Overall statement on business progress
In the past financial year, the Management Board is of the opinion that BRAIN achieved considerable successes in all key areas of the company’s business and strategic development. The Group’s revenue growth continued on a positive course despite the challenging economic environment. The acquisition of all outstanding minority interests in Biocatalysts Ltd. has enabled the Group’s product business to be aggregated under the management of Biocatalysts. This has further strengthened the profitable product business. The new segment reporting with the three operating segments BioProducts, BioScience, and BioIncubator has further enhanced transparency for our shareholders.
The instruments for managing the Group, the subsidiaries, and the projects were developed further and expanded on a business-related basis. With an optimized internal control and risk management system, we are taking account of the expanding revenue level and the increasing complexity of exogenous factors. Each corporate activity reports personally to the Management Board and to the company’s central finance department on a monthly basis. Current business performance, adherence to budgets, and changes to the risk profile are reviewed. In addition to risks, we also identify opportunities for the company. Our Group-wide BRAINway training program to strengthen the corporate culture, to focus on commercial success, and to promote the personal development of our employees was continued and supplemented with new elements. Following the publication of our first ESG and sustainability report in the last financial year, we have now begun the concrete implementation steps of our sustainability strategy.
Strategically, the BRAIN Biotech Group is developing into a focused product company with a focus on enzymes. We draw our strength in product development from deeply rooted biotechnological solution expertise from more than thirty years of entrepreneurial development. The BioProducts segment made a very pleasing contribution to the Group’s growth with a double-digit increase in revenue. Since its acquisition last year, the Breatec Group has enjoyed particularly dynamic revenue growth and rising profitability.
In the BioScience segment, we recorded stable service business overall. BRAIN successfully advanced some of its own development projects in the BioIncubator during the financial year under review. In the genome editing project, Akribion Genomics, we are continuing to make pleasing scientific progress and have received the basic patent for our nuclease G-dase E® from the European Patent Office. The spin-off and independent financing of these activities are still planned for the next financial year. In the area of wound management/Aurase, the Phase 2a study on patients has been successfully completed. The “Gold from Waste Streams” project is being continued with an industrial partner. The active substance outlicensed to Pharvaris for the treatment of hereditary angioedema is currently undergoing promising clinical development.
The economic environment remains characterized to a significant extent by uncertainty – including relating to armed conflicts, price inflation, political bloc formation, and an environment of sharply rising interest rates. The BRAIN Biotech Group was also affected by the negative economic effects in this context. Supply chains remain constrained in some cases and prices for raw materials and consumables are proving to be highly volatile. In addition, it was not always possible to pass on price increases for primary products and rising labor costs to customers in full and immediately. Nevertheless, most of the subsidiaries continued to contribute to the positive revenue and earnings growth during the year under review.
In relation to the trend in the net assets, financial position and results of operations, the Management Board is of the opinion that the overall picture is positive, as the Group achieved significant revenue growth and improved EBITDA despite the generally weak economic environment.
We continued to push ahead with measures to strengthen our business activities with the aim of achieving sustainable and profitable revenue growth. This includes leveraging cost and revenue synergies within the Group to a greater extent, a further streamlining of our corporate organization accompanied by a clear definition of responsibilities, stringent project controlling of the new business development pipeline, and ongoing initiatives to achieve general cost savings.
Furthermore, for the Management Board the continued high level of investments in research and development in relation to revenue represents an indicator and basis for BRAIN’s future potentials. The Group holds a position of cash and cash equivalents of € 5.4 million as of 30 September 2023, and reports a 32.4 % equity ratio. In the Management Board’s opinion, this signifies that the prerequisites to participate in the potential offered by growing bioeconomy markets remain in place. Further sources of financing in the area of debt or hybrid capital have been and are being tapped.
Overall, and on the basis of the developments outlined above, the Management Board of BRAIN Biotech AG continues to assess the course of business and the Group’s net assets and financial positions as positive as of the reporting date.