Outlook

Due to the overall high significance of biotechnological products, processes, and services for sustainable industrial processes, nutrition, health, and the environment, BRAIN anticipates a positive environment for the future of the sector as a whole. As a technology company active in the industrial biotechnology sector, BRAIN continues to regards itself in a position to be able to contribute significant added value for industrial partners, as well as in the context of its own research and development, and as a product provider.

The original expectation of a positive business trend in the financial year under review with dynamic revenue growth and a further improvement in adjusted EBITDA was not met in the past financial year. Revenue decreased by 1.3 %. Adjusted EBITDA of € -0.4 million was also down compared with the previous year’s € 0.4 million.

For the 2024/25 financial year, the Management Board expects a continuation of the dynamic business trend with further significant revenue growth and at least the same growth in adjusted EBITDA at Group level. For this indication, we assume that business activities will remain largely unchanged and that the scope of consolidation will remain as it is at present.

For the operating units in the BioProducts and BioScience segments, in addition to revenue growth in the mid to high single-digit percentage range, a further improvement in positive adjusted EBITDA is forecast to at least the same extent. Thanks to the increasing realization of economies of scale and positive contributions from central purchasing, we expect an improvement in the EBITDA margin, particularly in the BioProducts segment. It is expected that the percentage increase in adjusted EBITDA can be realized at least in line with the percentage rate of growth in revenue. In the BioIncubator segment, costs in relation to the new business development pipeline are expected to be significantly reduced in the low single-digit million-euro range, with very low revenue at most, as well as a resulting negative adjusted EBITDA of approximately the same magnitude. This arises from the transfer of the genome editing activities in the pharmaceutical sector to independent licensee Akribion Therapeutics GmbH. Holding segment costs and the associated negative impact on adjusted EBITDA will remain at around the previous year’s level as planned.

BRAIN expects to continue to successfully realize milestones in important projects during the next financial year. This concerns both milestone payments and published progress reports on individual projects. A total of seven milestones were reached in the financial year. The € 1.5 million milestone payment for the deucrictibant pharmaceutical program deserves special mention in this context. In the coming financial year, a similar volume, although lower value, of milestone payments is anticipated.

Research and development expenses in the financial year under review remained at a high level. For the coming financial year, we will continue to invest heavily in research and development, thereby further strengthening the company’s future potential.

As in the previous year, these forecasts are based on the assumption that the macroeconomic trends and sector-specific conditions for industrial biotechnology will continue to unfold further in the next financial year as described in the section “Macroeconomic and sector-specific conditions”, that existing projects will not be cancelled unexpectedly, and that further cooperation partners can be acquired for new projects. This forecast is also based on the assumptions that the effects of war and political actions will not have a significant impact on BRAIN’s planned revenue growth and associated earnings improvements, and that the general public will continue to exhibit an interest in sustainable products. The forecasts are also based on a permanently stable supply of natural gas, oil, and electricity at normal market prices. We expect inflationary pressure to remain in the area of labor costs, and that we will be able to pass such cost increases on to our customers as far as possible. We also assume that the company will continue to succeed in retaining and motivating employees and in successfully recruiting new talent in the future. For the EUR/GBP, USD/GBP and EUR/USD exchange rates, which are important for the Group, we assume that their average exchange rates will stand at the same levels as in the previous financial year.