw that, about the changes with Associated British Foods selling their monogastric feed mills. We feel this will be positive for us because those mills are being sold to sort of owner managed, family-owned companies. Some of them are like Lloyd's Animal Feeds that we already supply. Breaking those down to these owner managed and family-owned businesses sort of makes it easier 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.
You also get within a big organization, you may have a manager or a nutritionist and they change every so often and sometimes when you have the business that is fine, but a new person may come in and say, "Oh, well, I have got a relationship with a different supplier. I want to change from phytogenic to an organic acid or probiotic." It tends to be more stable with and more relationship driven with the family-owned. We feel that there is an opportunity with them breaking up the, and selling off these feed mills, and that is in the U.K. There is a lot, and we will be resourcing up a little bit of that to try and target that business. The others are just certain areas where maybe dropped some business behind or they have 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 those customers and drive forward. Hopefully with the distributor out the way, being competitive on price should not be an issue. It is just a case of building those relationships. We have got a guy down there who is based in Spain and looking at Italy and various other places. With Europe, there is still plenty to go at. It is a bit more difficult when you are based in the U.K., you have got the English Channel or the North Sea, and there are 27 different languages on that. We are looking at how we can organize more effectively in Europe. I think just switch on to the star performer, Middle East. Things are good for Middle East producers.
First off, they want to be self-sufficient and they're very much focused on food security. There's a lot of investment going into their production systems. They haven't had any issue, possibly like Asia, which is the other side of the coin if you look at things, haven't had as much issue in terms of higher energy costs because they're sat on oil and gas. Also raw materials they are buying, a lot of the raw materials are coming out of Ukraine in terms of corn, soya and things coming out of Ukraine and Russia, then that's going into the Middle East and those prices are very competitive 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, 15%, 16% in terms of harvest for wheat and corn. We expect Middle East to still be strong. The other side of that is they would have imported frozen chicken from Brazil and places, but because of the ports and the disruption at some of those ports then that's not getting in as much. So their own producers are having a good time and hopefully, excuse the pun, making hay whilst the sun shines out there. That's one of the reasons why we had some good performance there. India has obviously helped in terms of it's a new emerging market in terms of agriculture and for us we've had some good business there with our partner. There's still quite a few opportunities, well, there's still a lot of opportunity within India over the future.
A couple of new territories like Bahrain and Sudan where we just started to supply in there. The good thing on Middle East is we have now finally got first sales of QuadriCal, the Bio-Vet calcium bones. It took us a bit of time to get registration. 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. We then hope that we'll get QuadriCal first sales before the end of the year, we hope, in Saudi Arabia. Also just flipping into Vietnam, there is some trial work there. There's a big farm using, testing QuadriCal over there. So, yeah, we like the Middle East at the moment, and India is doing well.
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. I sort of mentioned about AmpLIPhy. We did have first and repeat orders in the Middle Eastern markets. There's a number of other markets around that we feel that product should do well. It may take a little bit of time, but as I say, hopefully the demand and people will give us their ear in the Asian region because they're going to have to get more out of the ration for the animal in a more cost-effective way and something like AmpLIPhy can help that. QuadriCal I'd mentioned, so I don't need to go through that. We've had further stuff on Orego-Stim and Orego-Stim Plus across sort of multiple species. We're doing quite well in the organic side of dairy.
In the U.S., we've always been selling the egg and poultry side into organic. We're now getting a lot of interest and hopefully increasing demand from the organic side into dairy and potentially into beef. The beef market is another opportunity into the U.S., Orego-Stim has a lot to go at out there. I think there is sort of trial work, and I think a few months ago, 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 Orego-Stim. There's still trial work sort of going on in there, but hopefully sales will follow on from that. Red-Lite, as I say, hope for continued market adoption.
We have been getting sales in the first half into the Philippines, as I say, where people are evaluating and looking at it elsewhere in that region. The heat stress, obviously we've had a really hot summer, some more than others. Particularly in Europe, when you see sort of temperatures of 40 degrees Celsius, we wouldn't have ordinarily looked at, yeah, there's a heat stress problem for dairy cattle in general, and can we develop a product? This was a combination development from Bio-Vet and Anpario, and it's a combination of plant extracts. It's currently being trialed, or it's on a few commercial farms in Wisconsin. The results touch wood 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.
If they drink more, A, they're cooling down, but also they're going to be producing more milk, which is obviously important in terms of yield. This product we feel is a real potential opportunity. I don't think there's anything quite like it in the market. Certainly after this year, it's become more of an issue, heat stress. Actually, I was having lunch, when was it? Last Thursday in London, with a big integrator from Bangladesh who does supply into the dairy feed market, their customers. Without us even prompting and saying we had this product, he says, "Yeah, one of the issues we've got over there is heat stress.
Have you got anything for heat stress?" This product, there's more markets to go at with this market in terms of geographically, because the way the temperature's gone in the last 10 years into the summer, you wouldn't necessarily have thought, well, could it be sold in France and Germany and places like that and even the U.K.? Now we think it potentially has got a much wider market, both geographically and in terms of seasonality all year round, because you've got obviously Northern Hemisphere and Southern Hemisphere markets. Hopefully the big benefit of that we'll start to see next year in the Northern Hemisphere as we run into the summer. We're just finishing.
I'll be over at the end of September into Wisconsin and be able 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 the innovation side that we're sponsoring a PhD. The guy, the PhD candidate works for us anyway. He's in aquaculture. He supports our aquaculture business around the world, and he's doing it at Plymouth University based on Orego-Stim going into formulations to try and reduce the heat stress in the fish, shrimp, what have you, are going to be impacted by because of global warming temperature in the water is going to start impacting performance and production in the aquaculture market.
It's going to be a theme moving forward in terms of looking at productivity and sustainability and overcoming heat stress. So something that we feel benefits Anpario, actually. I think, Marc, just quickly on to the outlook. Soft to start, two words that can crash your share price, which when we wrote them, we didn't think they would have that impact. We did think that maybe it would be a little bit negative. All it is in the first two, July. Firstly, go back a year, quarter one, quarter three was our best month ever. It was very strong. So quarter three this year is against a strong comparator. July and August were a little weaker, softer, as we said, than we had anticipated. We're not sure some of this, obviously we've seen this impact in Asia.
Some of it might just be the summer lull and the heat and the World Cup or whatever, but we were a bit cautious because we just felt it's gone on for two months. We're still ahead of last year, the end of August, and September's looking better and stronger. But we had a very good September last year that was GBP 5 million. We don't expect it at GBP 5 million, but we want to get some way to there. We just felt, put that caution out, and given what's going on in the Middle East, that's probably only got a little bit worse over the weekend and how some of that is impacting Asia. We just felt we put a cautionary note out. But other areas like the Middle East, funnily enough, are doing well. Americas, feel the U.K.
We're hoping that our geographic diversity will compensate and some of the business initiatives and the pipeline that we're driving through will sort of compensate for the weak areas like Asia. We feel that sales will be a bit softer, but what we've done in terms of the analysts are still putting in the same profitability for the years we'd forecast. If we felt at this stage it was a profit warning, we'd have to go out and say we're not going to hit the profits. As Marc said, in terms of like bonuses, lower bonuses and some of the costs we think it should compensate. But we don't know from here on in what's going to happen in terms of fuel costs, energy costs and things that's happening in the Middle East, how that will impact the rest of global GDP.
But as I said, it was a softer start, so we felt it was right to telegraph that. We do not, at the half year, normally say about the expectations because we tend to do that in January. Particularly, that is what we have done traditionally. We tend to give stronger indication in January after we have had the year end. Because we are shipping abroad, even though we might have manufactured a product in December, sent it to the port, it is on the quayside, if it does not go across the rail, gets onto a ship, then that sale falls into the following year. And a few years ago, we had GBP 1 million worth of sales where that happened, which is a GBP 0.5 million of profit. So, we have never sort of historically indicated that we are going to meet expectations or be in line or whatever at this stage.
We have to wait till later on in the year and normally January because of that cut off. But we have obviously spoken to the analysts and said this is what we feel in terms of where the sales are going at the moment, given the softer start and how that would impact through to the bottom line. And they have done their numbers and they have obviously worked out where they are. So as I say, we feel still optimistic. There is some difficult macro conditions. We have got these new territories, certainly Latin America or Central America, where we have now gone direct. We have got commensurate sales through our Turkish subsidiary.
We have a Turkish distributor which is still doing business there, but we set up a specific. We already had a subsidiary, but we have now enacted it and we are acting as an importer, a sort of agent and then appointing resellers and sub-distributors that will be given a particular product market or species market or geographic market. This allows us to optimize Turkey as a country in itself. It is big in terms of agricultural output, but it is on a number of different levels and that is why we felt we needed to set up this, or organize a subsidiary in this way as an importer. And we take additional margin because we are doing that. And we can sell the full range, whereas if we had have gone through a traditional distribution route, we would not necessarily have had that access for all our products into that market.
So, yeah, further projects to support growth in India, and as I say, some of these new product developments like PhytoCool, the Red-Lite product, that hopefully will help to support growth and the business going forward. So I think in long term, we do not feel anything has changed. We have a set of products where the market is moving towards us that are environmentally friendly, natural, sustainable, very effective. And we have now put down more sort of sales channels where we are in control. We are going to the end user or the sub-distributors within that country, and we can drive that over a period of time to continue to create long-term shareholder value. So I think that sort of wraps that up in terms of the formal presentation. If we can go to the questions.
I've just seen some questions that were on there have gone off, so I presume I've answered them. I'm assuming I have. The first one is saying, from Peter W, "Would you say you're guiding more conservatively than usual, even if trading is going well so far?" I wouldn't say any more than usual. I'd say we would always. We have in the past guided a bit more conservatively over the past two years. We probably haven't because we could see the growth and there was, well, in this world, there was quite a settled environment in terms of geopolitics until the Iran war started kicking off. In that period between start of the Ukraine war and when energy prices went up and then down, it was easy for us to. We could see the growth very strong in the first sort of nine months, yeah.
We probably guided up and we did upgrade a number of times. I wouldn't say we're guiding more conservatively than usual. I'd say when we guide conservatively, we've done that before. As I say, the first two months just gave us a little bit of a check and the visibility going forward 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 ARR, annual recurring revenue, and we're not a contract job where we know what contracts we're going forward. I would say we're guiding fairly and realistically more than anything. But I do hope it is conservative by the end of the year and that we've busted those numbers and broken them.
But at the moment, take what we've said in the guidance as where we feel we are and what the analysts are saying. Next one, this might be for you.
I can do this. Yeah, no problem. Yeah. I think we point out that those leading brands represented 80% of the sales mix. Yeah, they did. Sorry, the question just for everybody is, "Why did 17% growth in the leading brands translate into only 7% group growth?" So yeah, 17%. And 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 at 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 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.
The thing we can be confident on is those products are the. The toxin binder, as I said, we think we have a great product there. Potentially we need to work on the position of it in Asia, where it is a fundamentally different market for toxin binders. But outwith that Asia performance, toxin binders did grow marginally. But the products that have been doing fantastically well are those higher premium products that are the market leaders we feel in their various different segments. Hopefully that answers that question.
Marc, I think yours is the next one as well.
Yeah, okay. 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 4. The Americas have had the lowest margin and Europe the highest. Can you give us some background into this?" I think it is fair to say, the Americas, there is contrast in parts in the sense that the Americas is obviously growing fantastically well. It is a high margin area for us compared to some of the other segments in terms of gross margins. But at the same time, there is generally a high level of resource cost. People just naturally are more expensive to employ in places like the U.S. Also now, particularly with having Bio-Vet on board, there is a production site there is an administrative team, there is a location.
They are resources that are not necessarily the same elsewhere. If you look at how we report our operating segments, we have Asia, Americas, IMEA as one group, and then Europe as well. Then we have the central cost. The central cost really is everything that is the background architecture of the business, and the operating segments are really traditionally just the commercial front-end sales parts of the business. If we have a subsidiary in a particular area, so say for example in Asia, then we have a number of subsidiaries. Because that is directly associated, then it gets allocated into that segment. But what we do not do is take the central costs that we have, the technical team, finance team, et cetera, and apportion them across the different segments.
Where you have Americas that have their own. It is the largest set of operations we have outside of the U.K. Then there is a higher cost base. As we have been talking about, 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 will continue to drive performance in the coming years. Expect that to increase. Where we have Europe, for example, the European sales team is not actually that large. We are not reallocating in IT costs, et cetera, into it.
Because they do not have. They have only got one entity, the Irish entity. Then the resource that 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 a sort of lower administrative cost base. It depends on the dynamics. Hopefully that has answered the question.
Yeah.
The next question in.
Marc, can you hear me? Yeah. I just want to.
Yeah
Go ahead. Yeah. The next question, do you want to answer that or will I?
Yeah. In this half year report, you mentioned toxins in the Asia section several times, and I can see no reference to toxins at all in the full year report. I want to make sure I understand the significance of toxins in Asia. I think we've highlighted that it's 3% for this period, as in H1 2026, then the toxin binder sales in Asia were 3% of the group. Asia was roughly a third of the entire group, so it's about 9% of Asia specifically. There isn't. We don't expect this to happen, but if we lost all toxin binder sales in Asia, that would be a potential 3% hit to the group top line. Obviously, that's not a situation we expect to occur.
As I said, we think we've got a great product and we're going to look to start building that back and pushing it and position it right so that people understand the value that our product does bring over any sort of lower price commodity and lower efficacy alternatives that have been switched to. Richard, I think the next one's for you, but I think you've answered it to a degree already on the Red-Lite.
Yeah. No, we see certainly in Asia where this change of move is happening, obviously, because of the humid, hot conditions and they have more insects. There are insects, weevils and beetles, and red mite issues probably than some other places around the world. No, we had this product for 20 years, 30 years. It's basically a mineral, so it's quite a simple product that we have a supplier that produces it with us, and we have had it for a while. It's just that the market is now moving towards us. People had used, we have got the odd customers use it for 20 years for various things. It's just, as I say, the change in efficacy with chemical and fumigation and the health and safety and the cost of those is making people look at the alternative solutions.
The key bit will be also this mechanical innovation that we're doing in terms of applying it into the grain stores. That is a big opportunity for us. We do see, yeah, a good future for Red-Lite. It's early days, but we are selling quite a lot, I think, into the Philippines, aren't we, Marc? We have done no less six months ago.
Yeah. Sales of Red-Lite have been growing. Yeah.
The feedback is positive. We're getting good, positive feedback. Is there any reason for there being no mention of aquaculture in the interim statement? Actually, I think I did mention aquaculture in terms of heat stress, so it was in there. There's nothing in terms of the trading. I'd like it to go faster. One of our products, Orego-Stim Forte, is being used in hatcheries. We want to try and get it into the grow out ponds. It is quite an expensive product, although we have done some work on concentrating that up so that it will become a more cost-effective product, and we think that then that could be used in the grow out ponds more cost effectively.
Sometimes when you move from hatcheries into, where it's a bit more controlled condition into ponds out in the countryside, you don't always get the results consistently, and we found this with Aquatice and I think with Orego-Stim Forte, we've found this as well. There's still opportunities. Brazil is actually quite a good opportunity. I think it's catfish in the U.S., in the United States, down Louisiana and those sort of southern states, that I think it's Orego-Stim Plus 2X is being trialed there. No, there is stuff going on. It's just there was just other bigger things that we sort of wrote about 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 going to feed through, whether it's worth mentioning or not.
I'll take this next one then, Richard.
Yeah.
Pat K asks, "Capital allocation, are you considering a further buyback in light of the lower share price and a recently curtailed M&A opportunity?" Obviously, I can't say anything because it'd be price sensitive. What I can say is that, we kind of mentioned a little bit before, the priority for us is to be looking at buying businesses, acquisitions like Bio-Vet, because they work fantastically well. However, the number of Bio-Vets out there are low, and Richard, in particular, and myself supporting him, that is an active strain of work at all times and has been for a number of years. That's no surprise there. In the absence of that, we haven't got as much CapEx requirements, as I said. We're going to look to continue to grow the dividend, because we've had near 20 years of successive dividend growth.
I think it's fair to say that, yes, buybacks have been well-received by most investors, pretty much overwhelmingly very supportive of the buyback. That's very much been noted by the board, and I think it's been moved forward in terms of capital allocation and returns to shareholders. It could well play a feature again. Just moving to the next one. Has there been any change in the consensus earnings expectations for 2026, 2027 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 we have a lot firmer ground on which to operate. So, in June we said we're ahead of sales and profit expectations, which as you've seen from the results, has absolutely been the case.
In terms of the outlook for 2026 and 2027, then there's been no change to profitability in any of the consensus expectations. 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 the softer start and have interpreted that as a trim to revenue, but confident still on the overall profit expectations. So no change on profit. Slight reduction in revenue. The next question I'll take again.
Yeah.
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. Just to be clear, we've had some very fantastic years, and this first half of 2026 has been a little bit softer in terms of revenue growth. We've got two elements of our bonus program, a revenue element for the sales team and for the rest of the staff and management. It's profit based. 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. 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 are paid out on an annual basis.
If we're not hitting the right levels of profit that we need to, then that bonus cost will come out of the P&L. As such, just contingency for the overall full year results. Hopefully that explains that in a little bit more clearer manner. Richard, probably a good one for you.
Yeah, any progress. It's slow on this. The multinational supplier, even though they're talking to a lot of buyers across Europe, they are going to these big organizations which can take long discussions. I think it's this week, they are with our regional manager. They're meeting a number of companies that they're having discussions with, at what's called SPACE, which is in the, is it Brittany, near Nantes and Rennes, that there's a big French agricultural, European agri, exhibition and stuff and show. Our guys are there with this, the distribution company, talking to end customers, some of the cooperatives in France and some of the big producers. They are now down to some sort of specific projects and suppliers. So, 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 doing anything in Europe, quite frankly, because we can sort of still go direct on some of the main products. But it's been slower than what we'd hoped. I suppose they're not surprised. I think they're a little bit surprised that these big organizations that we're selling to take ages to make a decision and to change and to switch over and things. So they've found that. We'll know, I'll get more feedback after this exhibition. We'll review at the end of the year to see if that's the right structure. We are looking at how should we restructure the way that we look at Europe, and start putting more people down in some of these countries and stuff. There is some work going on within the company on that. But hopefully, as I say, this distribution, multinational supplier, they're a big company.
They got the contacts into the buyers. They need to work with some of the nutritionists, and that's where we're supporting them on. We'll know by the end of the year how we're going to review it and see how that's gone. But yeah, a bit slower on progress than I would've hoped. In terms of any acquisitions planned, or if there was, we can't really say, but I can say there's nothing imminent at the moment. There's one or two we're having light conversations with, but people are a bit slow to make a decision to move forward with doing anything. In a lot of cases, they want to improve their profits so they can get the valuation that they want in their heads. So, we have to wait till they've gone through that process. But there's nothing at the moment.
We've got plenty to go at in terms of selling Bio-Vet's products internationally and pushing our organic growth and implementing our organic strategy in terms of sales channels and things. Hopefully that's answered that one. In terms of the GBP 400,000 non-recurring professional fees, it was a transaction that didn't go ahead in the end, and so fees were incurred and that's really all I can say about that. I just need to point you just to what 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 the U.K. 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.
The share price is. It is very frustrating because I think Marc worked out we were below 7 x EBITDA, and some of the deals that have gone through at 12 x EBITDA in our sector. So, we do feel vulnerable, but there's regulation process to go through, and hopefully people will see that mismatch and investors or fund managers will buy into the stock and think, "Well, this is a good price," and sit there and close that gap. But, I don't feel particularly vulnerable because we can always argue where the business is going, what it is. But there may be people out there that are looking at us.
Just to.
Private equity.
Just to clarify as well, just on the 7x EBITDA. I think sometimes people do not realize how cheap we are because you have to remove the JSOP shares, and only add them back to the amount they are dilutive. Then we have the cash on the balance sheet as well. I think once you make those adjustments, then we do look cheap. It makes from an acquisition perspective in terms of us going out, it makes it difficult as well because there are deals going through at 12 x EBITDA, and we are down currently at just around 7x. So it makes the earnings dilutive for some of those deals if we were to look at them.
Okay. Hopefully that answered that. Pat K: "How is Super El Niño expected to impact revenues or costs or both?" It does not necessarily impact us directly, but it does indirectly, as you probably allude to that. Basically, Asia will suffer because it will. Generally, it will suffer because the rice harvest will be down. There is more wets, I think over there, rain that will go over there. So Asia will suffer, but then on the other side, the Americas will benefit. I think we have seen Brazil and Argentina have some very good harvests, some very strong harvests. 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 diversified and product diversified, is because you do get these effects.
We have the El Niños before and we have had Super El Niños before, but it gets compensated. Where it impacts one area, like we think Asia will get more impacted this time. The Americas will be fine and we have already had good harvests in Ukraine and Russia. So it may impact our revenues in certain regions, but hopefully that will get compensated elsewhere. I cannot see it impacting our costs. It is really the impact on the producer and how their profitability is going and that. But all in all, we do not feel it is anything to worry about. If it is impacted, it is a short-term impact and we move on. Hopefully people are investing in this for the future in the longer term and not just each year, and trying to trade El Niño. Do not try and trade our stocks based on El Niño.
There's probably better things to trade on with El Niño, like the prediction markets, isn't it? Hopefully, that sort of answered that question. I think that seems to be the last question. Just to thank everyone for your attending and listening. Hopefully we've given you a fair sort of reflection of where we are and where we feel we're going. I know there was that softer start sort of comment, but we feel confident we can keep driving the business forward and developing it. Just if you are shareholders, thank you for continued support in the company, and we'll keep trying to do our best. I'll hand back to Charles.
Perfect. Thank you, Richard and Marc, for updating investors today. Could I please ask investors not to close this session, as you'll 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 afternoon.