Net assets and financial position

The changes in the net assets and capital structure in the 2023/24 financial year are mainly due to the negative net result for the year and the Royalty Pharma transaction.

Non-current assets decreased from € 45.5 million in the previous year to € 43.1 million. This was due to both amortization and depreciation as well as a reduction in equity-accounted investments.

Current assets increased from € 25.5 million to € 45.7 million. This is especially due to the increase in cash and cash equivalents, which is mainly attributable to the advance payment received in connection with the Royalty Pharma transaction, the convertible bonds issued, and the raising of additional financing. This was offset by a reduction in trade receivables from € 9.4 million to € 7.8 million. This is primarily due to the successful active working capital management. Equity decreased from € 23.0 million to € 13.9 million. The main reasons for this are the negative result for the year (€ -11.1 million) on the one hand and an increase in the Capital reserves due to issuing convertible bonds in the amount of € 5.0 million (of which the allocated equity share is € 0.6 million) and the periodic recognition of the current employee participation programmes schemes (€ 0.9 million) on the other hand.

As at the 30 September 2024 reporting date, the company reports authorized capital of € 4,369,499 and conditional capital of € 2,184,749 (conditional capital to fulfil option or conversion rights from the issue of bonds with warrants and/or convertible bonds) and € 2,184,748 (conditional capital to fulfil option rights from the issue of share options).

Non-current liabilities increased from € 30.4 million in the previous year to € 49.8 million in the year under review. This is due mainly to the higher level of financial liabilities. Non-current financial liabilities include liabilities from the Royalty Pharma transaction (€ 18.4 million), the debt component of the convertible bonds (€ 4.2 million), and silent partnerships (€ 8.0 million).

Current financial liabilities increased from € 4.7 million to € 11.9 million. The increase is due to reclassifications from non-current liabilities in line with their maturities as well as the raising of additional financing. This is offset by scheduled repayments. Other liabilities increased by € 2.2 million to € 5.4 million. This is due to payment obligations for specific remunerations in connection with the Royalty Pharma transaction. Deferred income decreased from € 2.9 million in the previous year to € 0.7 million due to a lower level of advance payments from research and development projects. Overall, the aforementioned items led to an increase in current liabilities from € 17.5 million to € 25.0 million.

Financial management at BRAIN mainly entails securing the necessary liquidity to achieve the company’s objectives and to meet payment obligations at all times. Various financing instruments are utilized, such as loans, silent partnerships, the sale of future license income, leasing, and hybrid instruments.

The financial liabilities are predominantly denominated in euros and pounds sterling. In addition to silent partnerships, the interest-bearing financial liabilities mainly consist of loans from financial institutions with a fixed nominal interest rate of between 1.15 % and 7.87 %, as well as liabilities for the potential acquisition of company shares from the exercise of put options. Of the interest-bearing loans, € 7.1 million have a remaining term up to one year and € 6.6 million a remaining term of more than one year.

The equity ratio stood at 15.6 % as at the reporting date, down on the previous year (32.4 %). The debt-to-equity ratio rose from 67.6 % in the previous year to 84.4 % as at 30 September 2024 in the context of the aforementioned parameters. Total assets increased from € 70.9 million as at 30 September 2023 to € 88.7 million as at 30 September 2024.

Investments

Investments focused on property, plant and equipment amounted to circa € 1.6 million, mainly due to the expansion of production capacity at Biocatalysts in the BioProducts segment as well as new and replacement investments in laboratory equipment.

Liquidity

Extract from the cash flow statement

The BRAIN Biotech Group’s gross cash flow deteriorated from € -4.4 million in the previous year to € -9.0 million in the 2023/2024 financial year.

By contrast, cash flow from operating activities improved from € -4.2 million to € -3.6 million in the financial year under review. This was due to an improvement in operating working capital as a consequence of improved collection of trade receivables, as well as a lower level of inventories. This was offset by a year-on-year lower level of cash inflows from deferred income.

Cash flow from investing activities amounted to € -1.7 million in the financial year under review, compared with € 0.6 million in the previous year. Cash flow from investing activities is largely characterized by investments in property, plant and equipment amounting to € -1.6 million. The previous year was positively impacted by the receipt of the sales price for the divestment of L. A. Schmitt GmbH (€ +3.0 million).

Cash flow from financing activities amounted to € 27.0 million and reflects the debt capital measures in the financial year under review, such as the Royalty Pharma transaction (€ 18.4 million), the issuing of convertible bonds (€ 5.0 million), and the payment of silent participations (€ 5.0 million). This is offset by scheduled repayments of financial liabilities (€ 5.5 million).

The individual cash flows results in an overall increase in cash and cash equivalents of € 21.7 million compared with € -3.2 million in the previous year.

Cash and cash equivalents of € 27.1 million as at the 30 September 2024 reporting date were offset by current financial liabilities of € 11.9 million and non-current financial liabilities of € 21.2 million. In addition, the company has credit lines of € 7.0 million, which give it the flexibility to meet the aforementioned payment obligations. Of the credit line, € 5.0 million had been utilized as at the reporting date. The credit line has a term until 30 June 2025.

In the Management Board’s assessment, no restrictions exist that can limit the availability of cash and/or capital.