Half-yearly Report

ANPARIO PLC (AIM: ANP)

(“Anpario” or “the Group”)

Anpario plc the international supplier of natural high performance feed additives to enhance health, growth and sustainability in agriculture and aquaculture is pleased to announce its interim results for the 6 months to 30 June 2012.

Key points: Financial

• 25% increase in adjusted EBITDA¹ to £1.35m (2011: £1.08m)
• 20% increase in underlying earnings per share to 5.25 pence per share (2011: 4.36 pence per share)²
• 16% increase in sales revenue to £10.82m (2011: £9.36m)
• 24% increase in gross profit to £3.57m (2011: £2.88m)
• Cash balance of £2.83m at 30 June 2012.

Key points: Operational

• Meriden Animal Health Limited, acquired in March 2012, makes a full three month contribution.
• Successful repositioning of UK Agriculture division delivers continued profit growth on previous year.
• Organic feed division, Vitrition, more than doubles profitability through production efficiencies and margin improvement.

Richard Rose, Chairman, commented:

“The Group’s performance is very encouraging, despite the disruption in European and Middle Eastern regions, and demonstrates the resilience of our geographic spread. The recent acquisition of Meriden Animal Health Limited has further bolstered our product range and the business is performing to plan. I am particularly pleased with the successful repositioning of the UK Agriculture Division, which is now focused on value-added feed additives, and Vitrition, our organic feed business, which is performing very well.”

Enquiries:

Anpario plc

David Bullen, Chief Executive Officer +44 (0)7919 552 040

Karen Prior, Group Finance Director +44 (0)1909 537 380

FinnCap +44 (0)20 7220 0500

Matthew Robinson / Henrik Persson – Corporate Finance

Stephen Norcross – Corporate Broking

Anpario plc.

Interim results for 6 months to 30 June 2012

Chairman’s statement

I am pleased to report another successful and most encouraging trading period for the Group with profitability well ahead of the same period last year; characterised by good performances across our divisions and boosted by a maiden contribution from Meriden Animal Health Limited (“Meriden”), acquired on 29 March 2012.

The Group is focused on supplying high performance natural animal feed additives for global agriculture and aquaculture markets through its strong trading brands: Kiotechagil, Optivite, and now, Meriden. The Group has generated good profit growth despite the ongoing turbulence in the Eurozone and Middle East regions. In particular, the UK agriculture business is now repositioned to market high value-added products and has secured a number of important new customers. Vitrition, the organic feed business, has also improved its profitability markedly and made significant market share advances.

Our strategy of focusing sales effort on more profitable product lines continues to deliver improved levels of return overall.

Results

In the six months to 30 June 2012 adjusted EBITDA¹ increased by 25% to £1.35m (2011: £1.08m), with sales increasing by 16% to £10.82m (2011: £9.36m), benefiting from a maiden three months contribution from Meriden. Gross profit during the period increased by 24% to £3.57m (2011: £2.88m) helped by a richer product mix in the UK, which when combined with Meriden’s performance has delivered an overall increase in gross margin of 2.2 percentage points to 33.0% (2011: 30.8%).

The total consideration paid for Meriden is £3.00m, with up to a further £1.12m contingent consideration payable. As required by IFRS, Meriden acquisition costs totalling £0.31m have been written off to the income statement. Amortisation of acquisition intangibles relating to Meriden brands and customer relationships of £0.02m has also been incurred. Discounted contingent consideration payable of £0.92m is provided for in the Balance Sheet.

The increase in administrative expenses reflects the Meriden operations and investment in key human resources. The Group’s tax liability reflects benefits received from research and development tax credits.

Underlying earnings per share² increased by 20% to 5.25 pence per share from 4.36 pence per share.

The Meriden acquisition was financed entirely from Anpario’s own resources and has been immediately cash generative. The balance sheet remains strong with good cash generation and the Group ended the period with a cash balance of £2.83m.

Acquisition

Anpario continues to add growth through the completion of carefully selected acquisitions and on 29 March 2012 the Group acquired the entire share capital of Meriden Animal Health Limited. During the period since the acquisition, Meriden has performed according to our expectations.

Meriden’s sales and marketing teams continue to operate separately but, where appropriate, certain administrative functions are being progressively absorbed into Anpario to raise efficiency and lower cost. This consolidation includes certain areas of product development. Meriden is taking advantage of this additional technical resource to develop new product opportunities to market through its brand.

A key step in the integration process has been to consolidate Anpario’s aquaculture interests into Meriden’s Aquaculture division, to offer customers a broader range of products under one brand. We believe that combining resources and focus in this area will provide a better proposition to customers and accelerate sales growth in aquaculture markets.

Operations – International Agriculture

The International Agriculture division had a solid first half despite the continuing turbulence in the Eurozone and Middle Eastern regions, where some of the challenges have increased. As we reported in the 2011 Annual Report, we continue to work closely with our distributors to minimise credit risk where there is a financial or political concern. The global nature of the division means that regions such as Latin America and Asia Pacific continue to be key focus areas for growth. The division is currently re-structuring its account management function to ensure that sufficient time and resources are being targeted in the key growth areas.

The success of our Chinese wholly owned subsidiary, where like for like sales growth for the period was almost 150%, albeit from a small base, has demonstrated the effectiveness of employing staff locally. Our business in China is gathering pace and the intensive efforts of the Group in supporting the local team, including monthly technical visits, is having a tangible impact.

Building on the experience gained in China, the Group intends to replicate this process in other areas, including Brazil, where local account managers have recently been recruited. This investment will enable the Group to gain deeper first-hand knowledge of this important market, whilst also supporting its distributor to accelerate the establishment of our products.

Operations – UK Agriculture

The repositioning of the UK Agriculture division to focus on higher margin business has delivered growth in profitability compared with the same period last year. In addition, there are a number of market-led opportunities for our products to gain wider use as disease legislation, especially around salmonella control, tightens within the industry. The Food Standards Agency, Defra, the UK poultry industry and major retailers have agreed new targets that will measure the effectiveness, from farm to fork, of reducing the levels of the food bug campylobacter in chickens.

The campylobacter bacterium is one of the most common causes of food poisoning. Optivite has been undertaking a number of product trials to assess the efficacy of its antimicrobial products with some very encouraging results. Further work is still required but there may be a good opportunity for our products to take a lead in this area.

The UK team has launched a series of other marketing initiatives, including a salmonella control programme for pigs and a water disinfection system that can be connected directly at the discharge point to a drinking water tank, storage tank or container. These initiatives were launched at the national Pig and Poultry Fair in May 2012 and generated significant interest and new business. We are investing in additional resource to ensure we capitalise on this opportunity by providing a focused service and support staff.

Vitrition, Anpario’s organic feed division, has performed well, gaining market share in a very tough market, as organic farmers recognize Vitrition’s expertise and long term commitment to the industry. The pressures of the current economic climate have led to a decline in consumption of organic meat, forcing some producers to exit the market, particularly those who tried to balance organic and conventional feed production, whilst aiming to optimise efficiency within the same mill. However, strong control of our cost base, operational improvements and specific targeting to broaden and diversify the customer base, has enabled the division to deliver encouraging results.

Operations – Aquaculture

The Group’s aquaculture interests have now been consolidated under the Meriden brand where the sales team will have a broader range of aquaculture products to offer customers. In addition to Anpario’s Aquatice®, Meriden has recently launched Phyconomix, a 100% natural algae based product to optimize nutrition for growing shrimp and fish larvae and Orego-Stim® Aquatract, which enhances the fish immune system so improving growth performance. Placing all the products under one brand and sales team will improve both efficiency and effectiveness and give the customer a broader product proposition. Our aquaculture business is a small part of the Group but we are confident that these changes will help to accelerate sales growth.

Outlook

The second half is maintaining the progress of the first and the Group’s overall performance is in line with its budget. We are very pleased with the acquisition of Meriden, which broadens our product range and increases our global market share in key feed additive markets. Meriden is integrating well and will contribute fully to the Group’s second half performance. We remain focused on delivering organic growth through strong territory management, innovative product development and by supplementing these initiatives, from time to time, with suitable acquisition opportunities. There are geopolitical and financial concerns around the globe, but the Company’s broad product base and strong balance sheet offer encouraging opportunities to deliver improved returns to shareholders.

Richard S Rose

Chairman

19 September 2012

¹ Adjusted EBITDA represents operating profit before tax £0.88m (2011: £0.97m) adjusted for: share based payments £0.03m (2011: £0.05m); acquisition related costs of £0.32m (2011: £nil); and depreciation and amortisation of £0.12m (2011: £0.06m).

² Underlying earnings per share represents profit for the period before: share based payments; acquisition related costs, and amortisation of acquisition intangibles; and prior year tax adjustments divided by the weighted average number of shares in issue.

Copyright Business Wire 2012