Afyren : ANNUAL FINANCIAL REPORT 2023

ANNUAL

FINANCIAL REPORT 2023

SUMMARY

DECLARATION BY THE PERSON RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT ..	3
1	MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER	5
2	MANAGEMENT REPORT	8
	2.1	Information about the Group	8
	2.2	General presentation	10
	2.3	Business overview	12
	2.4	Competitive environment	18
	2.5	Activity and key figures	19
	2.6	Significant events of the year ended 31 December 2023	19
	2.7	Research and development activities	23
	2.8	Significant events after 31 December 2023	24
	2.9	Risk factors	24
	2.10	Risk management and internal control procedures implemented by AFYREN for
		the preparation and processing of accounting and financial information	35
	2.11	Risk management and internal control procedures implemented by AFYREN for
		the preparation and processing of accounting and financial information	36
	2.12	Alternative performance indicators	36
	2.13	Review of financial statements and results	37
	2.14	Information about AFYREN	43
	2.15	Foreseeable developments and outlook	46
	2.16	Share capital and share ownership	48
	2.17	Main related party transaction	51
3	CORPORATE GOVERNANCE REPORT	53
	3.1	Board of Directors	54
	3.2	Executive management	64

3.3 Agreements referred to in Articles L.225-38 et seq. of the French Commercial

Code

76

1. Agreements entered into between a subsidiary of the company and a corporate officer or a shareholder holding more than 10% of the company's share capital 76
2. Summary table of current delegations of authority and powers to increase the

share capital	76
4 SUSTAINABLE DEVELOPMENT	89
4.1 PREAMBLE and METHODOLOGICAL NOTE	89

4.2 SUSTAINABLE DEVELOPMENT AT THE HEART OF AFYREN'S VALUE CREATION

	MODEL	89
4.3	AFYREN CORPORATE REPORTING	92
4.4	Non-financial assessment and reporting	93

5 APPENDIX 1 - AFYREN ANNUAL FINANCIAL STATEMENTS AND STATUTORY AUDITOR'S

REPORT	95
6 APPENDIX 2 - AFYREN IFRS FINANCIAL STATEMENTS AND STATUTORY AUDITOR'S	117
AUDIT REPORT

D E C L A R AT I O N B Y T H E P E R S O N R E S P O N S I B L E F O R T H E A N N U A L F I N A N C I A L R E P O RT

"I certify that, to the besFt of my knowledge, the financial statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets and liabilities, financial position and results of AFYREN (the "Company") and that the management report in section 3 gives a true and fair view of changes in the Company's business, results and financial position and describes the main risks and uncertainties it is facing."

Nicolas Sordet, Chief Executive Officer

Signed in Lyon, France, on 10 April 2024

ANNUAL FINANCIAL REPORT 2023

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01	MESSAGE FROM THE CHAIRMAN
AND CHIEF EXECUTIVE OFFICER

MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

1 M E S S A G E F R O M T H E C H A I R M A N A N D C H I E F E X E C U T I V E O F F I C E R

OUR INGREDIENTS MEET THE CRITICAL NEEDS OF A WIDE VARIETY OF INDUSTRIES LOOKING FOR MORE NATURAL PRODUCTS.

To the Shareholders,

Founded in 2012 with the aim of offering an industrial-scale solution for transforming biomass residue into products that replace their petroleum-based equivalents, AFYREN has taken just ten years to go from fundamental research to the industrial stage.

Because we focus on low-value raw materials, processed using our innovative natural fermentation technology, the profitability of our business model is completely independent of the oil market.

Our output meets the critical needs of a wide variety of industries seeking more natural ingredients and/or products with a reduced carbon footprint. This is demonstrated by the €165 million in sales secured by commercial contracts for our 1st French plant, AFYREN NEOXY. This industrial and commercial maturity sets us apart from similar high-impact projects.

On the operations front, we have made significant progress in 2023 toward continuous production at our AFYREN NEOXY plant, with the manufacture of several tonnes of product in June 2023. However, some processes have not yet reached the level of stability required to enable the plant to run continuously. Therefore, we have adapted our operations schedule to allow us to make further adjustments and modifications at this first plant that will be carried over to subsequent factories so they can profit from AFYREN NEOXY's experience.

On the extra-financial front, we were awarded a silver medal in 2023 from EcoVadis, one of the world's most recognized independent CSR assessment platforms, and in 2024, a new rating from EthiFinance of 83/100 (Platinum Level), rewarded a higher level of ESG maturity than our peers.

Turning to finances, the Company is in a solid position at the end of 2023, with cash reserves totaling €49.6 million and debt of €4.8 million, thanks to rigorous expense management and limited cash consumption.

Our priority for fiscal 2024 remains the execution of our operational, financial and environmental roadmap, beginning with the start-up of continuous production at the AFYREN NEOXY plant.

ANNUAL FINANCIAL REPORT 2023

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MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

We would like to thank all our stakeholders: the AFYREN teams, all our commercial and industrial partners, and also all of you, historic and new shareholders. We are delighted to welcome an ever- growing number of individual investors, who are drawn to the Company's potential and its environmental impact.

STEFAN BORGAS,

PRESIDENT DU CONSEIL D'ADMINISTRATION

NICOLAS SORDET,

DIRECTEUR GENERAL CHIEF

ANNUAL FINANCIAL REPORT 2023

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02 BUSINESS REPORT

BUSINESS REPORT

2 M A N A G E M E N T R E P O RT

2.1 INFORMATION ABOUT THE GROUP

• COMPANY NAME AND TRADING NAME OF AFYREN (THE "COMPANY")

The Company's name since incorporation has been AFYREN, which is also its trading name.

• COMPANY PLACE OF REGISTRATION AND REGISTRATION NUMBER, LEGAL ENTITY IDENTIFIER (LEI)

The Company is registered under number 750 830 457 with the Clermont-Ferrand Trade and Companies Register.

The Company's Legal Entity Identifier (LEI) is 969500XKOIIX6JRUAY14.

• COMPANY'S DATE OF INCORPORATION AND TERM

The Company was incorporated for a term of 99 years from its registration on 11 April 2012, except in cases of early dissolution or extension decided by the extraordinary general meeting in accordance with the law and the articles of association.

• COMPANY'S REGISTERED OFFICE AND LEGAL FORM

The Company was incorporated as a société par actions simplifiée (simplified joint stock company). It began operating on 4 April 2012.

By resolutions of the Company's general meeting of shareholders of 11 June 2021, it was decided to convert the Company into a société anonyme (public limited company) with a board of directors.

The Company, governed by French law, will be primarily subject to the provisions of Articles L.225- 1 et seq. of the French Commercial Code for its operations.

The Company's registered office is located at 9-11 rue Gutenberg, 63000 Clermont-Ferrand.

The Company's contact details are as follows:

Telephone: [phone]

Email address: [e-mail]

Website:www.AFYREN.com

ANNUAL FINANCIAL REPORT 2023

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BUSINESS REPORT

2.1.1 LEGAL ORGANISATION CHART

In 2023, AFYREN and Bpifrance carried out a capital increase in AFYREN NEOXY, as provided for in the initial agreements of December 2018, increasing AFYREN's stake in AFYREN NEOXY from 50.62% to 51.08%. AFYREN also sold its stake (0.16% of the capital and voting rights) in Bio- Valo, an independent technical consultancy firm.

2.1.2 LIST AND ACTIVITY OF SUBSIDIARIES DURING THE PAST FINANCIAL YEAR

In accordance with the provisions of Article L.233-6 of the French Commercial Code, we hereby inform you of the activity of our subsidiaries during the financial year ended 31 December 2023.

• AFYREN NEOXY is the operating company of AFYREN's first industrial-scale production plant for biobased organic acids from sugar beet by-products. The plant is located on the Chemesis industrial platform located in Carling-Saint-Avold, in the Grand Est region. AFYREN NEOXY is jointly owned with Bpifrance (with AFYREN owning 51% of its share capital and Bpifrance 49%).

•

Last financial year ended (in €)	AFYREN NEOXY
Share capital	49,600,999
Equity	33,887,037
Net income	-10,819,889
Revenues	44,422
Dividends received during the year	-

•

• AFYREN also has a wholly-owned subsidiary in Quebec (9478-2687 Quebec inc.). This subsidiary is currently dormant.

2.1.3 BRANCHES

None.

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BUSINESS REPORT

2.2 GENERAL PRESENTATION

2.2.1 BUSINESS ACTIVITY

Founded in 2012, AFYREN is a sustainable chemical ("greentech") company offering innovative solutions to replace petroleum-based ingredients with products derived from non-food biomass processed using natural microorganisms, in a zero industrial waste circular economy approach.

Using renewable raw materials that do not compete with human food (e.g. molasses and beet pulp), AFYREN's process makes it possible to produce 100% biobased organic acids on an industrial scale and at a competitive cost, offering the same chemical properties as those produced from oil, but with a carbon footprint divided by five1.

These acids are used in a wide range of products, from aeronautical lubricants to food preservatives. As well as acids, the process makes it possible to produce a natural fertiliser.

The AFYREN model: biobased ingredients from renewable by-products obtained by fermentation.

1 Environmental footprint of AFYREN's products via Life Cycle Assessment, Sphera, March 2021 (https://AFYREN.com/wp- content/uploads/2021/04/210402-AFYREN-LCA-analysis-April2021.pdf)

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