Results of operations
Extract from the statement of comprehensive income
| € thousand | 2023/24 | 2022/23 |
|---|---|---|
| Revenue | 54,631 | 55,335 |
| Research and development grant revenue | 868 | 890 |
| Changes in inventories | -433 | 144 |
| Other income | 453 | 771 |
| Total operating performance | 55,520 | 57,140 |
| EBITDA | -4,029 | -826 |
| Adjusted EBITDA | -420 | 402 |
| EBIT | -8,852 | -5,480 |
| Net financial result | -2,137 | -2,010 |
| Pretax loss for the reporting period | -10,990 | -7,489 |
| Net loss for the reporting period | -11,100 | -8,114 |
| Earnings per share (in €) | -0.51 | -0.38 |
BRAIN Biotech Group’s consolidated revenue decreased to € 54.6 million in the 2023/24 financial year. Compared with the previous year (€ 55.3 million), this represents a decline of 1.3 %. This was mainly due to a reduction in revenue in the BioScience segment. The product business, by contrast, reported slight year-on-year growth of 0.2 %.
The regional focus of revenue was on the USA (circa 25 %, previous year: circa 28 % of total revenue), the Netherlands (circa 21 %, previous year: circa 19 %), Germany (circa 12 %, previous year: c. 10 %), the UK (circa 7 %, previous year: circa 9 %) and France (circa 5 %, previous year: circa 5 %). Revenue in Germany rose to € 6.7 million (previous year: € 5.7 million). International revenue decreased year-on-year to € 48.0 million (previous year: € 49.7 million).
At € 0.9 million, research and development grant revenue remained constant compared to the previous year.
Changes in inventories amounted to € -0.4 million and were thereby clearly lower than in the previous year (€ 0.1 million). In the BioScience segment, the change in inventories reduced from € 0.3 million in the previous year to € -0.3 million. By contrast, changes in inventories in the BioProducts segment remained the same as in the previous year at € -0.2 million.
Other income was down by € 0.8 million year-on-year to € 0.5 million.
At € 55.5 million, the total operating performance resulting from the aforementioned developments was 2.8 % below the previous year (€ 57.1 million).
The cost of materials decreased by 5.9 % from € 25.4 million to € 23.9 million. The ratio of cost of materials to revenue improved clearly from 45.8 % to 43.7 %. Expenses for third-party services within the BRAIN Biotech Group were reduced from € 1.0 million to € 0.5 million. Third-party services were purchased mainly from universities, companies with special production expertise, and other technology firms. The volume of services procured from third parties varies depending on the respective project requirements and internal capacity utilization.
Personnel expenses in absolute terms increased year-on-year by 14.1 % from € 22.0 million to € 25.1 million. Personnel expenses include certain one-off effects in connection with the Royalty Pharma transaction amounting to € 2.5 million. The exclusion of these one-off effects would generate a 2.9 % yearly increase, which largely reflects the hiring of new production personnel as well as higher expenses deriving from share-based payment.
At € 10.6 million, other expenses remained at the previous year’s level of € 10.6 million. Inflationary trends were largely offset by stringent project controlling and consistent cost management.
In summary, the effects described above led to a € 3.2 million decrease in EBITDA to € -4.0 million
As in the previous year, EBITDA was influenced by various non-operating effects, for which adjustments have been made. These include expenses for share-based payment programs as well as personnel expenses and other expenses in connection with the Royalty Pharma transaction. In the previous year, acquisition and integration costs were also adjusted.
In the past financial year, adjusted EBITDA decreased from € 0.4 million to € -0.4 million.
The following overview presents the reconciliation of reported EBITDA with adjusted EBITDA:
| € thousand | 2023/24 | 2022/23 |
|---|---|---|
| EBITDA, including: | -4,029 | -826 |
| Personnel expenses in connection with the Royalty Pharma transaction | -2,467 | 0 |
| Other operating expenses in connection with the Royalty Pharma transaction | -248 | 0 |
| Personnel expenses from share-based payment components | -894 | -714 |
| Personnel expenses in connection with M&A transactions and the integration of acquired companies | 0 | -234 |
| Other operating expenses in connection with M&A transactions and the integration of acquired businesses | 0 | -279 |
| Adjusted EBITDA | -420 | 402 |
Depreciation, amortization and impairment losses changed from € -4.7 million in the previous year to € -4.8 million.
This led to EBIT of € -8.9 million compared to € -5.5 million in the previous year.
The financial result deteriorated from € -2.0 million to € -2.1 million. Within the financial result, finance costs increased due to higher borrowings. Finance income includes income from the subsequent measurement of financial liabilities in connection with put option rights amounting to € 0.2 million. Compared to the previous year, however, finance income decreased from € 0.8 million to € 0.4 million. The result from equity-accounted companies improved from € -1.5 million to € -0.5 million. This reflects a lower loss incurred at SolasCure Ltd.
As a consequence, the pretax result deteriorated from € -7.5 million to € -11.0 million.
Taking taxes into account, the net result amounted to € -11.1 million (previous year: € -8.1 million). Of this amount, € -11.1 million is attributable to the shareholders of BRAIN Biotech AG.
Overall, the revenue and adjusted EBITDA trends were not in line with our original guidance (see also the detailed forecast report in this Group management report).
The operating segments report the following results:
No changes have occurred to the segmentation compared with the consolidated financial statements as at 30 September 2023.
Segment share of revenue
| 2023/24 | 2022/23 | |
|---|---|---|
| BioProducts | 78 % | 77 % |
| BioScience | 19 % | 22 % |
| BioIncubator | 3 % | 1 % |
BioProducts segment
The BioIndustrial segment consists mainly of the Group’s industrially scaled product business.
| € thousand | 2023/24 | 2022/23 |
|---|---|---|
| Revenue | 42,567 | 42,492 |
| Research and development grant revenue | 68 | 149 |
| Changes in inventories | -150 | -170 |
| Other income | 101 | 320 |
| Total operating performance | 42,586 | 42,791 |
| Cost of materials | -22,160 | -22,761 |
| Personnel expenses | -8,994 | -8,648 |
| Other expenses | -6,124 | -6,203 |
| EBITDA | 5,309 | 5,178 |
| Adjusted EBITDA | 5,309 | 5,485 |
| Depreciation, amortization and impairment | -3,594 | -3,256 |
| EBIT | 1,715 | 1,922 |
Revenue in the BioProducts segment grew slightly from € 42.5 million to € 42.6 million. This segment’s revenue growth stood below our original guidance. In addition to a generally weaker economic environment and the reduction of customer inventories, delays also occurred in the commissioning of the second large-scale fermenter in the UK.
The segment’s total operating performance decreased by 0.5 % from € 42.8 million in the previous year to € 42.6 million, mainly due to a lower level of other income.
The segment’s adjusted EBITDA decreased from € 5.5 million to € 5.3 million. The industrially scaled segment continues to show strong profitability. However, the lower momentum in the segment has resulted in adjusted EBITDA growth below the original guidance.
BioScience segment
The BioScience segment includes mainly research and development business with industrial partners, and the company’s own research and development.
| € thousand | 2023/24 | 2022/23 |
|---|---|---|
| Revenue | 10,694 | 12,306 |
| Research and development grant revenue | 406 | 374 |
| Changes in inventories | -283 | 314 |
| Other income | 421 | 460 |
| Total operating performance | 11,238 | 13,454 |
| Cost of materials | -1,486 | -2,102 |
| Personnel expenses | -8,051 | -8,626 |
| Other expenses | -2,167 | -2,283 |
| EBITDA | -466 | 443 |
| Adjusted EBITDA | -172 | 768 |
| Depreciation, amortization and impairment | -1,229 | -1,397 |
| EBIT | -1,694 | -954 |
In the BioScience segment, revenue decreased by 13.1 % from € 12.3 million to € 10.7 million. This is due to project delays in the cooperation business given a weakening business environment in contract research. Research and development grant revenue amounted to € 0.4 million and thereby stood at the previous year’s level. Overall, total operating performance reduced to € 11.2 million.
Adjusted EBITDA decreased from € 0.8 million to € -0.2 million, which is mainly due to the lower revenue level. However, the reduced revenue level was partly offset by continued stringent project controlling and good overall cost control. Nevertheless, both the revenue trend and adjusted EBITDA fell short of our original guidance.
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 | 2023/24 | 2022/23 |
|---|---|---|
| Revenue | 1,657 | 576 |
| Research and development grant revenue | 394 | 368 |
| Changes in inventories | 0 | 0 |
| Other income | 0 | 0 |
| Total operating performance | 2,051 | 955 |
| Cost of materials | -468 | -519 |
| Personnel expenses | -3,025 | -2,417 |
| Other expenses | -685 | -753 |
| EBITDA | -2,127 | -2,734 |
| Adjusted EBITDA | -2,127 | -2,734 |
| Depreciation, amortization and impairment | 0 | 0 |
| EBIT | -2,127 | -2,734 |
In the BioIncubator segment, revenue in the reporting period increased significantly from € 0.6 million in the previous year to € 1.7 million. In the second quarter of the financial year under review, a milestone was reached in the deucrictibant project (formerly PHA 121), which made a significant contribution to revenue growth. The strong revenue growth is also reflected in the segment’s adjusted EBITDA, which improved from € -2.7 million in the previous year to € -2.1 million. The segment continues to be characterized by a high level of investments of € 2.6 million in the area of genome editing under the brand name Akribion Genomics. Thanks to the successful realization of a high milestone payment, segment earnings stood above our original guidance, both in terms of revenue and adjusted EBITDA.
BRAIN Biotech Holding segment
The BRAIN Biotech Holding segment comprises mainly personnel expenses and other expenses for Group administration, the further development of the BRAIN Biotech Group including strategic Group financing, stock exchange listing, and M&A activities, as well as one-off expenses in connection with the Royalty Pharma transaction in the context of strategic Group financing in the financial year under review, which can be found in the adjustments. Adjusted EBITDA for the segment amounted to € -3.3 million, which is slightly below the previous year’s level but still in line with our original guidance.