Results of operations
Extract from the statement of comprehensive income
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Revenue | 55,335 | 49,509 |
| Research and development grant revenue | 890 | 786 |
| Changes in inventories | 144 | 932 |
| Other income | 771 | 1,845 |
| Total operating performance | 57,140 | 53,072 |
| EBITDA | -826 | -1,309 |
| Adjusted EBITDA | 402 | -98 |
| EBIT | -5,480 | -5,648 |
| Net financial result | -2,010 | -516 |
| Pretax loss for the reporting period | -7,489 | -6,165 |
| Net loss for the reporting period | -8,114 | -6,341 |
| Earnings per share (in €) | -0.38 | -0.30 |
BRAIN Biotech Group’s consolidated revenue increased to € 55.3 million in the 2022/23 financial year. Compared with the previous year (€ 49.5 million), this represents growth of 11.8 %. In organic terms, in other words, excluding the Breatec Group in the first four months of the current financial year as well as L.A. Schmitt in the previous year, growth was dynamic, amounting to a total of € 4.6 million, or 9.8 %.
This organic growth was driven mainly by the expanding enzymes business in the BioProducts segment.
The regional focus of revenue was on the USA (circa 28 %, previous year: circa 28 % of total revenue), Germany (c. 10 %, previous year: circa 16 %), the Netherlands (circa 19 %, previous year: circa 13 %), the UK (circa 9 %, previous year: circa 7 %) and France (circa 5 %, previous year: circa 8 %). Revenue in Germany decreased to € 5.7 million (previous year: € 7.9 million). International revenue was up year-on-year to reach € 49.7 million (previous year: € 41.6 million).
Research and development grant revenue increased slightly by € 0.1 million from € 0.8 million to € 0.9 million.
Changes in inventories totaled € 0.1 million and were thereby significantly lower than in the previous year (€ 0.9 million). In the BioScience segment, the change in inventories increased from € 0.1 million in the previous year to € 0.3 million. By contrast, changes in inventories in the BioProducts segment decreased from € 0.8 million in the previous year to € -0.2 million. The decrease in the BioProducts segment is due mainly to the high initial level as a result of timing effects on the previous year’s reporting date and an active reduction in inventories. Other income was down by € 1.8 million year-on-year to € 0.8 million. The previous year was influenced by income of € 0.7 million from the divestment of L.A. Schmitt GmbH.
At € 57.1 million, the total operating performance deriving from the aforementioned developments was 7.7 % up on the previous year (€ 53.1 million).
In line with the higher revenue, the cost of materials increased by 10.3 % from € 23.0 million to € 25.4 million. By contrast, the ratio of cost of materials to revenue improved from 46.4 % to 45.8 %. Third-party services within the BRAIN Biotech Group were reduced by 26.2 % to € 1.0 million. Third-party services were purchased mainly from universities, companies with special production expertise, and other technology firms.
Personnel expenses in absolute terms increased slightly year-on-year by 1.5 % from € 21.7 million to € 22.0 million. This was due mainly to rising wages and salaries. However, the personnel expense ratio decreased from 43.8 % to 39.8 %. Within personnel expenses, expenses for share-based payments decreased compared with the previous year, as a share-based payment program at one company expired during the course of the financial year under review.
At € 10.6 million (previous year: € 9.7 million), other expenses were above the previous year’s level. This increase is due mainly to higher advertising and travel expenses as well as costs for the distribution of goods and logistics services, reflecting the revenue growth. Inflationary trends were largely offset by consistent cost management.
As a consequence of the aforementioned effects, unadjusted EBITDA improved from € -1.3 million to € -0.8 million.
As in the previous year, EBITDA was influenced by various non-operating effects, for which adjustments have been made. These include acquisition and integration costs as well as expenses for share-based payment programs. In the previous year, an adjustment was also made for other income from the divestment of L.A. Schmitt GmbH.
In the past financial year, adjusted EBITDA improved from € -0.1 million to € 0.4 million.
The following overview shows the reconciliation of reported EBITDA to adjusted EBITDA:
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| EBITDA, including: | -826 | -1,309 |
| Personnel expenses from share-based payment components | -714 | -1,384 |
| Other operating expenses in connection with M&A transactions and the integration of acquired businesses | -279 | -476 |
| Personnel expenses in connection with M&A transactions and the integration of acquired companies | -234 | 0 |
| Other income from the divestment of L.A. Schmitt GmbH | 0 | 650 |
| Adjusted EBITDA | 402 | -98 |
EBIT improved slightly year-on-year from € -5.6 million to € -5.5 million.
The net financial result deteriorated from € -0.5 million to € -2.0 million due to negative subsequent valuation effects from financial liabilities in connection with put option rights and a higher level of interest expenses for loans. In addition, a planned negative result from the equity accounted interest in SolasCure Ltd. contributed to a lower net financial result. This is offset by a gain from share dilution relating to the interest in SolasCure Ltd.
As a consequence, the pretax result deteriorated from € -6.2 million to € -7.5 million.
The loss after taxes amounted to € -8.1 million (previous year: € -6.3 million). Of this amount, € -8.3 million is attributable to the shareholders of BRAIN Biotech AG.
Overall, the revenue and adjusted EBITDA trends were fully in line with our guidance (see also the detailed forecast report in this Group management report).
The operating segments report the following results:
The following changes have occurred in the segmentation compared with the consolidated financial statements as of 30 September 2022. The BioIndustrial segment remained unchanged in its composition, with the exception of the divestment of L.A. Schmitt GmbH as of 30 September 2022, and was renamed “BioProducts”. The “BioIncubator” and “BRAIN Biotech 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) as well as AnalytiCon Discovery. The previous year’s figures have been adjusted accordingly.
Segment share of revenue
| 2022/23 | 2021/22 | |
|---|---|---|
| BioProducts | 77 % | 76 % |
| BioScience | 22 % | 24 % |
| BioIncubator | 1 % | 0 % |
BioProducts segment
The BioProducts segment consists mainly of the Group’s industrially scaled product business.
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Revenue | 42,492 | 37,548 |
| Research and development grant revenue | 149 | 154 |
| Changes in inventories | -170 | 824 |
| Other income | 320 | 1,284 |
| Total operating performance | 42,791 | 39,811 |
| Cost of materials | -22,761 | -20,402 |
| Personnel expenses | -8,648 | -8,929 |
| Other expenses | -6,203 | -5,562 |
| EBITDA | 5,178 | 4,918 |
| Adjusted EBITDA | 5,485 | 4,904 |
| Depreciation, amortization and impairment | -3,256 | -2,987 |
| EBIT | 1,922 | 1,931 |
Revenue in the BioProducts segment grew from € 37.6 million to € 42.5 million. The 13.2 % increase in the segment is due mainly to revenue generated in the area of enzyme sales. In particular, the Breatec Group, which was newly acquired in the previous year, is posting dynamic growth.
The segment’s total operating performance also reported growth of 7.5 %, from € 39.8 million in the previous year to € 42.8 million.
The segment’s adjusted EBITDA grew from € 4.9 million to € 5.5 million, underlining the importance of the industrially scaled segment, which operates profitably. This strong performance is the result of higher revenue and an improvement in the cost/income ratio.
BioScience segment
The BioScience segment includes mainly research and development business with industrial partners, and the company’s own research and development.
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Revenue | 12,306 | 12,079 |
| Research and development grant revenue | 374 | 521 |
| Changes in inventories | 314 | 108 |
| Other income | 460 | 727 |
| Total operating performance | 13,454 | 13,434 |
| Cost of materials | -2,102 | -2,357 |
| Personnel expenses | -8,626 | -8,207 |
| Other expenses | -2,283 | -2,357 |
| EBITDA | 443 | 513 |
| Adjusted EBITDA | 768 | 907 |
| Depreciation, amortization and impairment | -1,397 | -1,353 |
| EBIT | -954 | -840 |
In the BioScience segment, revenue increased by 1.9 % from € 12.1 million to € 12.3 million. This is due to the growth in the project business. New cooperation partners were acquired in the financial year under review and existing relationships with cooperation partners were expanded. Research and development grant revenue decreased slightly by € 0.1 million, from € 0.5 million to € 0.4 million. As a consequence, total operating performance was up by € 0.1 million to € 13.4 million.
The segment’s adjusted EBITDA decreased from € 0.9 million in the previous year to € 0.8 million.
BioIncubator segment
The BioIncubator segment includes the R&D pipeline as well as the company’s own R&D projects or R&D projects initiated with partners offering high value-creation potential.
| € thousand | 2022/23 | 2021/22 |
|---|---|---|
| Revenue | 576 | 0 |
| Research and development grant revenue | 368 | 111 |
| Changes in inventories | 0 | 0 |
| Other income | 0 | 0 |
| Total operating performance | 955 | 111 |
| Cost of materials | -519 | -337 |
| Personnel expenses | -2,417 | -1,968 |
| Other expenses | -753 | -386 |
| EBITDA | -2,734 | -2,580 |
| Adjusted EBITDA | -2,734 | -2,580 |
| Depreciation, amortization and impairment | 0 | 0 |
| EBIT | -2,734 | -2,580 |
The BioIncubator segment generated revenue of € 0.6 million in the reporting period. This revenue was generated primarily from license income in the genome editing area. Research and development grant revenue increased significantly from € 0.1 million to € 0.4 million.
The segment’s adjusted EBITDA is characterized mainly by investments in the area of genome editing under the brand name Akribion Genomics, and amounted to € -2.7 million in the financial year, thereby standing below the previous year’s adjusted EBITDA of € -2.6 million.
BRAIN Biotech Holding segment
The BRAIN Biotech “Holding” segment primarily comprises personnel expenses and other expenses for Group administration, the further development of the BRAIN Biotech Group, stock exchange listing, and M&A activities. Adjusted EBITDA for the segment totaled € -3.2 million and thereby remained at the previous year’s level. Inflationary trends were offset by consistent cost management.