Jürgen Eck, CEO BRAIN AG

Letter from the CEO

Dear shareholders,

The economic environment in the 2018/2019 financial year was characterized by great uncertainty. Political tensions resulting from the Brexit negotiations and, in particular, the trade dispute between the USA and China, led to a significant deterioration in the business climate. This particularly affected the heavily export-oriented chemical industry, which stagnated or even declined worldwide. However, especially within this difficult environment, the importance of the performance of the entire team at BRAIN is evident. With a passion for innovation and scientific creativity, we have considerably advanced our business in the past year and impressively achieved our growth targets.

In the past 2018/19 financial year, the BRAIN Group’s revenues rose to € 38.6 million, representing an increase of more than forty percent over the previous year. The Group’s adjusted EBITDA improved to € -2.3 million in this period, reflecting an increase of of 58 percent.

In our strategically important “BioIndustrial” product segment, significant organic growth was just as much a factor in revenue growth as the positive contribution from the Biocatalysts Group, which we acquired in the previous year. The increasing expansion of product sales is setting a course that enables our innovations to be commercialized profitably, and consequently for a successful future for the BRAIN Group.

The research-oriented “BioScience” segment also performed well due to the many contracts that were signed for tailor-made solutions projects and strategic product development projects. Our own research performance plays an important role in this context. With our attractive development pipeline and the product ideas that are advancing along it, we are ensuring that BRAIN can continue to grow organically in the future.

“In order to grow profitably, we are pressing ahead with our strategic orientation as a fully integrated company and positioning ourselves as an innovative business partner for industrial customers.”

Dr. Jürgen Eck
CEO (until 31.12.2019)

The bioeconomy has gained in importance, and its share of the macroeconomy is steadily increasing. Political pressure to act and the need for greater sustainability are giving our business additional impetus. With our diverse range of biobased ingredients and processes, we are making a significant contribution to more sustainable consumer products and industrial processes. Continuous investments in our research are required in order to meet the industry’s sustained high demand for innovative, biobased solutions. The focus here is on expanding our quantity-scalable product range, which now accounts for almost seventy percent of the company’s total operating performance. With our clear focus on our three operating segments – Nutrition & Health, Skin Care and Industrial BioSolutions – we are strengthening our position in the most promising markets of the food, cosmetics and chemical industries. We are pressing ahead with our strategic orientation as a fully integrated company and positioning ourselves as an innovative business partner for industrial customers. Given this backdrop, in the second quarter of the year we divested our interest in Monteil Cosmetics International GmbH, which operates in the consumer business.

In this annual report – entitled “Pioneering Bioproducts” – we present a selection from the BRAIN Group’s product portfolio, which ranges from existing products for B2B customers to customer-specific solutions and our innovation pipeline. Our range of bioactive natural substances, tailor-made enzymes and high-performance microorganisms is unique in its breadth. This makes us a strong supplier of biobased products and processes.

We are particularly proud of the continuous quality of our research, which makes us bioeconomy pioneers. Last year, BRAIN scientists once again received awards for their groundbreaking work in applied research. With its outstanding expertise, BRAIN is a sought-after partner for globally active companies from various sectors of the food and cosmetics industries.

We are addressing growing demand for novel, natural beverage ingredients together with Suntory Beverage & Food Europe (SBFE). Newly developed beverage components will be applied in selected SBFE categories. A leading Japanese consumer goods company with a highly diversified beverage portfolio has joined the FRESCO program, which focuses on identifying natural preservatives. With our work on the development of bioactive, natural ingredients with preservative-enhancing properties, we are responding to growing demand for natural food components. This applies all the more to our DOLCE program for natural sugar substitutes and sweetness enhancers. A new partner was added during the course of the financial year, which will give a globally active European beverage company access to novel sweeteners.

However, we have no wish to be satisfied with what we have achieved. We aim to grow profitably and convince business customers, partners and consumers of our at times groundbreaking products and solutions. For this reason, we are continuing to focus on proximity to our customers and on the Group’s innovative strength. The economic environment remains challenging. Nevertheless, we are looking with confidence to the future for our own business. For the 2019/20 financial year, we expect a positive business trend, with a significant increase in organic revenue. The further expansion of our product range for industrial customers in the chemical, food and cosmetics industries and the development of our own new product ideas play a key role here. We also identify growth prospects internationally, where in the future we aim to participate to a greater extent. We are convinced of our strategy, we have unique creative competencies and we are passionate about achieving scientific progress. This annual report provides insights into the dynamism and determination with which we are working for the BRAIN Group’s success.

On behalf of my Management Board colleagues, I would also like to thank all BRAIN Group employees for the special level of commitment they have shown in their work over the past financial year. Our thanks also go to our cooperation and business partners and, of course, to you, our shareholders. We aim to be the leading German company within a sustainable bioeconomy, and we are pleased that you are accompanying us on this path.

Dr. Jürgen Eck — CEO*

*until 31.12.2019

Enzymestructur of Aurase designed for BRAIN Annual Report Cover 2018-19

To BRAIN Annual Report 2018/19

BRAIN Annual Report 2018/19 with the title ”Pioneering Bioproducts”

Annual Report 2018/19

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