Anpario Regulatory News (ANP)

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Group's obligations under Article 17 of MAR.

("Anpario", "Group" or the "Company")

Final results

Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable feed additives for animal health, nutrition and biosecurity is pleased to announce its full year results for the twelve months to 31 December 2022.

Financial highlights

- 1% decrease in revenue to £33.1m (2021: £33.4m).

- 25% decrease in adjusted EBITDA1 to £5.2m (2021: £7.0m).

- 35% decrease in prot before tax to £3.7m (2021: £5.7m).

- Basic earnings per share down 30% to 16.13p (2021: 22.92p).

- Diluted adjusted earnings1 per share down 28% to 16.67p (2021: 23.01p).

- Increase of 5% in proposed nal dividend of 7.35p (2021: 7.0p) per share, total dividend for the year 10.5p (2021: 10.0p).

- Cash and bank deposit balances2 of £13.6m at the year-end (2021: £15.5m).

Operational highlights

- Sales growth across Asia, Middle East & Africa (MEA) and the Americas, offset by a decrease in Europe.

- Implementation of sales price increases helped partial recovery in gross margins through H2.

- Mastercube™ pellet binder grew by 39%, driven by demand for natural products in aquaculture.

- pHorce® and Orego-Stim® combination presented at the International Poultry Scientific Forum in Georgia, USA for the prevention and control of necrotic enteritis.

ESG highlights

- Awarded ISO 14001 certification for Environmental Management Systems.

- 39% reduction in Carbon Intensity3, a cumulative reduction since 2019 of 62%.

"The Board reports the Group's operating performance in what has been a difficult year impacted by supply chain disruption and significant and immediate raw material and logistics price inflation. This challenging backdrop has also adversely affected many producers who have experienced input cost pressures, notably feed and energy, hurting their profitability and in some cases viability. Some farmers, particularly across the UK and Europe, decided to forgo unprofitable production which is now leading to specific food shortages in the retail channels. With less animals being reared the demand for animal feed and therefore additives is inevitably lower and partly explains the Group's disappointing performance across Europe.

I am proud of the contribution and support from all our stakeholders, especially our staff around the world, who have maintained high customer service levels and at the same time been able to implement sensitive sales price increases to partially mitigate what has been unprecedented raw material price inflation. Our margins improved in the second half of the year as a result of our actions. We also experienced lower volumes in China because of covid lockdowns, which was a very testing time for our local staff. So, it is pleasing to see the relaxation of this policy and hopefully a resumption to more normal economic activity.

Trading in the first couple of months of 2023 has been weak and market conditions are expected to continue to be challenging through the first half of the year. Avian influenza which for the first time is evident around the world at the same time will present its challenges to the industry. However, Anpario is well diversified geographically and with a broad range of products also targeting new markets in aquaculture and ruminants we therefore expect the Group's performance to improve as the year progresses supported by our strong balance sheet and business development initiatives. Looking beyond the current trading environment, the Group continues to see significant growth opportunities for natural and sustainable feed additives."

1 Adjusted EBITDA is defined in note 6.

2 Cash and bank deposit balances include amounts shown as short-term investments in the statement of financial position, these are deposit accounts with notice periods of more than three but less than six months which can be accessed instantly at the penalty of lost interest, see note 20.

3 Carbon intensity represents tCO2e per £m sales for Scope 1 and 2 emissions, more information available in the Environment and Social Responsibility Report.

Chairman's statement

Anpario reports its revenue and profit performance for the period during what has been a very difficult year for the Group. Sales decreased by 1% to £33.1m and the decline in our gross margins due to significant and immediate raw material price inflation led to a decrease of 25% in Adjusted EBITDA to £5.2m. Profit before tax declined 35% to £3.7m (2021: £5.7m). The period has been characterised by a series of global events, not least the invasion of Ukraine by Russia, which has affected energy, agricultural commodities and certain raw materials manufactured in the region. Global supply chains and logistics continued to be disrupted following the pandemic and China's zero-covid policy for most of the period.

I am proud of the way the Group planned and reacted to these challenges and, in particular, being able to implement sensitive sales price increases to rebuild gross margins, which improved in the second half of the period. We have continued to invest in our sales channels, storage capacity and energy saving initiatives such as the solar panels at our head office and manufacturing site, as well as increase inventory to ensure customer service levels were maintained during this disruption. Our strong balance sheet and control on costs enabled us to make these investments and to return cash to shareholders by way of a 5% increase in the total dividend subject to shareholder approval at the Annual General Meeting (AGM).

Despite the difficult backdrop, there were positive sales performances in Asia Pacific, Latin America, United States (US), the Middle East & Africa (MEA) and North-West Europe. Key products which performed well in these regions included Mastercube™, pHorce® and our mycotoxin binder range Anpro®. Sales in the UK declined by 36% primarily due to a large customer reducing their use of our feed hygiene product following significant increases in the price of organic acids. The other territories in Europe experiencing declines included Belarus and Russia, following our decision to suspend trading in these territories, with sales were down by over £0.2m, and Spain and Italy where high input costs are making business very difficult for producers.

We set up a wholly owned subsidiary in Vietnam in the prior period and I am pleased the team delivered a strong sales performance which affirms our strategy to supply direct to end customers by employing local sales personnel in key markets. We have developed valuable skills in setting up subsidiaries around the world which can take longer to implement but prove to be more durable. During the period we also recruited additional sales resource in Brazil, Europe, Mexico, the Middle East and the US.

China had a difficult period where sales declined by 6% due to disruption caused by intermittent covid lockdown periods followed by the rapid spread of covid after the relaxation of these restrictions at the end of the year. The opening up of China will bolster its economy and with it, meat protein consumption, in addition to supporting the wider Asia Pacific economy.

Given the challenges of our global supply chain we increased our stockholding of both raw materials and finished goods in our subsidiaries by approximately £2 million during the period, but as supply chains improve our inventory levels are expected to return to more normal levels.

Our research and development activities continue with several scientific trials and new product development initiatives. The scientific paper presented at the 2023 International Poultry Forum in Georgia, USA showed that using a cost-effective combination of our leading products, pHorce® and Orego-Stim®, can prevent and control necrotic enteritis in poultry whilst at the same time maintaining bird performance. In addition, our recently launched 100% natural omega 3 supplement, branded Optomega® Algae, is now being used in poultry feed to enrich both eggs and meat to support improved human health.

The Board is recommending a nal dividend of 7.35 pence per share (2021: 7.0 pence) making a total of 10.5 pence per share for the year (2021: 10.0 pence), an increase of 5%. This dividend, payable on 28 July to shareholders on the register on 14 July, reects the Board's continued condence in the Group and its ability to generate cash.

The Board plans to hold the AGM on Thursday 29 June 2023, at 11.00am. We recognise that the AGM is a good opportunity for shareholders to meet and ask questions of the Board. We will let shareholders know nearer the time the arrangements for the AGM.

Anpario's philosophy is to provide innovative solutions for animal health challenges by working in synergy with the animal's natural biological processes to support natural immunity through improved gut health. This is complemented by our culture and ethics which we have encapsulated in our 3 Pillars framework: People, Planet and Promise to communicate our sustainable behaviours and objectives including achievement of net zero carbon emissions by 2030. We have attained ISO 14001 accredition for our robust Environmental Management System and are committed to strong governance and stakeholder accountability which is central to our values More information can be found in the Environment and Social Responsibility Report and the Corporate Governance section of this Report.

This period has been one of the toughest to navigate for our staff across the globe. There has been no respite since the pandemic to challenge our staff who have stepped up ensuring our customers have been supported with products and services with minimal disruption. I thank them for their unstinting support and commitment to Anpario. The team has also embraced our environmental, social and governance strategy, some of whom are members of our internal 'Green Team'. Our operations department is also continually looking at efficiency initiatives to reduce energy usage and wastage, including being able to provide carbon footprint data for our packaging.

The year has started weaker than anticipated, at similar levels to the final quarter of 2022, which reflects the current challenges facing the global agricultural industry. The high input costs, notably feed and energy, affecting farmers in many parts of the world has impacted their profitability leading both to a reduction in animals being reared and a focus on reducing animal production costs. In addition, the strength of the US dollar and a tightening in liquidity has led some developing countries to implement currency controls restricting the level of trade we can prudently do with our customers in these regions. Avian influenza which for the first time is evident all around the world will inevitably affect feed volumes for a period.

We expect the Group's performance to improve as the year progresses as some of the challenges dissipate and inflationary pressures alleviate. We have several business development initiatives including growing our sales in both the aquaculture and ruminant markets and as recently recruited sales personnel start to deliver new business. In addition, the investment in production automation in recent years enables the Group to keep tight cost control when volumes are subdued.

Anpario's products improve animal feed conversion rates through both natural gut health improvement making the animal more efficient in nutrient utilisation and by improving feed quality. We will continue to run our 'Produce More for Less' campaign to remind customers of the efficiency benefits delivered by our products which are even greater when their input costs are high.

Our geographic diversity and strong balance sheet afford us to invest in developing the Group even during challenging periods. We therefore remain confident in the future profitable development of the Group with the industry growth drivers still intact and look forward to supplementing our organic growth initiatives with suitable acquisition opportunities which may arise.

Chairman

22 March 2023

Chief Executive Officer's statement

Group sales for the year to 31 December 2022 declined by 1% to £33.1m (2021: £33.4m) with sales growth across Asia, Middle East & Africa (MEA) and the Americas offset by a significant decrease in Europe. Asia Pacific, excluding China which declined by 6%, grew sales by 15% and Latin America and the United States (US) experienced growth of 44% and 19% respectively, helped by a favourable exchange rate. Latin America's strong performance can be attributed to sales of our natural pellet binder brand Mastercube™ into aquaculture markets and demand for our acid-based eubiotics range. The US continued to benefit from pHorce®, the leading anti-viral feed mitigant product, which is also successfully being used as a replacement for zinc oxide in piglet diets.

China experienced a 6% decline in sales due to the intermittent covid lockdowns throughout the year followed by an abrupt end to the restrictions which led to the rapid spread of the virus at the end of the period. Europe including the UK inflicted the biggest impact on Group performance with sales declining 22%. The result included the loss of a significant customer, for which our feed hygiene product was no longer commercially viable following significant increases in organic acid prices. This product is more acutely exposed to organic acid cost increases than others across our range and we were able to retain other smaller customers. As well as an overall reduction in animal production levels especially in the pig and egg-layer sectors in the UK and across Europe, where feed and energy costs forced some farmers to limit production.

Group product volumes declined by 11% which was offset by an increase in the weighted-average selling price of 11% due to the actions taken to recover raw material price inflation. Our strongest product growth came from our natural pellet binder and mycotoxin binder range, especially in Asia, where any switch to lower quality grain because of high prices would require an increase in the use of mycotoxin binders to improve feed quality. Sales of higher value Orego-Stim® declined by 8% as farmers reduced their production output or their use of Orego-Stim® to alleviate inflationary pressures in their operations, despite the consequence of animal performance being compromised. This change in product mix also affected our overall gross margin.

We are receiving very positive customer feedback on the performance of Orego-Stim® in ruminants, following our research with the University of Reading which showed that Orego-Stim® reduced the proportion of bacteria in the gut that show antimicrobial resistance, when added to the diets of young cattle. Our recently launched natural and sustainably sourced omega 3 supplement brand Optomega® Algae is being used in dairy feeds for animal fertility and in poultry for egg and meat enrichment. Our unique carrier and packaging technology allows us to specify an extended shelf-life compared to competitor products.

During the period we recently developed and launched a new phytogenic product in a water-soluble form to add to the Orego-Stim® range. Orego-Stim® Forte is Anpario's newest phytogenic feed additive for aquaculture, containing 100% natural oregano essential oils (OEO), saponin and natural astaxanthin. It is fully water soluble and specifically designed for use in feed or on farm, to defend against infectious pathogens and support the performance of aquatic species.

Group gross profit decreased by 13% to £14.1m (2021: £16.3m) for the year to 31 December 2022 due to the significant increases in raw material and logistics costs and the change in product mix, with gross margins lower at 42.7% (2021: 48.7%) compared to the same period last year. A number of sales price increases were implemented during the year which helped to improve gross margins in the second half. Our focus on margin recovery and cost control will continue during this year.

The investment in automation and storage capacity in our Manton Wood production plant affords the Group a solid platform from which to grow profitably as the market improves, taking advantage of our operational gearing. We are committed to building our sales presence in key markets around the world through recruitment to support both existing and new customers in the transition to using natural additives to improve animal health, productivity, and performance.

Overall, this segment grew sales by 4% with the Asia Pacific region, which accounted for 56% of Asia's sales, achieving growth of 15% in contrast to Australasia and China which declined by 7% and 6% respectively. There were strong performances in the Philippines, Malaysia and Vietnam driven by growth in demand for mycotoxin binders and acid-based eubiotics. Vietnam is particularly encouraging given we recently set up a wholly owned subsidiary and see its combination of agriculture and aquaculture as being an attractive opportunity for Anpario's broad product range, especially our new aquaculture product Orego-Stim® Forte.

Bangladesh, Indonesia and South Korea struggled with high energy and imported feed raw material costs with sales declines of 33%, 25% and 16% respectively. Orders for Bangladesh were delayed at the end of the period due to central bank foreign currency restrictions preventing letters of credit being issued to importers. Any weakening of the US dollar is expected to help improve this specific issue evident in some developing economies.

China which accounted for 13% of Group sales during the period struggled with covid lockdowns and the subsequent reversal of government policy at the end of last year. The relaxation of people movement including tourism and business activity should bring a welcome resumption of economic activity not just in China but also the wider region. The small to medium sized pig farmer in China has all but disappeared following African Swine Fever with the emphasis now on larger more sophisticated integrators with the feed mill sector becoming more relevant to the non-integrated sector. Our China team is therefore working to target feed mills with added value solutions they can offer their customers.

With better energy security and locally grown raw materials for animal feed the Americas region experienced less disruption than the rest of the world in the animal production industry. Overall, the segment grew sales by 11%, partially helped by a favourable exchange rate, but also strong performances in Latin America and the United States (US) which grew sales by 44% and 19% respectively.

All countries except one, Guatemala, in Latin America delivered sales growth including strong performances from Mexico, Ecuador and Colombia with growth of 55%, 27% and 111% respectively. The region benefited from an increase in sales of our Mastercube™ pellet binder for aquafeed purposes and acid-based eubiotic products, especially in Mexico. Sales to our South America region declined by 19% weighed down by weak performances from Brazil and Chile, which delivered declines of 14% and 65% respectively. Chile's weak performance is due to lower sales of Orego-Stim® for sea lice control compared to the prior period. The region's weak performance was tempered by a strong showing from both Argentina and Peru.

In the US pHorce® continues to prove its credentials in the swine market as an anti-viral feed mitigant and is also being used as an effective replacement for zinc oxide in piglet diets as the industry starts to look for safe environmentally friendly alternatives. Demand for Orego-Stim® was maintained by a number of marketing initiatives with key distributors and running commercial trials in the ruminant market for feeding young cattle. The territory also experienced an increase in mycotoxin binder demand. We instigated some management changes at the beginning of the period which included recruiting account managers which overall helped improve the profitability of the business unit.

The Middle East delivered sales growth of 9% supported by sales price increases and a focus on higher value-add products, offsetting a volume decline of 5%. There were some very strong performances from Egypt and Saudi Arabia with sales more than doubling and from India and the United Arab Emirates (UAE) which both delivered growth of more than 60%. The region experienced declines in Iraq, which performed very strongly last year, and Pakistan. Sales of our mycotoxin binders, pellet binders and phytogenics products continued to deliver growth in contrast to demand for our acid-based eubiotic products which declined due to the significant price inflation of organic acids.

We expect some parts of this region to be adversely affected by the strength of the US dollar in 2023, especially those countries which are net importers of grain and energy.

Clearly Europe delivered the most disappointing performance with sales declining 21%, but the region suffered from significant geopolitical events none more so than Russia's invasion of Ukraine which exacerbated already chaotic supply chains hungover from the Covid-19 pandemic. Europe's energy crisis and the impact of high grain prices meant farmers across the region faced an unprofitable near-term future with some choosing to reduce output as they were unable to recover inflationary costs from retail channels. The decline in production has affected the poultry and swine markets across Europe with, for example, the number of eggs packed in UK packing stations declining by 12% in quarter four of 2022 compared to the same quarter in 2021 and German pork production decreased by more than 9% in 2022 and by over 5% across the EU for the year to October 2022.

Inevitably we delivered a decrease in sales in several countries including Italy and Spain with a reduction of around 40% each. However, the biggest impact was the United Kingdom (UK) which declined by 36%, and because of its importance to the region the amount was more significant and was the result of losing price sensitive feed hygiene business due to significant cost inflation of organic acids which more than doubled from their low point before the pandemic. We also had a reduction in combined sales of £0.2m from Russia and Belarus following our decision to suspend trading in these territories.

There were some positive performances especially in North West Europe with sales growth of 69% which includes countries such as Austria, Denmark, Switzerland and Serbia which is a new territory for the Group. Other good performances were in Hungary and Israel with sales growth of 89% and 69% respectively. Product growth in North West Europe predominantly came from Orego-Stim® and our acid-based eubiotic range. This performance followed the recent review of our distribution relationships in the region supported by our European stockholding hub.

With the expansion of our global sales team, we have taken the decision to invest in a customer relationship management (CRM) system to improve the management of the sales process, contact management, customer retention and marketing campaigns. The nature of our business is that the sales process can be lengthy, often with multiple decision makers. A CRM system will give senior management greater visibility of order progress across the Group and identify buying patterns to help improve customer retention. In addition the sales team will be able to link global accounts giving better visibility of product usage in customers' facilities in different parts of the world. The CRM system will be rolled out on a regional basis in a phased approach during 2023.

During the period we developed and launched a new phytogenic feed additive for aquaculture, containing 100% natural oregano essential oils (OEO), saponin and natural astaxanthin. It is fully water soluble and specifically designed for use in feed or on farm, to defend against infectious pathogens and support the performance of aquatic species. Trials of Orego-Stim® Forte have shown to inhibit Vibrio species growth after 48-hours in the absence of antibiotics, performing as well as Florfenicol, a commonly used antibiotic to mitigate aquaculture bacterial infections.

Since the development of our Optomega® Algae product, which is gaining traction in both the dairy and poultry sectors, our research is now investigating how the product can help reduce greenhouse gas emissions and farm carbon footprint. Farmers are more likely to adopt products which reduce their environmental impact if these products bring a productive benefit in themselves. If we can assign a carbon value to Optomega® Algae, then eventually this can be used by the farmer to offset his emissions in other activities on the farm or reduce any future carbon taxes which may be legislated for by various governments around the world. The New Zealand government has already announced plans to tax agricultural emissions, including those related to the burps, urine, and dung of livestock like sheep and cows.

Our organic growth strategy has been focused on expanding and strengthening our global sales channels by recruiting local sales and technical teams and setting up wholly owned subsidiaries. We now have a platform on which to build a greater presence by increasing our sales resource to build critical mass in key markets. This is the next phase of development in our sales channels and is supported by the implementation of the CRM system.

Both the Americas, because of their strong position in energy and agricultural commodities and Asia due to its large population and above average Gross Domestic Product (GDP) growth are key markets for Anpario currently accounting for over 65% of Group sales. Changes in regulation which are often initially introduced in Europe or from consumer pressure are, over time, adopted in other overseas territories and has enabled Anpario to position itself ahead of the transition away from harsher chemical treatments used in agriculture towards sustainable and environmentally friendly products. Key product brands such as Orego-Stim®, Optomega® Algae, pHorce® and Mastercube™ exemplify our safe and sustainable product range.

Anpario has historically been focused on the monogastric market with up to 80% of sales in poultry and swine species. However, in recent years we have developed the product range and invested in scientific trials to support business development in the ruminant and aquaculture markets which is starting to gain momentum as we develop the appropriate sales channels. Diversifying into broader species segments will help build resilience in our business, reducing reliance on any one species especially at times when, for example, the poultry industry is facing challenges from avian influenza or pork producers are struggling to be viable.

Pursuing suitable acquisition opportunities will remain a priority for the Group where we can play a role in consolidating a fragmented market to enhance shareholder returns through operational synergies and expanding the product, species or geographic portfolio.

Chief Executive Officer

22 March 2023

Key performance indicators

1 Includes both the interim dividend paid during the year and the proposed final dividend which is subject to approval by the shareholders at the AGM.

1 Scope 1 and 2 Carbon emissions and defined by the GHG protocol, for more information see the environment and social responsibility report.

Anpario have begun to monitor and report on Scope 1 and 2 carbon emissions as part of its goal to achieve net-zero carbon emissions by 2030. As such we are introducing two new related performance indicators, total carbon emissions and carbon intensity. Anpario is expected to grow as a Company and as a result total carbon emissions may increase, as such our carbon intensity, defined as carbon emissions divided by sales, will be a key measure in tracking our progress towards our net-zero goals.

The Group also regards growth of business in key target markets and the on-going achievement of product registrations and quality assurance accreditations as other KPIs.

Financial review

Revenues for the year declined by 1% to £33.1m (2021: £33.4m) as a result of the difficult market conditions highlighted in the Chief Executive Office Statement. Three of the four operating segments achieved sales growth, with the Americas growing the strongest with a £0.9m increase in revenue, followed by Asia £0.5m and MEA £0.3m. However, this was offset by a large decline in European sales of £2.1m which suffered due to the significant increase in organic acid costs which resulted in lost revenues from price sensitive feed hygiene business. This lost business contributed the majority of an 11% reduction in overall sales volumes.

Gross profit for the year declined by 13% to £14.1m (2021: £16.3m), and gross margins were 42.7% (2021: 48.7%). The most significant factor reducing margins has been the continuation of raw material price inflation pressures outlined at the end of last year, in particular the significant cost increases for organic acids products used predominantly in our ABE range. As well as lower sales of Orego-Stim® which is a lower volume, higher value product than other ranges and so this product mix change has a larger impact on gross margins.

We have continued to react as quickly as possible and implement successive prices rises in response to cost pressures and margins have improved through the second half of the year. As we enter 2023, there are signs that raw material prices and availability have stabilised and in some cases there are we are expecting slight reductions in input costs which, alongside a drive to increase Orego-Stim® sales, should help gross margins.

Administrative expenses were overall unchanged in the year, despite high levels of inflation, at remained at £10.6m. This includes non-recurring costs of £0.2m on due diligence fees related to an acquisition opportunity that was unfortunately unsuccessful.

Employment costs, excluding bonuses and R&D staff capitalisation, increased by £0.3m (4%) in the year through inflationary rises and also an increase in the number of sales managers. In light of the financial performance there was a £0.8m reduction in bonus costs.

Travel and marketing costs increased by £0.3m, now reflecting a full-year normalised rate following the impact of Covid-19, this new level is materially down on pre pandemic rates as we operate with new business practices and tools allowing for more optimised travel and marketing expenditure.

Establishment costs increased by £0.2m as a result of inflationary pressures and in particular increases in insurance costs, IT expenditure on new risk management tools and expenditure on the new CRM system currently being implemented.

As a result of the decline in gross profits, Adjusted EBITDA1 for the year decreased by 25% to £5.2m (2021: £7.0m) and diluted adjusted earnings per share fell by 28% to 16.67p per share (2021: 23.01p). These measures exclude the non-recurring acquisition costs mentioned previously.

Prot before tax fell by 35% to £3.7m (2021: £5.7m). Basic earnings per share fell by 30% to 16.13p (2021: 22.92p).

The Group's primary foreign currency exchange rate risk relates to both sales and related receivables denominated in US Dollars, for which there has been significant movement in the year. The average rate experienced for GBP/USD has reduced from 1.376 in the prior year to 1.237 in the current year, with a rate at 31 December of 1.210. As such there has been a beneficial impact, both in terms of USD sales being converted at a more favourable rate, but also through the revaluation of receivables denominated in that currency.

As previously discussed, we actively take steps to mitigate the downside-risks related to adverse GBP/USD exchange rate movements through the use of hedging contracts. These protect a large portion of the forecasted net US Dollar cash flows over the next three years. The contracts protect cash flows at a higher rate than those at the end of the period, and as such currently have a net fair value of a £1.3m liability. Of this amount, £0.2m has been recognised in the income statement, with £1.1m deferred in equity in accordance with cash-flow hedge accounting. This accounting treatment means that any potential charge unwinds at the same time as the future USD cash flows which it protects, which is over the next three years.

Despite this potential charge, which is dependent on future rates experienced, lower GBP/USD rates should be net beneficial overall in context of the wider gains made on USD denominated sales. Our hedging strategy is in place to mitigate adverse risk and improve certainty about the value of future USD cash flows to aid in matters such as pricing strategies.

The effective tax rate for the year was 10.3% (2021: 17.9%). The prior year charge including both an exceptional deferred tax charge relating to changes in Corporation Tax rates from April 2023 and the prior year tax benefit from Patent Box. Excluding these factors for the prior year the underlying effective tax rate for the year was similar to last year at 10.3% (2021: 10.8%).

As previously announced following the successful granting of our first patent for our market leading phytogenic product Orego-Stim®, we expect a tax benefit to the Group via the UK Patent Box scheme which allows companies to apply a lower rate of corporation tax to profits attributable to qualifying patents. The scheme was first applied to our 2021 tax return and at the current reporting date we are still in the window for HMRC to review this first submission.

Operating cash flows before changes in working capital were £5.4m (2021: £7.5m). Changes in working capital absorbed £3.6m (2021: £3.3m), this was mainly due to a £1.7m increase in inventories and a £2.2m decrease in trade and other payables. The trade and other payables declined in part due to the completion of outstanding CAPEX projects from the end of the prior year and lower provision levels.

Higher overall inventory balances are partly the result of price inflation but also additional factors. Raw material holdings increased over the prior year as a result of both higher onsite storage to manage supply chain risks and strategic purchasing decisions at the end of the year. Concerns over both supply chain risks and logistics delays and constraints have began to ease and we expect to be able to reduce inventory levels through the coming year. Finished good levels were flat compared to last year, with a reduction of £1.6m through the second-half of the year. Finished good levels across most subsidiaries have started to reduce in the year, however, these reductions were offset by an increase in USA for certain product lines to support sales growth and additional stock held to support the recently established Mexican subsidiary.

Net cash used in investing activities was flat versus the prior year at £1.4m. Of which, £0.6m related to the capital commitments at the end of the prior year to conclude a number of projects such as the solar panel investment. Net cash used in financing activities was also the same as in the previous year at £2.0m. Cash and cash equivalents decreased by £2.3m in the period.

Anpario seeks to maximise the interest received on cash held by the Group and as such utilises a number of notice deposit accounts which give a higher rate of interest. During the preparation of the financial statements, it was identified that some balances are held in accounts with a notice period of greater than three months and less than six months, and as such they should be classified as short-term investments in accordance with IAS 7. Consequently, the prior year statement of financial position and cash flow statement have been restated to show the split between the overall balances into cash and cash equivalents and short-term investments. More information is available in note 20.

Including these short-term investments, the overall cash and bank deposit balances held by the Group at the end of the year was £13.6m (2021: £15.5m). The primary purpose of holding these resources is to fund future acquisitions and we continue to explore suitable opportunities.

The Board is recommending a nal dividend of 7.35 pence per share (2021: 7.00 pence) payable on 28 July to shareholders on the register on 14 July. In addition to the interim dividend already paid, this represents an increase to the total dividend for the year of 5% to 10.5 pence per share (2021: 10.0 pence).

Marc Wilson

Group Finance Director

22 March 2023

Our business model and strategy

Business model

Anpario is an independent manufacturer of natural sustainable animal feed additives for health, nutrition and biosecurity. Our products work in harmony with the natural aspects of the animal's biology and Anpario's expertise is focused on intestinal and animal health, and utilising this understanding to improve animal performance and customer protability.

Anpario supplies its customers with quality assured products manufactured in the United Kingdom and has an established global sales and distribution network in over 70 countries.

Anpario was built up through a combination of acquisitions and organic growth by establishing wholly owned subsidiaries in a number of key meat producing countries. The portfolio of products has been developed with the customer and the animal in mind, taking into account the life stages of the animal and the periods when they will be more challenged.

Anpario is well positioned to benet from the trends in growth of the world's population, the increasing demand for meat and sh protein in developing countries and the tightening of global regulation which favours more natural feed additive solutions. Seizing these opportunities is how Anpario intends to deliver long-term shareholder value.

Anpario acknowledges the challenges facing livestock producers in meeting environment and sustainability targets. Anpario is contributing to the research and development progress that the agricultural livestock industry is achieving in improving its carbon footprint and GHG emissions. Anpario prides itself on being a low carbon manufacturer of animal feed additives, with two thirds of sales from products which can be described as from sustainable sources and from non-carbon derived raw materials.

Strategy

Section 172 Statement

Introduction

As a Board, collectively and as individual Directors, we recognise our obligations and our duties as Directors. Section 172 of the Companies Act 2006 requires a director of a company to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benet of its members as a whole. In doing so, each Director has regard, amongst other matters to:

- the likely consequences of any decision in the long term;

- the interests of the Company's employees;

- the need to foster the Company's business relationships with suppliers, customers and others;

- the impact of the Company's operation on the community and the environment;

- the desirability of the Company maintaining a reputation for high standard of business conduct; and

- the need to act fairly as between members of the Company.

How the Board fulfils its Section 172 duties

We ensure that the requirements of section 172 are met and the interest of our stakeholder groups are considered through, amongst other means, a combination of the following:

- review of strategic objectives and achievement thereof;

- annual budgets and review of resource allocations;

- results presentations to shareholders and staff;

- audit and risk management processes conducted through the year;

- health and safety reports;

- reviews of employee matters;

- annual performance appraisals for all staff including personal development reviews;

- consideration of these matters in relation to major decisions made within the year;

- regular meetings with customers and key suppliers; and

- other ad-hoc engagement with stakeholders.

Stakeholders and their key interests

The table below outlines the key stakeholders the Company has identied, their key interests and where in this annual report that further details on matters such as engagement and key decisions made in the year in relation to each stakeholder group can be found.

Key decisions affecting multiple stakeholders

The table below outlines the key decision which affect more than one stakeholder group and outlines the actions taken and the groups considered as part of the decision-making process.

Risk management

Risk Register and Management Process

We continually examine in detail the key risks facing our business in the context of our overall business strategy and evaluate their likelihood and potential impact. The risks we have examined are the most signicant but not necessarily the only ones associated with the Group and its businesses. In common with all businesses, we face risks of a generic nature for example failure of projects, foreign exchange impacts and the recruitment, development and retention of employees. In considering our risks during the year we have performed detailed assessments at a global and regional level. We assess the likelihood of their occurrence and potential impact and implement appropriate and proportionate risk mitigation measures.

As part of our continual risk management process we consider new and emerging risks.The Russian invasion of Ukraine and resulting impact on energy costs and agricultural supply chains has been the most significant across our industry in 2022. Price inflation and recessionary factors will continue to depress worldwide economies and agriculture.

We have continued to monitor residual Covid-19 and Brexit related risks which caused supply chain disruption including force majeure being declared by key raw material suppliers. These were all successfully managed without serious detriment to our customers or operations. As part of our continual risk management process we consider new and emerging risks. We have also continued our focus on sustainability and climate change related issues which has seen a substantial increase in consumer and investor focus on climate. In addition we consider global meat consumption patterns and the potential impact on our operations.

The Group's risk management process through engagement of the Executive Management team and global management team is conducted on at least an annual basis and reviewed by the Board, as follows:

- Identify the risk and likelihood for each function and regional operation;

- Analyse and assess the risk, its potential severity and the impact and priority for the business;

- Consider risk rating and trends on a low to high scale;

- Plan to mitigate or treat the risk and identify resources or investment required;

- Implement mitigation procedures by obtaining resources and approvals necessary and put in place necessary actions; and

- Monitor, measure and control the risk and its likely impacts which will change and evolve so that you we can respond and react in a timely efficient manner.

The Risk Framework below shows those risks that are more specic to our business together with details of the controls and mitigation in place to manage our exposure. More information on our approach to effective risk management can be found in the Corporate Governance section, Principle 4.

Key successes include:

- conducted an assessment and review of Board risk appetite;

- reviewed IT risk management policies and procedures;

- implemented enhanced IT security systems;

- launch of new products such as aqua product Orego-Stim Forte;

- Zinc Oxide replacement campaign in response to industry regulatory changes;

- responded to market conditions with 'More for Less' campaign focused on improved feed efficiency and supporting producers with rising global feed costs;

- membership of SEDEX (Supplier Ethical Data Exchange) to give supplier chain transparency on a global platform; and

- internal development training and coaching of key managers across all disciplines.

We continually endeavour to improve our key control framework and processes and improve our risk management capabilities. In response to new or emerging risks and to any improvements recommended by management, external auditors and advisors we will implement appropriate measures. For 2023 our key areas of focus include:

- implement planned changes to internal review and audit of controls and processes in subsidiary entities; and

- further review and updating of business continuity plans and procedures.

The strategic report was approved by the board and signed on its behalf by:

Richard Edwards

Chief Executive Officer

22 March 2023

Board of Directors

Non-Executive Directors

Executive Directors

A: Audit Committee N: Nomination Committee R: Remuneration Committee

The Terms of Reference of the Audit, Nomination and Remuneration Committees are available on the Company's website: www.anpario.com/aim-26/.

Corporate governance

Chairman's introduction

The Company's shares are traded on the Alternative Investment Market ("AIM") of the London Stock Exchange. Anpario applies the Quoted Companies Alliance Corporate Governance Code ("QCA Code").

Anpario offers natural solutions to the food farming industry which work in harmony with the natural aspects of an animal's biology to promote healthy growth at the least cost to the environment and the producer. Our products enable the production of top-quality protein that partners future farming practice around the world. This objective and our engagement with stakeholders, ensures that we act in a manner that is responsible and benecial to all.

The board and staff at the Company are committed to behaving professionally and responsibly to ensure that the highest standards of honesty, integrity and corporate governance are maintained. Enshrining these values through the Company's culture, objectives and processes is essential to support the success of the Company in creating long-term shareholder value.

Anpario is committed to conducting business in a socially, ethically and environmentally responsible manner. We do this by focusing on a 3 Pillars framework: 'People; Planet; and Promise'.

Principle 1: Our strategy and business model to promote long-term value for shareholders

Anpario is well positioned to benet from the trends in growth of the world's population, the increasing demand for meat and sh protein in developing countries and the tightening of global regulation favouring more natural feed additive solutions. Seizing these opportunities is how Anpario intends to deliver long-term shareholder value. More information is included in the Strategic Report.

Anpario has specic resource and processes in place to proactively identify and manage risk to protect the continued growth and long-term future that is possible as outlined above. Our annual report details specic nancial and non-nancial risks and uncertainties facing the business and measures in place to mitigate them.

Principle 2: Understanding and meeting shareholder needs and expectation

Communications with shareholders are given high priority and Anpario recognises the importance and value in reciprocal and open communication with its many investors. This is key to ensure alignment between the motivations and expectations of our shareholders and our strategy and business model.

This communication takes place in many forms to serve different purposes. Our Interim Statements and Annual Reports contain detailed information for shareholders to understand our performance, strategy and future plans. Between these disclosures, the Company also issues RNS announcements, as required, which serve to keep shareholders updated about regulatory matters or changes that they should be notied of. These RNS announcements, as well as wider news articles about the Company, are available on our website www.anpario.com/investor/.

The Annual General Meeting ("AGM") is the main opportunity for all shareholders to engage with Anpario. Shareholders are notied in advance of the date and location of the meeting as well as the resolutions that are to be voted on. At the meeting, the Board and key personnel give a presentation about the most recent published results and our strategy. They are also available to answer any questions that shareholders may have. The Company's articles have been updated to enable the holding of virtual meetings in future.

The Directors actively seek to build strong relationships with institutional investors and investment analysts. Presentations are given immediately following Interim Statement and Annual Report announcements. Feedback directly from shareholders via the Company's advisers after these regular analyst and shareholder meetings ensures that the Board understands shareholder views. The Board as a whole are kept informed of the views and concerns of major shareholders and are made aware of any signicant investment reports from analysts.

Shareholders are encouraged to contact the Company should they have any questions or concerns and can do so using a dedicated email address investor@anpario.com. This is actively used by our Shareholders and successfully enables them to engage with the Board in addition to attaining assistance on individual shareholder specic matters with which we may be able to help. The Chairman and other Directors will meet or have contact with major shareholders as necessary. Where appropriate on specific matters the Board or its Committees will conduct shareholder consultations.

The Executive Directors, management and staff as appropriate hold shares and participate in incentive plans in the Company which ensures that their interests are fully aligned with those of other shareholders.

Principal 3: Corporate social responsibilities and wider stakeholders

Anpario seeks to ensure a sustainable business, behaving with social, ethical and environmental responsibility and engaging with all of its key stakeholders, including the communities in which the Group operates, its people and the environment. As noted we have launched the 3 Pillars: 'People, Planet and Promise' as a framework to focus our behaviours with respect to sustainability and our ESG objectives. Full details of the Group's approach to these matters are included in a new Environmental and Social Responsibility Report later in this annual report and on the website: www.anpario.com/about/sustainability/.

Principle 4: Effective risk management

Anpario has specic resource and processes in place to proactively identify and manage risk to protect its continued growth and long-term future. However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk prole of the Company and that they balance exploiting opportunities and protecting against threats. The Risk management section of this annual report details specic nancial and non-nancial risks and uncertainties facing the business and where possible the measures in place to mitigate them.

Effective risk analysis is fundamental to the execution of Anpario's business strategy and objectives and our risk management and control processes are designed to make management of risk an integrated part of the organisation. The framework is used to identify, evaluate, mitigate and monitor signicant risks and to provide reasonable but not absolute assurance that the Group will be successful in achieving its objectives. The focus is on signicant risks that, if they materialise, could substantially and adversely affect the Group's business, viability, prospects and share price.

A formal Internal Audit function is not felt to be suitable for the Group at the current time due to its size, however this is kept under review alongside an appropriately robust internal control system.

We recognise that a level of risk taking is inherent within a commercial business. Our risk management process is designed to identify, evaluate and mitigate the risks and uncertainties we face.

The CEO is the ultimate Risk Manager. The Board establishes our risk appetite, oversees the risk management and internal control framework and monitors the Group's exposure to principal risks.

The Executive Management Board (EMB) owns the risk management process and is responsible for managing specic risks. The EMB members are also responsible for embedding rigorous risk management in operational processes and performance management and review.

The EMB members are responsible for the risk analysis, controls and mitigation plans for their individual section of the business.

The Audit Committee reviews the effectiveness of the risk management process and the internal control framework and ensures appropriate executive ownership for all key risks.

These processes ensure that all Directors receive detailed reports from management and are able to discuss the risks, controls and mitigations in place and therefore satisfy themselves that key risks are being effectively managed.

Anpario's internal control framework is designed to ensure the:

- effectiveness and efficiency of business operations;

- reliability of nancial reporting;

- compliance with all applicable laws and regulations; and

- assignment of Authority and Responsibility.

Anpario's values underpin the control framework and it is the Board's aim that these values drive the behaviours and actions of all employees. The key elements of the control framework are:

The Board sets formal authorisation levels and controls that allow it to delegate authority to the EMB and other Managers in the Group. The management structure has clearly dened reporting lines and operating standards.

- Anpario has a strategic plan which is developed by the EMB and endorsed by the Board;

- Business objectives and performance measures are dened annually, together with budgets and forecasts; and

- Monthly business performance reviews are conducted at both Group and business unit levels.

Our key nancial, legal and compliance policies and procedures that apply across the Group are:

- Code of Conduct;

- Designated authorities and approvals;

- ISO 14001 Environmental Management Systems accreditation;

- Anti-Bribery and Corruption Policy;

- Modern Slavery Policy;

- GDPR and Privacy Policy; and

- Due diligence processes including rigorous sanctions checks.

Our operational control processes include:

- Product pipeline review: product pipeline is reviewed regularly to consider new product ideas and determine the t with our product portfolio. We assess if the products in development are progressing according to plan and evaluate the expected commercial return on new products;

- Lifecycle management: lifecycle management activities are managed and reviewed for our key products to meet the changing needs of our customers, environmental and regulatory standards;

- Quality assurance: a manufacturing facility with an established Quality Management System operating under FEMAS and UFAS and designed to ensure that all products are manufactured to a consistently high standard in compliance with all relevant regulatory requirements;

- Product registration: a robust system operated by our regulatory team to ensure all products are correctly registered within the jurisdiction in which they are sold; and

- Pricing: a pricing structure which is managed and monitored to provide equitable pricing for all customer groups and compliance with regulatory authorities.

Our nancial controls are designed to prevent and detect nancial misstatement or fraud. This provides reasonable, but not absolute, assurance against material misstatement or loss. They include:

- a formalised reporting structure which incorporates the setting of detailed annual budgets and key performance indicators which are updated on a regular basis to form forecasts;

- management and Board meetings where all key aspects of the business are presented, reviewed and discussed including comparison of current and historical performance as well as budgets and forecasts;

- dened authorisation levels for expenditure; the placing of orders and contracts; and signing authorities;

- transactional level controls operated on a day-to-day basis;

- daily reconciliation and monitoring of cash movements by the nance department and the Group's cash ow is monitored;

- segregation of accounting duties;

- reconciliation and review of nancial statements and judgements;

- internal and external training to ensure staff are aware of the latest standards and best practice; and

- membership of professional bodies and compliance with associated code of ethics.

Principle 5: The Board

The Board of Directors is collectively responsible and accountable to shareholders for the long-term success of the Company. The Board provides leadership within a framework of prudent and effective controls designed to ensure strong corporate governance and enable risk to be assessed and managed.

The Board regularly reviews the operational performance and plans of the Company and determines the Company's strategy, ensuring that the necessary nancial and human resources are in place in order to meet the Company's objectives. The Board also sets the Company's values and standards, mindful of its obligations to shareholders and other stakeholders.

Full details and biographies of the Board are available on our website, the Board comprises of four independent Non-Executive Directors and two Executive Directors.

Audit = Audit Committee, Nom. = Nomination Committee, Rem. = Remuneration Committee

C = Chair, M = Member

The Board considers that the Non-Executive Directors are independent.

All Directors are subject to reappointment by shareholders at the rst AGM following their appointment and thereafter by rotation.

The Board delegates its authority for certain matters to its Audit, Remuneration and Nomination Committees. The Board approves and reviews the terms of reference of each of the Committees which are available on the Company's website, www.anpario.com/aim-26/.

The Board meets formally at least four times per annum. All Board members receive agendas and comprehensive papers prior to each Board meeting. The Corporate Responsibility Director is also the Company Secretary and is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are adhered to.

In addition to formal Board and Committee meetings, ad hoc decisions of the Board and Committees are taken after discussion throughout the nancial year as necessary through the form of written resolutions.

All Directors in office at the time of the various committee meetings were in attendance for all of the meetings convened during 2022. A list of the meetings convened during the year is set out below.

The Chief Executive Officer and Group Finance Director work full time for the Group. The Corporate Responsibility Director works two days a week in the year and ensures the roles and responsibilities of the position are fully met. The Non-executive Directors have commitments outside of Anpario plc. They are summarised on the Board biographies available from www.anpario.com/investor/aim-26/. All the Non-Executive Directors give the appropriate amount of time required to full their responsibilities to Anpario. During the year, following the resignation of Ian Hamilton, the number of Non-Executive Directors reduced to two. The Board is currently evaluating the needs of this role and potential candidates for the position.

Principal 6: Ensuring Directors have between them the necessary up-to-date experience, skills and capabilities

The Nomination Committee aims to ensure that composition of the Board reects appropriate balance of skills and experience required to ensure long-term shareholder value and manage risk. Details of the role of the Nomination Committee and the activities it performs in relation to these matters is included in the "Maintaining governance structures" section later on in this document.

The Board biographies available on the website give an indication of their breadth of skills and experience. Each member of the Board takes responsibility for maintaining their own skill set, which includes roles and experience with other boards and organisations as well as formal training and seminars.

Principal 7: Evaluating board performance

The performance of the Board is evaluated formally on an annual basis, following the conclusion of the annual Audit and nalisation of the Annual Report. The Chairman leads this process which looks at the effectiveness of both the Board as a unit and its individual members.

When addressing overall Board performance the factors considered, include but are not limited to, underlying group nancial performance, the success of new strategy implementation and the effectiveness of risk and control measures. This process further looks at the performance of each member and considers their individual successes, commitment and alignment to the overall Group strategy. As appropriate, it will also look to conrm that members have maintained their independence.

The Nomination Committee is responsible for determining Board level appointments, details of its role and terms of reference are provided later in this document. The Executive Board members determine the appointments to the Executive Management team, in line with Board approval procedures.

Succession planning is a key part in ensuring the long-term success of the Company. The Executive team ensure that potential successors are in place within the business and are given the required support and guidance to develop further. At the required time, it is the Nomination Committee's role to make decisions about future appointments to the Board.

Principle 8: Promoting a corporate culture based on ethical values and behaviours

Anpario has a strong ethical culture, the Board is responsible for setting and promoting this throughout our processes and behaviours. The policies related to these matters are regularly reviewed and updated and distributed to employees and other stakeholders as appropriate. Further, specic training is given to keep staff updated on relevant changes, these sessions are often recorded for future reference and new staff induction.

A copy of our Code of Conduct is available on our website, www.anpario.com/code-of-conduct/. Anpario has stated policies on Corporate Social Responsibility, Anti-Bribery and Corruption, Modern Slavery Policy and Whistleblowing Policy that are applicable to all our employees, other workers, suppliers and those providing services to our organisation.

The Company has achieved ISO 14001 standard on Environmental Management Systems accreditation along with a qualified internal audit function.

Anpario published its inaugural Sustainability Report and accompanying video which is available on the website https://www.anpario.com/about/sustainability/.

Principal 9: Maintaining governance structures

Anpario is condent that the governance structures in place in the Company are appropriate for its size and individual circumstances whilst ensuring they are t for purpose and support good decision making by the Board.

The Board denes a series of matters reserved for its decision. These include strategy, nance, corporate governance, approval of signicant capital expenditure, appointment of key personnel and compliance with legal and regulatory requirements.

There is clear segregation of responsibility within the Board. The Non-Executive Chairman is responsible for providing leadership to and managing the business of the Board, in particular ensuring strong corporate governance policies and values. The role of Chief Executive Officer is concerned with the formulation and implementation of the strategy of the Company and is responsible for all operational aspects of the business. The role of the Group Finance Director is to provide strategic and nancial guidance and to develop the necessary policies and procedures to ensure sound nancial management and control of the Company. The Corporate Responsibility Director also acts as Company Secretary and is further responsible for advising on corporate governance matters and ensuring compliance with relevant legislative and legal requirements.

Details of the key committees are set out below, the terms of reference for each are available on our website as part of the committee section of the AIM 26 disclosures www.anpario.com/aim-26/.

Details are contained within the Audit Committee Report section of this Annual Report.

Details are contained within the Remuneration Committee Report section of this Annual Report.

The Nomination Committee is comprised of the two Non-Executive Directors and the Chief Executive Officer and is chaired by Kate Allum. Meetings are held as required by the Chairman. The role of the committee is as follows:

- regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes;

- give full consideration to succession planning for Directors and other senior executives taking into account the challenges and opportunities facing the Company, and the skills and expertise needed on the Board in the future;

- keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;

- keep up to date and informed about strategic issues and commercial changes affecting the Company and the market in which it operates;

- review and approve selection procedures for potential Board members, whether executive or non-executive, whether for immediate appointment to the Board or after a probationary period;

- be responsible for identifying and nominating for approval of the Board, candidates to ll Board vacancies as they arise;

- ensure that on appointment to the Board, non-executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside Board meetings;

- ensure that following appointment to the Board, Directors undergo an appropriate induction programme; and

- make recommendations to the Board on membership of the Board's committees, in consultation with the chair of such committees, the reappointment of any non-executive at the conclusion of their specied term of office, the reappointment by shareholders of Directors under the Company's rotation requirements taking into account the need for progressive refreshing of the Board.

Before any appointment is made by the Board, evaluate the balance of skills, knowledge, experience and diversity on the Board, and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment.

For the appointment of a Chairman or other Non-Executive, the committee shall produce a job specication, including the time commitment expected. A proposed Non-Executive's other signicant commitments should be disclosed to the Board before appointment and any changes to commitments should be reported to the Board as they arise.

Prior to the appointment of a Director, the proposed appointee should be required to disclose any other business interests that may result in a conict of interests and be required to report any future business interests that could result in a conict of interest. Full due diligence is undertaken by the Company and NOMAD.

New appointments made in the year have gone through the processes as described above and more information can be found in the Board Changes section of the Chairman's Statement.

Principal 10: Communicating governance and performance matters with shareholders and wider stakeholders

Communications with shareholders are given high priority and we proactively promote engagement through a range of measures. More details of which are provided earlier in this document about how Anpario seek to engage with and understand Shareholders and wider Stakeholders.

The most recent AGM took place on 16 June 2022, full details of which are included on our Website. The results of the AGM are set out below. None of the resolutions had a signicant number of votes cast against it.

Our Company website includes historical Annual Reports and Interim Statements; both in RNS format as part of its News section, and the published documents are available from www.anpario.com/investor/annual-reports/. Included within these documents are the notices of previous AGMs, the results of which are released as RNS announcements and can be found in the News Releases section of our website www.anpario.com/investor/.

Environment and Social Responsibility Report

Environmental responsibility

Anpario seeks to ensure a sustainable future, conducting business in a socially, ethically and environmentally responsible manner engaging with all our key stakeholders, including the communities in which we operate. The key issue of climate change has highlighted the critical part played by agriculture and food production and the necessity for collective action to achieve a net-zero emissions economy for a world that prioritises the health of people and our planet.

Anpario's team seek to meet environmental challenges with sustainability at their heart and pursuing a journey of continuous evolution and progression. We recognise that it is our responsibility to identify problems faced by producers globally and find effective sustainable solutions and as we continue to grow on the strong foundations built over past decades. We aim to be a leading light now and in the future.

We are leaders in the field of speciality feed additives, our products capture natures ingenuity and work in harmony with the animals' biology to deliver sustainable and natural solutions. It is through our products that we can have the greatest positive impact, empowering global animal protein producers to produce more from less, preserving vital resources, safeguarding food production and human health, whilst protecting the planet. We promise to seek new ways of operating that protect valuable resources and remain committed to high environmental standards and robust health and safety measures.

We believe that through our product innovation, management of our operations and aligning with stakeholders who share our values and sustainability objectives, we can help our global customers to achieve their own sustainable goals faster.

The UN Sustainable Development Goals (SDG's) provide a globally accepted roadmap for addressing many of the most urgent global, economic, environmental and social challenges. Agreed at international level in September 2015, the achievement of these 17 goals by 2030 requires extensive participation and creates a key role for businesses in delivering entrepreneurial solutions that can help meet these challenges. Anpario aligns with several SDG's and the goals highlighted below are those where we recognise that we can play our part in creating positive impact for people and the planet, now and into the future.

Agriculture and sheries can provide nutritious food for all and generate decent incomes, while supporting people-centred rural development and protecting the environment. Anpario's products work in tune with nature's inherent processes within each of the animal species to support production of safe and affordable food for a growing population and can help to:

- conserve, protect and enhance natural resources;

- improve rural livelihood, equity and social well-being through productive farming; and

- enhance resilience of people, communities and ecosystems.

We are leading work in collaboration with major feed producers to successfully reduce the unnecessary use of antibiotics and other substances such as zinc oxide and urea-formaldehyde. The misuse of antibiotics in agricultural production is a signicant threat to animal and human health. Anpario provides products and guidance to support farmers to:

- improve animal gut health;

- defend against mycotoxins;

- reduce and where possible remove the unnecessary use of antibiotics; and

- safeguard the use of antibiotics for effective treatment of sick animals and humans.

Anpario's phytogenic and organic acid products help improve biosecurity and prevent animal diseases, which can eliminate signicant animal populations, leading to devastating losses of food producing animals (e.g. Coccidiosis, Necrotic Enteritis, Porcine Epidemic Diarrhoea (PEDv), and African Swine Fever (ASF). Anpario's products are proven to work effectively alongside vaccines to aid in disease control.

Anpario is tackling climate change through establishing energy reduction initiatives and making renewable energy investments and commitments including Net Zero Carbon by 2030. Our products help farmers to feed more nutritious diets with a lower environmental footprint to their animals which reduces negative environmental impacts such as:

- nutrient loss;

- greenhouse gas and ammonia emissions; and

- degradation of ecosystems.

Anpario works to protect and enhance marine life by working with aquaculture producers globally to improve production systems, sourcing responsibly and reducing marine waste. Our 100% natural, aquaculture products work on the same principles as for land animals and are effective for shrimp and other farmed sh such as salmon and tilapia. We are progressing with aquaculture experts new formulations for sustainable and antibiotic free sh production.

Anpario works collaboratively with other organisations and stakeholders with the common goal of sustainable food production. To achieve optimal circular sustainability means educating distribution networks, employees, partners and working with customers, our supply chain and leading global universities who share our goals to lead initiatives to replace unsustainable practices. It means leading by example and actively demonstrating how we apply and achieve sustainable objectives to our partners to inspire positive change.

Our Commitment and 3 Pillars

Anpario is committed to conducting business in a socially, ethically and environmentally responsible manner. We will do this by focusing on 3 Pillars: 'People; Planet; and Promise'.

Sustainability is a core focus for Anpario and driven by our people to deliver leading product innovations, operational excellence and engagement with key stakeholders. We are building on strong foundations and are committed to continuous responsible development that will help to safeguard the planet now and for future generations. Alongside our customers we work responsibly to identify problems faced by protein producers globally and we collaborate with leading industry and research partners to find effective sustainable solutions.

Anpario is committed to:

- protecting and empowering employees;

- embracing diversity, equality and inclusion of our employees and their communities; and

- working with our customers, suppliers and other stakeholders for a better tomorrow.

At Anpario we recognise the importance of nurturing and developing lasting relationships with customers and suppliers. Building and continually developing a stable, highly motivated and skilled workforce is key to our approach. Anpario is an inclusive organisation where everyone is treated equally irrespective of gender, nationality, marital status, colour, race, ethnic origin, creed, sexual orientation or disability. Together we drive a positive culture with employee well-being prioritised and setting high standards to ensure we effectively manage risk and health, safety and ensuring a safe working environment. Our employees embody Anpario's key values of "Integrity, Teamwork, Innovation and Leadership".

It is Anpario's policy to involve colleagues in the business and to ensure that matters of concern to them, our aims, objectives and nancial performance are communicated in an open way. As far as possible, employees are offered the opportunity to become shareholders to promote active participation and commitment to our success.

The Employee handbook applies globally and includes detailed policies and guides for employees which cover:

- Behaviour: Equal Opportunities and Dignity at Work, Anti-Bribery and Anti-Corruption, Modern Slavery, Communications and Privacy.

- Family: Parental, Dependents, Maternity, Paternity, Flexible working, Adoption.

- General: Grievance, Whistle blowing, Discrimination and Bullying, and Disciplinary.

- Safety: Health and Safety handbook, Occupational Health Policy, Drug and Alcohol abuse.

128 employees work for Anpario in the UK and its global operations. Employees are recruited from local communities which has helped us build a very ethnically diverse team of which we are very proud. The team includes 18 nationalities speaking 19 languages with 22 of positions of manager and above being held by non-white. Females represent 3 out of 7 the Executive Management team and 2 out of 5 of the Board are women including the role of Chairperson. Specic training is given to all employees in respect of key policies including online training videos and in person equal opportunities and diversity and health and safety training. An analysis of Directors, managers and other employees by gender as at 31 December 2022 is as follows:

Anpario is committed to equality of opportunity for all of its current and prospective employees, and we ensure that we treat people in a fair and equitable manner.

The Group considers applications for employment from disabled persons equally with those of other applicants having regard to their ability, experience, and the requirements of the job. Where existing employees become disabled, appropriate efforts are made to provide them with continuing suitable work within the Group and to provide retraining if necessary.

Anpario support a motivated and highly skilled workforce, where talent is nurtured, and opportunities created for all. Our belief in solving problems from new perspectives using science, experience and technology continues to drive positive change to our ways of working.

We recognise the importance of developing talent within our business through continuous learning and development. This is a key part of our succession planning and preparing our business for the future to ensure that we retain key individuals, develop high potential and future business leaders. We aim to develop and promote from within where possible and three members of our Executive team commenced at Anpario straight from school or university.

Employees are encouraged to further develop their skills and we provide appropriate training to support our people and grow our organisational capabilities. Anpario currently:

- recruits graduates and doctorates in disciplines such as biosciences, accountancy, law and HR;

- works closely with several global universities on joint scientic initiatives;

- sponsorship of prestigious Nuffield training for technical and sales staff;

- provides ongoing professional training support, extensive coaching and management development programmes;

- provides nancial and study leave for professional and work related qualications; and

- has several apprentice places.

We value long service and retaining staff is fundamental to our success and the creation of a strong, robust business. Anpario has a wealth of long serving employees across its global operation, these key staff continue to advance and develop within the business and play a major part in nurturing future Anpario talent.

Percentage of Employees with Extended Length of Service:

We believe in contributing and enriching the communities in the which we operate by employing and offering development opportunities to local people. We encourage active participation by our employees in initiatives that support our local communities, through social, educational, and charitable contributions. Anpario supports charities and local communities through donations and volunteering. We believe it is important to give back and serve local people and their communities, contributing to positive and measurable social change.

Anpario and its staff are proud to have been able to support the local community over the course of the pandemic, having donated £10,000 each to the Nottingham Hospitals Charity "NHS Heroes Appeal run" and towards Doncaster and Bassetlaw Teaching Hospitals Rainbow Garden Appeal. The latter has now created a memorial garden in honour of those lost to Covid-19, providing a place of comfort and contemplation for its visitors. Anpario staff volunteered their time to work on the Rainbow Garden Memorial during the build, creating a valuable outdoor space for the friends, family and loved ones of those who sadly passed away, as well as for staff working within the hospital.

During the height of the PPE shortages, Anpario were able to use their logistics expertise and business contacts to source 50,000 medical grade face masks. These were donated and distributed, with the help of staff volunteers, to more than 12 local care homes, hospices and community care providers surrounding our Manton Wood head office.

In recognition of the community work undertaken Anpario was awarded the "Giving Back: Community Business Hero Award" at the Sage Impact Awards. In 2022 Give Something Back Volunteer Days Scheme was introduced globally, with all employees entitled to one paid day release a year to volunteer at a charity of their choice.

Our staff supported Weston Park Cancer Charity in 2022 with several fund raising events. This local charity provides financial, physical, and emotional support to patients and families facing a cancer diagnosis and an experimental cancer research centre which conducts vital research and clinical trials run by exceptional medical experts every year. The results are shared, helping to influence cancer treatments both nationally and globally.

Our charity of the year chosen for 2023 is Dementia UK support and provide life-changing care for families affected by all forms of dementia, including Alzheimer's disease. Anpario will work to raise awareness and funds for this cause.

Our staff are key to advancing processes and initiatives that improve our ways of working and protect the planet. Through our "Green Team" activities we encourage participation and raise awareness across our entire workforce to initiate more sustainable ways of working throughout the business. Through ongoing commitment of our team and cross functional projects we aim to improve our sustainable practice with current objectives including: production efficiency improvements, identify new "Ways of Working" to reduce waste in manufacturing our products and office wastage reduction.

In aligning with UN SDG's Anpario is committed to:

- driving global protein production and support our customers to build strong sustainable businesses, without negatively impacting future generations;

- minimise impact of our global operations on the environment;

- continuous product innovation; and

- improving our supply chain's environmental, social and ethical practices.

Anpario seeks to optimise animal protein production by using sustainable natural resources for the benefit of animals, our customers and human health. Our ongoing commitment is to support, influence, and assist farmers and food chain producers to switch to healthier more sustainable feed ingredients, which will deliver greater global food security and a reduction in feed poverty. We partner with government, industry and leading research bodies globally. Together we advance product innovation and create long-term sustainable solutions, helping to maintain animal health and optimise nutrition throughout the supply chain. Combatting diseases that can destroy animals, impact welfare and livelihoods, without negatively impacting the environment, is key to our approach.

Our innovative products work in harmony with the animals' biology to promote healthy growth and demonstrate value to the animals fed directly throughout all life stages and indirectly to their progeny; and ultimately within the human food chain. This contributes to the more efficient use of feed ingredients, reduces environmental impact and supports responsibly produced food.

Underpinning Planet objectives is a core strategy "Anpario's 4R's" a programme to reduce antibiotic use in animal production through "Review, Reduce, Replace, Responsibly" which supports our customers to reduce reliance on antibiotics, whilst maintaining efficient production using natural sustainable solutions. Our products replace harmful applications such as formaldehyde and zinc oxide used for antimicrobial control in the feed, and help reduce antibiotic use in animal production thus improving and safeguarding both animal and human health. The patent attained for Orego-Stim® in reducing the proportion of bacteria and antimicrobial resistance, when added to the diets of young cattle, is just one example of how Anpario is providing environmentally safe and sustainable solutions for the world's population.

Anpario is one of the leading companies helping global livestock producers to meet environmental and sustainability challenges and contributing to the research and development progress that the agricultural livestock industry is achieving in improving its carbon footprint and greenhouse gas emissions (GHG's). Anpario prides itself on being a low carbon manufacturer of animal feed additives, with two thirds of sales from products which can be described as from sustainable sources. These products are also the Group's fastest growing product categories. Furthermore, our products help producers to be more efficient in the resources they use by improving feed efficiency by supporting gut health thus optimising nutrient utilisation. Use of Orego-Stim® in chicken meat production Anpario led trials have shown on average a 7% improvement in feed conversion efficiency.

Anpario's 100% natural oregano essential oil product, Orego-Stim®, has also been shown to support greener egg production by improving overall egg production, hen liveability and feed efficiency. Meta-analysis from global trials show on average '8 Extra Eggs' per hen improvement (2.2% per hen) when fed Orego-Stim®. Optomega® Algae is a new, micro-algae derived, Docosahexaenoic acid (DHA) supplement for use in all species including aquaculture, targeted at breeding animals and producers supplying enriched meat, milk and eggs containing higher levels of omega-3 fatty acids. The product is 100% natural, from a sustainable source. Furthermore, preliminary data from an in vitro study at the University of Reading suggests that dairy cows fed Optomega® Algae can reduce methane output by 7% in 24-hour period. It is well known that supplementing dairy rations with DHA supports cow fertility, reducing replacement frequency in the dairy herd supporting lifelong milk production and contributing to carbon footprint reduction.

Orego-Stim® Forte a proprietary blend of active ingredients including Orego-Stim® for use in aquaculture, has been shown to benefit producers of both shrimp and fish through improvement of gut health and reduction in pathogens leading to improved liveability and growth performance. Orego-Stim® Forte is proven to support producers wishing to reduce reliance on antibiotics in production.

Anpario partners with organisations that work to inspire and enable cutting edge science and sustainable farming that is prosperous, enriches the environment and engages communities. These partnerships help to assist with our goals and work with our customers to achieve optimum animal performance through sustainable, natural solutions.

We hold organic farming approvals in numerous global territories, required by regional certifying bodies to permit the use of several of our key products in organic production systems.

Work is progressing alongside industry bodies and peers to enable us to seek a recognised measure of product carbon footprint. We are a member of LEAF (Linking Environment and Farming) seeking circular approaches to farming and food through integrated solutions.

In 2022 Anpario:

- Achieved ISO14001 internationally recognised standard for Environmental Management Systems which provides a framework to identify, manage, monitor and control environmental processes.

- Vecame a member of Supplier Ethical Database (SEDEX) providing a high level transparency of operational standards, employment practices and corporate ethics.

- Joined Centre for Innovation Excellence in Livestock (CIEL) a collaboration of major industry players in livestock production.

Anpario continues to support Vision 365, which is the new 10-year plan for the International Egg Commission (IEC) and supported by the United Nations and aligned with SDG's. Eggs are an affordable, nutritious, and low impact food source and the plan aims to develop the nutritional reputation of the egg on an international scale and to accelerate global average egg consumption per capita to 365 eggs per annum from 165 today.

We work with suppliers who share our aspiration to deliver high quality, economic products without exploiting or damaging the environment. Our key partners share the same ethos and commitment to natural based farming solutions, including circularity in production with no use of external resources except rainwater, green energy and zero use of chemical pesticides. Anpario's ambition is to cease to consume finite materials that cannot be renewed or replenished, using only raw materials from common minerals and plants with plentiful natural resources. For example:

- Oregano oil used in the production of Orego-Stim® is unique to Anpario and grown using organic, pesticide-free principles.

- Microalgae used in the production of Optomega® Algae is grown using sustainable principles from natural waste of existing sugarcane production processes. The waste sugarcane is also used to produce energy to power the factory.

Anpario will only engage with suppliers operating within international regulations who are capable of meeting our high specification and operate rigorous quality standards quality standards. Due diligence is undertaken for assurance that all applicable ethical labour, trade laws and regulations are complied with including the requirements of the UK Bribery and Modern Slavery Acts. Anpario's employees and partners are contractually bound by its Code of Conduct.

We are focused on minimising the impact of our operations on the Planet and aim to reduce our own carbon emissions, whilst also helping our stakeholders to do the same. Working with the UK Government and the Environment Agency our industry trade association, Agricultural Industries Confederation (AIC), has set out a road map for a sustainable food chain and an open partnership across the industry to achieve the transition to Net Zero Carbon (NZC) by 2050. Anpario's ambition is even more ambitious to achieve NZC by 2030* and have started to implement plans to achieve this.

Operational practices are kept under continuous review to drive further improvements in efficiency, to eliminate waste, reduce energy consumption and our carbon footprint. Examples include:

- the installation of solar panels generating electricity for use at our plant in Nottinghamshire reducing our reliance upon fossil fuels;

- almost all of our carrier materials are supplied in bulk and directly added from silos to minimise packaging waste;

- liquid ingredients are stored in bunded storage silos;

- pre-used reconditioned and cleaned intermediate bulk containers (IBC's) used for packaging and supply of bulk liquids;

- product and material waste is collected by a waste contractor and environmentally recycled;

- our bottling plant produces liquids in 100% recyclable plastic bottles;

- packaging design is constantly reviewed resulting in improvements such as a recent reduction box size;

- dust extraction system minimises dust in the production area and prevents emission into the environment;

- automated palleting system has reduced forklift movements; and

- investment in additional warehousing on site to reduce packaged raw material movements in and out of third party storage.

We are dedicated to driving continuous improvement and targeting operational efficiency though our production facility and committed to developing and monitoring carbon reducing measures throughout our operations, benchmarking to reduce waste, and emissions to land, air and water. Positive environmental impact assessments are expected for any new operational investments submitted for approval and alignment with our clear goals and ESG strategy which is focused on Net Zero Operations by 2030*;

*Scopes 1 and 2 plus Scope 3 relating to group business travel & waste.

Measurement of energy consumption & carbon emissions by businesses is made universal by categorising into 3 areas:

Scope 1 - This relates to emissions relating to: stationary consumption i.e. fuel consumption used in our operations (to produce electricity, steam, heat or power) and mobile consumption by our own vehicles, and emissions to the air.

Scope 2 - These are the emissions we create indirectly - like the electricity or energy use for heating and cooling buildings, being produced on our behalf by energy suppliers.

Scope 3 - In this category go all the emissions associated, not within the business itself, but those emissions for which the organisation is indirectly responsible in its supply chain. e.g., associated with the products from our suppliers and to the use of our products by our customers. This is an area in which we are in the process of gathering data and setting targets in collaboration with our stakeholders.

Whilst we have always sought to minimise travel and flights to essential multi-purpose trips, Covid-19 restrictions have taught us valuable lessons in how much more we can do to reduce our carbon footprint by adapting our ways of working through homeworking, e-conferencing, internet based training, a significant reduction in physical visits and movements, and a paperless office becoming our new normal.

Our aim is to maximise the value of the resources we use and rely on, reduce all waste being generated across the Group and divert waste away from landfill. We place specific emphasis on the type of packaging used to protect our products and ensure as far as possible the use of recyclable materials. The Group continues to invest in infrastructure and management systems to reduce waste and packaging.

There was a reduction in the amount of waste produced in the year of 120 Tons (28%), with a cumulative reduction from the 2019 baseline year of 165 Tons (34%).

Our water consumption is low compared to manufacturing industries due to the nature of our formulations and production systems. With increasing pressure on this shared resource, we are mindful of the importance of protecting water sources and are committed to using water as efficiently as possible. We exercise extreme care to ensure that all waste water complies with relevant legislation and the Group continues to invest in infrastructure and management systems to minimise potential spillages or other forms of water contamination. We continuously look for ways to conserve and re-use our water volumes and are currently investigating initiatives to further reduce our reliance on water resources.

There was a reduction in the amount of water consumed in the year of 408 cubic metres (27%), with a cumulative reduction from the 2019 baseline year of 877 cubic meters (44%).

Anpario's products are delivered through distribution channels and direct to customer's using third party haulage and global freight services. We note that there are carbon emissions associated with the delivery of our products, however, this is offset by the feed efficiency and improved liveability gains that our products make for our customers.

Anpario is committed to:

- honest, ethical, and responsible practice;

- positive engagement and partnerships;

- best practice, governance and stewardship; and

- helping customers build strong and sustainable businesses.

Anpario recognises the importance of corporate social responsibility. It is essential to our reputation that our team offer honest and open advice, matched by the integrity and provenance of our products. Anpario's positive culture ensures honesty, ethical practice and responsibility is instilled into all activity across the business. "Do the Right Thing" is a fundamental message that creates a sound base to communicate our cultural guidance and code of conduct throughout the entire group. Our Code of Conduct represents our commitment to our values, to doing the right thing, personally and professionally, and outlines the expected standards by which Anpario leaders and employees should work in the delivery of their duties, across all job functions, departments, and global locations in which we operate.

Policies and guidance are provided to all staff on expected behaviours at the point of induction and fortified through training and appraisal procedures. Compliance to the Anpario Code of Conduct is required from all employees and businesses partners alike with a zero-tolerance policy to transgressions whilst also facilitating whistleblowing internally and externally.

Anpario assures safety of its products, absolute transparency and traceability of raw materials, and compliance with international regulations through rigorous internal control processes and quality standards. We retain key industry quality accreditations in particular, UFAS and FEMAS certifications.

Anpario promises to lead by example and consistently promote a culture of integrity by making ethical decisions and acting responsibly and honestly in everything we do whilst striving for excellence in our business objectives. Our leaders understand the importance of our ethics framework to safeguard best practice and excellence in governance and stewardship. The following measures help to ensure compliance:

- the Board sets overall business strategy and plans which include key ESG initiatives;

- the Board identifies key risks and opportunities which are regularly reviewed and updated;

- Anpario's Board structure is in line with best practice and Corporate Governance Codes, including independent Chair and Senior Independent Director;

- the Board has clear and transparent division of roles;

- performance related incentives are dependent on achievement of strategic business and ESG objectives; and

- business continuity and emergency response plans are in place and regularly reviewed by the Board to ensure effective action and communications.

We maintain strong relationships with shareholders, ensuring they understand our strategy, progress and performance and that we understand their views and address any concerns. Anpario's Promise to our shareholders is to consistently strive to increase corporate value via best business practices and to produce healthy returns and profit growth and ensure:

- regular informative communication through investor roadshows, meetings and presentations;

- regular news flow on key developments in the business;

- engagement with investors regarding executive remuneration, sustainability issues and Board changes;

- adherence to Aim Rules for Companies and compliance with Quoted Companies Alliance Corporate Governance Code;

- appointment of external auditors who are tendered on a periodic basis and report to the Audit Committee;

- Anpario's Board and its committees are chaired by independent non-executive directors; and

- regular Board training on AIM Rules and Market Abuse Regulation.

We establish and communicate our policies to all staff throughout the group through induction training using video and provide regular updates for all staff.

We are transparent and compliant with all applicable laws and we ensure that our employees and our external business partners are aware of their responsibilities, this includes providing appropriate training and guidance. We expect each individual acting on Anpario's behalf to be responsible for maintaining our reputation by conducting business honestly, transparently, professionally and ethically. Our Anti-Bribery and Corruption policy and training outlines our zero tolerance and articulates that no employee or representative of any Group business is to offer or accept any bribe, including facilitation payments, or engage in any form of corrupt practice.

We are committed to respecting human rights and labour practices in our operations and supply chains and recognise the importance of operating in an ethical and responsible manner. The Group has procedures including a requirement for suppliers to accept our stance in relation to preventing Modern Slavery. Employees are given awareness training as part of their induction programme with updates provided to all employees as appropriate. We do not tolerate the use of forced or child labour, in any operations connected with the Group.

It is our policy to encourage colleagues or external business partners to speak up if they have any concerns about wrongdoing in the workplace. Any employee who raises their concerns in good faith will be supported for doing so and will be protected from retaliation. We have a number of reporting channels through which concerns can be confidentially raised both informally or formally through our grievance procedure and to our Human Resources Team or any Board member. In the event of a concern being raised we promise to take it extremely seriously and carry out an independent investigation as appropriate to validate the complaint, following which the relevant process is implemented, with oversight and reporting through to the case being resolved or closed.

Anpario plc has had no formal whistleblowing cases reported during the year.

In addition to the Code of Conduct the Group's Policies which are available on the website and internal server include:

- Sustainability Policy

- Anti-bribery and Anti-Corruption Policy &

- Modern Slavery Policy

- Whistleblowing Policy

- Supplier Selection and Procurement Policy

- Health and Safety Policy

- Equal Opportunity and Dignity at Work

- Dealing with Claims of Unlawful Discrimination Policy.

Directors' report

The Directors present their Annual Report and audited consolidated financial statements for the year ended 31 December 2022.

The Directors believe that some of the requisite components of this report are set out elsewhere in the Annual Report and/or on the Company's website, https://www.anpario.com/. The detail below sets out where the necessary disclosures can be found.

Anpario plc is a public company traded on the Alternative Investment Market ("AIM") of the London Stock Exchange and is incorporated in the United Kingdom and registered in England and Wales, 03345857. The Company's registered office is Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS, England.

Anpario plc ("the Company") and its Subsidiaries (together "the Group") produce and distribute natural feed additives for animal health, hygiene and nutrition. A review of the performance and future development of the Group's business is contained in the Chairman's Statement, Chief-Executive Officer's Statement and Financial Review set out earlier in this Annual Report.

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group has adequate resources to continue in operation for the foreseeable future. The Group is profitable and expects to continue to be so, there has been an increase in working capital through the year to manage supply-chain risks, however these pressures are now easing and the Group has significant level of cash resources.

Accordingly, the financial statements have been prepared on a going concern basis, more detail can be found in note 2.1 of the Group financial statements.

The financial results for the year ended 31 December 2022 are set out in the consolidated financial statements later in this Annual Report and summarised in the Financial Review earlier in the Annual Report. The profit for the year after tax was £3.3m (2021: £4.7m).

The Directors propose a final dividend of 7.35p per share (2021: 7.00p) making a total of 10.50p per share for the year (2021: 10.00p), amounting to a total dividend of £2.3m (2021: £2.1m). More information can be found in note 11 to the financial statements.

The Group is continually researching and developing new products. Details of expenditure incurred and impaired or written off during the year are shown in the note 4 of the Group financial statements. During the year, £528,000 (2021: £360,000) was capitalised as development projects with £98,000 (2021: £42,000) expensed to the income statement.

The Directors during the year under review were:

The Board regards the Non-Executive Directors as being independent. The biographies and roles of all Directors and their roles on the Audit, Remuneration and Nomination Committees are set out earlier in this report.

Details of the Directors' interests in the shares of the Company are provided in the Directors' remuneration report.

Details of how the Directors have engaged with employees are set out in the Section 172 report. The Group's policies in relation to equal opportunities are explained in the people section of the Environment and Social Responsibility Report.

Details of how the Directors have engaged with it's stakeholder groups are set out in the Section 172 report.

By virtue of, and subject to, Article 172 of the current Articles of Association of the Company, the Company has granted an indemnity to every Director, alternate Director, Secretary or other officer of the Company. Such provisions remain in force at the date of this report. The Group has arranged appropriate insurance cover for any legal action against the Directors and officers.

During the year 177,338 (2021: 35,048) Ordinary shares of 23p each were issued pursuant to the exercise of share options. During the year the Company issued 600,000 (2021: 50,000) Ordinary shares of 23p at market price to the Trustees of the Anpario plc Employees' Share Trust.

A Special Resolution will be proposed at the AGM to renew the Directors' limited authority last granted in 2022 to make market purchases of Ordinary shares in the capital of the Company.

As at 31 December 2022, the Company holds 440,388 (2021: 440,388) Ordinary shares of 23p in treasury.

At 1 March 2023, analysis of the share register showed the following holdings of 3 per cent or more of its issued share capital:

The auditor, BDO LLP, has indicated its willingness to continue in office and a resolution seeking to re-appoint BDO LLP as the Group's auditor will be proposed at the AGM.

Peel Hunt LLP are the Company's stockbroker and nominated adviser.

The closing share price on 31 December 2022 was 500p per share (2021: 616p per share).

Details of the Company's financial risk management policy are set out in note 2.21 of the financial statements.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with UK adopted International Accounting Standards and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

In preparing these financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- for the Group financial statements, state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

- for the Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

So far as the Directors are aware:

- there is no relevant audit information of which the Company's auditor is unaware; and

- they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The Directors' report was approved by the Board of Directors on 22 March 2023 and is signed by order of the board:

Karen Prior

Company Secretary

22 March 2023

Report of the Remuneration Committee

On behalf of the Board, I am pleased to present the Remuneration Committee's report for the year ended 31 December 2022. The Committee continuously seeks to ensure alignment of the strategy and values of the Company and the interests of all shareholders. This includes the need to recruit, retain and appropriately incentivise high calibre directors and managers to deliver the Group's strategy.

The Committee comprises solely of independent Non-Executive Directors. Executive Directors and external advisors are invited to attend meetings as required if thought advantageous for consideration of a particular agenda item. The Committee is chaired by Matthew Robinson, Non-Executive Director. The other Committee member is Kate Allum, Non-Executive Chairman.

The Remuneration Committee meets as necessary to fulfil its objectives but as a minimum, at least once a year. The Committee met twice during the year ended 31 December 2022 with full attendance by the Committee members. In addition, the Committee chose to consult with shareholders on changes to Remuneration Policy to ensure alignment with their interest as well as Group strategy.

The Committee is responsible for reviewing the performance of Executive Directors as well as determining the scale and structure of their remuneration, their terms and conditions of service and the grant of share awards, having due regard to the interests of shareholders.

The Committee is also responsible for reviewing the overall policy in respect of remuneration of all other employees of the Company and establishing the Company's policy and operation of share incentive schemes.

In determining the remuneration of senior executives, the Committee seeks to enable the Company to attract and retain executives of the highest calibre. The Committee also makes recommendations to the Board concerning the allocations of options to executives under the long-term incentive plan and for the administration of the scheme.

The terms of reference of the Remuneration Committee can be found on the Company's website www.anpario.com/aim-26/.

During the course of the year, the main activities of the Committee were:

- implementation of changes outlined in the previous year, in particular, dilution limits and long-term incentive structures;

- approved awards under the new LTIP policy for new Executive Board members, Senior Management and other key management;

- review of Director remuneration, following which there were no changes to base salary or fees; and

- review and evaluation of talent management and succession planning activities.

Remuneration policy for the year in review

As outlined last year, following a review by the Committee and consultation with external consultants and shareholders, there have been a number of changes implemented for this year's remuneration policy. The policy below reflects the changes made on dilution limits, long-term incentive structures and a number of other minor policy changes.

The objectives of the remuneration policy are to ensure that the overall remuneration of senior executives is aligned with the performance of the Company and preserves an appropriate balance of annual profit delivery and longer-term shareholder value.

The Committee keeps the remuneration policy, in particular the need for share ownership guidelines for Executive Directors, regularly under review and will take action whenever deemed necessary to ensure that remuneration is aligned with the overall strategic objectives of the Company.

The Committee seeks advice, if appropriate, from independent advisors where required on remuneration related matters.

The table below sets out the elements of Non-Executive Directors' remuneration as well as the purpose and operation.

Remuneration in the year

The remuneration of each Director for the year ended 31 December 2022 and the prior year is set out in the table below.

1 Karen Prior worked four days a week through to 1 July 2021, after which, upon taking on her new role as Corporate Responsibility Director this reduced to two days per week.

2 Remuneration shown for Marc Wilson for 2021 relates to amounts between the date of appointment as a Director on 1 July 2021 and the end of the financial year.

3 For 2022 and onwards, the IFRS 2 share-based payment charge disclosure will be replaced by the value of vested share options in the period. This change is related to the implementation of the PSP long-term incentive award structure. The PSP award includes performance based vesting criteria and therefore subject to estimations on future performance which can lead to variability in the IFRS 2 charge. Disclosing the vale of share options vested will be a fairer reflection of the value of share options received by Directors.

The remuneration of each Non-Executive Director for the year ended 31 December 2022 and the prior year is set out in the table below.

1 Appointed 1 February 2021.

2 Remuneration for 2022 includes £8,000 relating to agreed increases in fees following the appointment as Chair that should have been paid in the prior year.

3 Appointed 11 January 2021

4 Appointed 1 April 2021, resigned 17 April 2022

5 Resigned 17 June 2021

6 Resigned 31 January 2021

There were no ad hoc payments to any Directors for the year ended 31 December 2022.

There were no payments to past Directors for the year ended 31 December 2022.

There were no loss of office payments made for the year ended 31 December 2022.

In March, following advice from FIT Remuneration Consultants LLP and a consultation process with shareholders, a new long-term incentive structure was implemented that will apply to Executive Directors and management. As a result, Anpario has introduced a new Performance Share Plan to work alongside the existing JSOP share scheme.

The Anpario PSP award creates a maximum opportunity for the participating Executive Directors equivalent to 100% of salary, Executive Management 40% of salary and other key management 20% of salary.

The Awards have been granted in the form of nil-cost share options and will normally vest after three years, subject to the achievement of performance conditions. Awards may become exercisable subject to continued employment and the achievement of three performance conditions, being a financial target representing 75% of the total award and two further ESG components representing the remaining 25% as described below.

75% of the PSP award is weighted on the achievement of diluted adjusted earnings per share growth targets over a three-year period. The minimum growth required is 6% per annum for a 18.75% vesting of the overall PSP award, on a pro-rata straight-line basis to a maximum 75% vesting of the overall PSP award for annual growth of 16%.

The primary objective for ESG based targets is to reduce Carbon Intensity in-line with our ambitions to achieve net-zero emissions by 2030. 15% of the PSP award is weighted on the reduction of annual Carbon Intensity cumulatively since the year ended 31 December 2019. The minimum reduction required is 63% per annum for a 4.5% vesting of the overall PSP award, on a pro-rata straight-line basis to a maximum 15% vesting of the overall PSP award for a cumulative reduction of 70%.

The final potential 10% of the PSP Award is based on the achievement of progress towards other ESG objectives. This will be based on a qualitative assessment by the Remuneration Committee which will consider a range of quantitative and qualitative inputs, including but not limited to: diversity, equality and inclusiveness; training and development of staff; reductions in waste and water usage; health and safety; and sustainable business operations.

The Joint Share Ownership Plan ("JSOP") and the Anpario plc Employees Shares Trust ("the Trust") were established and approved by resolution of the Non-Executive Directors on 26 September 2011. The JSOP provides for the acquisition by employees, including Executive Directors, of beneficial interests as joint owners (with the Trust) of Ordinary Shares in the Company upon the terms of a Joint Ownership Agreement ("JOA").

The terms of the JOAs provide, inter alia, that if jointly owned shares become vested and are sold, the proceeds of sale will be divided between the joint owners so that the participating Director receives an amount equal to any growth in the market value of the jointly owned Ordinary shares above the initial market value, less a "carrying cost" over the vesting period (equivalent to simple interest at 4.5 per cent per annum on the initial market value) and the Trust receives the initial market value of the jointly owned shares plus the carrying cost. Jointly owned Ordinary shares will become vested if the participant remains with the Company for a minimum period of 3 years.

Director's share interests and awards

The interests of the Directors who served during the period, as at 31 December 2022, in the Ordinary shares of 23p each in the Company were as follows: -

There have been no changes in Directors' interests between 31 December 2022 and 22 March 2023.

Awards granted in the year are as follows.

Under the Company's long-term incentive plans the following Directors have the right to acquire Ordinary shares of 23p each as follows.

1 The exercise price upon vesting will increase by a carrying cost equivalent to simple interest at 4.5% per annum on the option price for three years

2 The exercise price upon vesting will increase by a carrying cost equivalent to simple interest at 4.5% per annum on the option price until exercised

3 Vesting is subject to performance criteria as outlined in the remuneration policy section above

Directors' service contracts

The Executive Directors are employed under service contracts with the Group, these are available to view at the Company's Registered Office. The key terms of the services contracts are set out below.

Non-Executive Directors' terms of appointment

Each of the Chairman and Non-Executive Director have a letter of appointment stating their annual fee and termination terms.

The appointments are terminable on three months written notice at any time by either the Company or the Non-Executive Director.

Matthew Robinson

Remuneration Committee Chairman

22 March 2023

Audit Committee report

The Audit Committee is comprised of the two Non-Executive Directors, whom the Board considers to be independent and is chaired by Matthew Robinson. Meetings are also attended, by invitation, by the Group Finance Director, external auditors and other management as appropriate.

The auditor, BDO LLP, has indicated its willingness to continue in office and a resolution seeking to reappoint BDO LLP as the Group's auditor will be proposed at the AGM.

The Committee meets at least twice each financial year with the external auditors and considers any issues that are identified during the course of their audit work. The Board is satisfied that the Committee members have recent and relevant financial experience.

The Committee met twice during the year ended 31 December 2022 with full attendance by the Committee members.

The Audit Committee's role is to assist the Board in the effective discharge of its responsibilities for financial reporting and internal control. The Audit Committee's responsibilities include:

Monitor the integrity of the financial statements of the Company, and to assist the Board in ensuring that the financial statements and any formal announcements relating to financial performance, when taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy. Ensuring that reviews are undertaken on the significant financial reporting judgments contained in financial statement focusing particularly on:

- the consistency of and any changes to accounting policies and practices;

- the methods used to account for significant or unusual transactions where different approaches are possible;

- whether the Company has followed appropriate accounting standards and made appropriate estimates and judgments, taking into account the views of the external auditor; and

- the clarity of disclosure in the Company's financial reports and the context in which statements are made.

- keep under review the adequacy and effectiveness of the Company's internal financial controls and internal control and risk management systems;

- keep under review the requirement for an internal audit function; and

- review and approve the statements to be included in the annual report concerning internal controls and risk management.

review the Company's arrangements for its employees to raise concerns, in confidence, about possible wrong doing in financial reporting or other matters so as to ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action; and

review the Company's systems and controls for the detection of fraud and prevention of bribery.

Consider and make recommendations to the Board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the external auditor. The Committee shall oversee the selection process for a new auditor and if an auditor resigns, the Committee shall investigate the issues leading to this and decide whether any action is required. Oversee the relationship with the external auditor including (but not limited to):

- recommendations on their remuneration, whether fees for audit or non-audit services and that the level of fees is appropriate to enable an adequate audit to be conducted;

- approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;

- assessing annually the external auditor's independence and objectivity taking into account relevant UK professional and regulatory requirements and the relationship as a whole, including the provision of any non-audit services;

- satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business);

- monitoring the auditor's compliance with relevant ethical and professional guidance on the rotation of audit partner;

- assessing annually the qualifications, expertise and resources of the auditor and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures;

- develop and implement a policy on the engagement of the external auditor to supply non-audit services;

- discuss with the external auditor(s) before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

- review the findings of the audit, discussing any major issues which arose during the audit, any problems and reservations arising from the Final audit, and any matters the auditors may wish to discuss (in the absence of management where necessary); and

- review the external auditor's management letter and management's response.

The Committee regularly reviews its terms of reference and makes recommendations to the Board for any changes as appropriate. The current terms of reference are available on the Company's website.

The Committee reviews the independence of the external auditor, BDO LLP on an annual basis. It receives a detailed audit plan, from BDO LLP, identifying their assessment of the key risks. The Committee assesses the effectiveness of the audit process in addressing these matters through the reporting it receives from BDO LLP.

The Committee considered the inherent risk of management override of internal controls as defined by auditing standards. In doing so the Committee continue to review the overall robustness of the control environment, including consideration of the Group's whistleblowing arrangements and the review by the external auditor.

The Group holds assets on the statement of financial position in relation to both current research and development projects and developed products that have resulted in commercial launches. These assets are subject to judgements such as whether costs are eligible for capitalisation, the amortisation periods and impairment reviews. The Committee was satisfied with the accounting policy in force and with the estimates and judgements applied by management in employing this policy.

The Committee considered the inherent risk of fraud in revenue recognition as defined by auditing standards and was satisfied that there no issues arising.

Matthew Robinson

Audit Committee Chairman

22 March 2023

Independent auditors' report

In our opinion:

- the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2022 and of the Group's profit for the year then ended;

- the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

- the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Anpario Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022 which comprise the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Consolidated statement of changes in equity, the Consolidated statement of cash flows, the Company statement of financial position and the Company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the

Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

- Obtaining an understanding of how the Directors undertook the going concern assessment process to determine if we considered it to be appropriate for the circumstances by way of enquiry with the Directors in regards to who prepared the assessment and the information and individuals consulted in the process;

- Obtaining the Directors' trading forecasts which underly the going concern assessment and challenging them on the key estimates and assumptions within such with a particular focus onthe forecast levels of revenue, gross profit predictions and working capital cycles, through analysis and comparison of the forecasts with prior year actuals;

- Performing data verification and logic checks to confirm the mathematical accuracy of the forecast model;

- Reviewing 'stress tested' sensitivity analysis to assess the quantum of adverse variance against forecast that could be sustained without creating material uncertainties over the going concern assessment;

- Undertaking an analysis of post year end trading results and comparing to forecast and current year figures in order to evaluate the accuracy and achievability of forecasts, and

- Performing a review of the disclosures in the financial statements to to ensure they are adequate, consistent with the Director's assessment.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

We determined that the Parent Company was the only significant component within the Group and a full scope audit was performed by the Group engagement team.

The remaining 16 components ('the components') were not individually financially significant enough to require a full scope audit for Group purposes, but did present specific individual risks that needed to be addressed in accordance with the Group audit approach. The components act as sales offices and all purchases are made from the Parent Company, therefore, through specific risk-focussed audit procedures over inventories, trade receivables and cash, along with analytical review procedures we gained sufficient audit assurance to form our opinion on the financial statements as a whole. All work was conducted by the Group engagement team, with the exception of year-end inventory count attendance procedures at locations in Brazil, China, Indonesia, the Netherlands, Thailand and the United States of America. Overseas inventory count procedures were performed by other BDO network firms, operating in accordance with instructions issued by the Group engagement team.

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

Our calculation of performance materiality was increased from 70% of financial statement materiality to 75% in the year. Our rationale for this increase is that it is the third year of our appointment as auditor and the history of unadjusted differences over our period of appointment is low. Performance materiality of 75% of financial statement materiality was considered to give suitable level to determine the nature of and extent of testing required.

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £5k (2021: £5.7k). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

The Directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

As explained more fully in the Statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the Group and the Components of the Group including the industry in which they operate and considered the risk of acts by the Group and components which were contrary to applicable laws and regulations, including fraud. Our understanding was obtained from enquires with the board of Directors and the management team, our experience of auditing similar business models, and continuity in the audit team in respect of auditing the entity in previous years. The most significant matters relevant to the Group included but were not limited to compliance with the Companies Act 2006, the AIM listing rules Animal Feed product regulatory requirements, the principles of the Quoted Companies Alliance Corporate Governance Code and and accounting standards.

We focused on areas that could give rise to a material misstatement in the Group and Company financial statements which, alongside the key audit matter, included a fraud risk in relation to revenue recognition and the risk of management override of controls. Our testing included, but was not limited to:

- enquiries of management of non compliance with laws and regulations or fraud in the period and other unusual transactions. We corroborated our enquires through a review of minutes of Board meetings throughout the year;

- challenge of key estimates and judgements, including those applied to the key audit matter by management in the financial statements to check that it was free from management bias;

- identifying and testing a sample of journal entries for the following journal types:

- any journals outside of the normal course of business or indicative of manipulation of the financial statements;

- all journals posted to revenue to ascertain if any unusual transactions exist which are outside the normal course of business; and

- any manual or late journals posted at a consolidated level.

- performing the following revenue tests:

- review of the revenue nominal accounts for any unusual transactions, including reviewing all postings to revenue in the significant component of the Group using data analytic techniques to identify outliers which did not follow the pattern we expected;

- testing a sample of transactions posted to the nominal ledger in December 2021 to check that revenue had been recorded in the correct period;

- review of the elimination of intra-group revenue and associated unrealised profit within inventories at consolidation level; and

- review of transfer prices applied on a sample of intra-group revenue transactions to verify that arm's length prices had been applied.

- Consideration of management's assessment of related parties and any other unusual transactions and evaluating the process for identifying and monitoring any such transactions, and

- Consideration of the total unadjusted audit differences for indications of bias or deliberate misstatement.

We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Gareth Singleton (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

Birmingham, UK

22 March 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated statement of comprehensive income

for the year ended 31 December 2022

Consolidated statement of financial position

as at 31 December 2022