IV. Segment reporting
The Management Board, as the chief operating decision maker, assesses opportunities and risks and allocates the operating segments’ resources. The segmentation as well as the selection of the indicators presented is realized in accordance with the internal control and reporting systems (the “management approach”). The segment information is prepared applying the same accounting standards as described in the notes to the consolidated financial statements.
The following changes have occurred in the segmentation compared to the consolidated financial statements as at 30 September 2022. The BioIndustrial segment remained unchanged in its composition, with the exception of the divestment of L.A. Schmitt GmbH as at 30 September 2022, and was renamed “BioProducts”. The “BioIncubator” and “Holding” segments have been excluded from the BioScience segment. The BioScience segment now includes the activities of BRAIN Biotech Zwingenberg (excluding the holding company and the share of the BioIncubator) and AnalytiCon Discovery. The previous year’s figures have been adjusted accordingly.
Based on monitoring and control by the Management Board, three operating segments were identified, for which no further aggregation is possible due to their differing product and service orientation.
BRAIN’s business activities are categorized into the BioProducts, BioScience, and BioIncubator operating segments. Segmentation is according to the criterion of the existence of an industrial scale of products. At Management Board level, the individual segments’ business performance is measured on the basis of revenue, and their profitability is measured based on adjusted EBITDA. The Management Board performs and approves planning at this level. All three operating segments have a different strategic orientation and require different marketing and business development strategies.
The BioProducts segment mainly consists of its industrially scalable products business focusing on specialized enzymes and proteins.
The BioScience segment mainly includes research and development business with industrial partners, and the company’s own research and development. Marketing the company’s own products and developments with external partners also forms part of this operating segment.
The BioIncubator segment mainly comprises the R&D pipeline as well as the company’s own R&D projects or those initiated with partners offering high value-creation potential. One particularly promising BioIncubator project concerns the development of a proprietary CRISPR-based gene editing technology platform, which will be established and expanded by the subsidiary Akribion Genomics AG.
The BRAIN Biotech “Holding” segment mainly comprises personnel expenses and other expenses for Group administration, further development of the BRAIN Biotech Group, stock exchange listing, and M&A activities.
The allocation of adjustments (see the section “Adjustments to earnings”) to the segments is generally made in the segment in which the costs to be adjusted were incurred.
Sales revenues generated between the segments are realized on standard market terms.
The following overview presents the segment results. The previous year’s figures have been adjusted in line with the new segmentation
| BioProducts | BioScience | BioIncubator | Holding | Consolidation | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| € thousand | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 |
| Revenue generated with other segments | 0 | 47 | 39 | 71 | 0 | 0 | 0 | 0 | -39 | -118 | 0 |
0 |
|
Revenue generated with external customers |
42,492 | 37,501 | 12,267 | 12,007 | 576 | 0 | 0 | 0 | 0 | 0 | 55,335 | 49,509 |
| Total revenue | 42,492 | 37,548 | 12,306 | 12,079 | 576 | 0 | 0 | 0 | -39 | -118 | 55,335 | 49,509 |
| R&D grant revenue1 | 149 | 154 | 374 | 521 | 368 | 111 | 0 | 0 | 0 | 0 | 890 | 786 |
| Changes in inventories2 | -170 | 824 | 314 | 108 | 0 | 0 | 0 | 0 | 0 | 0 | 144 | 932 |
| Other income | 320 | 1,284 | 460 | 726 | 11 | 0 | 0 | 0 | -20 | -166 | 771 | 1,845 |
| of which net income from divestment of L.A. Schmitt GmbH | 0 | -650 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -650 |
| Total operating performance | 42,791 | 39,811 | 13,454 | 13,434 | 955 | 111 | 0 | 0 | -59 | -284 | 57,140 | 53,072 |
| Cost of materials | -22,761 | -20,402 | -2,102 | -2,357 | -519 | -337 | 0 | 0 | 25 | 101 | -25,357 | -22,994 |
| Personnel expenses | -8,648 | -8,929 | -8,626 | -8,207 | -2,417 | -1,968 | -2,310 | -2,577 | 0 | 0 | -22,000 | -21,681 |
| of which from share-based payments | -82 | 636 | 325 | 394 | 0 | 0 | 471 | 354 | 0 | 0 | 714 | 1,384 |
| of which acquisition and integration costs | 234 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 234 | 0 |
| Other expenses | -6,203 | -5,562 | -2,283 | -2,357 | -753 | -386 | -1,406 | -1,483 | 36 | 82 | -10,609 | -9,706 |
| of which acquisition and integration costs | 154 | 0 | 0 | 0 | 0 | 0 | 125 | 476 | 0 | 0 | 279 | 476 |
| EBITDA | 5,178 | 4,918 | 443 | 513 | -2,734 | -2,580 | -3,716 | -4,060 | 3 | -101 | -826 | -1,309 |
| Adjusted EBITDA | 5,485 | 4,904 | 768 | 907 | -2,734 | -2,580 | -3,120 | -3,230 | 3 | -101 | 402 | -98 |
| Depreciation and amortization | -3,256 | -2,987 | -1,397 | -1,353 | 0 | 0 | 0 | 0 | 0 | 0 | -4,654 | -4,340 |
| EBIT | 1,922 | 1,931 | -954 | -840 | -2,734 | -2,580 | -3,716 | -4,060 | 3 | -101 | -5,480 | -5,648 |
| Finance income | 789 | 3,606 | ||||||||||
| Result from equity-accounted investments | -1,492 | -2,426 | ||||||||||
| Finance costs | -1,307 | -1,696 | ||||||||||
| Result before taxes | -7,489 | -6,165 | ||||||||||
Revenue derived from the following revenue sources:
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Enzymes & Bio-based Products | 42,492 | 35,301 |
| Cosmetics | - | 2,200 |
| BioProducts | 42,492 | 37,501 |
| Research and development | 12,267 | 12,007 |
| BioScience | 12,267 | 12,007 |
| Licenses | 576 | 0 |
| BioIncubator | 576 | 0 |
| Group total | 55,335 | 49,509 |
The following table presents revenue by geographic region:
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Germany | 5,665 | 7,929 |
| Abroad | 49,670 | 41,579 |
| of which: USA | 15,306 | 14,017 |
| of which: Netherlands | 10,381 | 6,540 |
| of which: UK | 4,770 | 3,643 |
| of which: France | 2,743 | 3,798 |
Revenues are allocated to countries according to the destination of the products or services. Revenues in other countries were not material in comparison to total revenues and for this reason these revenues are not shown separately.
The following table shows intangible assets and property, plant and equipment by geographic region, according to the respective Group companies’ locations. If assets in an individual foreign country are material, they are disclosed separately:
| € thousand | 30.09.2023 | 30.09.2022 |
|---|---|---|
| Intangible assets | 15,215 | 16,764 |
| Property, plant and equipment | 28,720 | 28,737 |
| Total | 43,935 | 45,502 |
| of which: UK | 25,168 | 25,176 |
| of which: Germany | 12,211 | 13,102 |
| of which: Netherlands | 4,893 | 5,290 |
| of which: USA | 1,663 | 1,934 |
No relationships exist with individual customers where revenue is to be categorized as significant in comparison with consolidated revenue.