Evotec SE — Interim / Quarterly Report 2016

Apr 16, 2019

HALF-YEAR REPORT 2016

HALF-YEAR REPORT 2016

I. MANAGEMENT REPORT

• EVOTEC DELIVERS VERY STRONG OPERATIONAL AND FINANCIAL RESULTS IN H1 2016
• SIGNIFICANT PROGRESS IN ENDOMETRIOSIS COLLABORATION WITH BAYER
• PROFITABILITY GUIDANCE RAISED AND POSITIVE OUTLOOK CONFIRMED

HIGHLIGHTS Financial performance – Profitability growth trend continues

• Significant revenue growth in both operating segments: EVT Execute revenues up 35% to € 79.8 m; EVT Innovate revenues up 44% to € 11.8 m
• Consolidated Group revenues grew by 37% to € 75.5 m (H1 2015: € 55.0 m); base revenues up 35% to € 68.5 m
• Adjusted Group EBITDA significantly increased to € 15.8 m (H1 2015: € 0.8 m); adjusted EBITDA of € 22.5 m for EVT Execute (H1 2015: € 9.8 m)
• Increase in R&D expenses of 6% to € 9.0 m
• Strong liquidity position of € 118.3 m; initiation of loan repayments

EVT Execute – Strong and profitable growth

• Important milestone achievements in Bayer, Boehringer Ingelheim and Padlock collaborations
• Collaboration extensions e.g. with Genentech and Janssen Pharmaceutica NV
• Multi-year compound management agreement closed with Pierre Fabre
• Antibiotic Research UK's first research contract awarded to Evotec
• Continued strengthening of existing drug discovery platforms with e.g. Trianni's next-generation transgenic technology and CRISPR/Cas9 licences
• Phase I clinical start for the treatment of endometriosis with Bayer (after period-end)

EVT Innovate – Expansion of first-in-class targets and platforms

• Acceleration of TargetNASH programme funded by Ellersbrook GmbH & Co. KG
• Innovation partnership with ex scientia to develop bispecific small molecule immuno-oncology therapeutics
• Formation of spin-off company Topas Therapeutics GmbH in the field of nanoparticle-based therapeutics to treat immunological disorders; Series A funding of € 14 m

Profitability guidance 2016 raised (after period-end)

• Adjusted Group EBITDA (before changes in contingent consideration) expected to more than double compared to 2015 (previously: positive and significantly improved compared to last year (2015: € 8.7 m))
• All other elements of financial guidance as of 22 March 2016 and positive outlook confirmed

Segment information for the first six months of 2016

EVT Execute	EVT Innovate	Intersegment eliminations	Evotec Group

			EBITDA adjusted
--	--	--	-----------------	--

Segment information for the first six months of 2015

EVT Execute	EVT Innovate	Intersegment eliminations	Not allocated	Evotec Group

Operating income and (expenses)
—R&D expenses	(190)	(10,376)	2,060	-	(8,506)
— SG&A expenses	(9,324)	(3,062)	-	-	(12,386)
- Impairment of intangible assets	-	(୧୨)	-	-	(୧୨)
- Income from bargain purchase	-	-	-	18,476	18,476
- Other operating income	3,953	529	-	-	4,482
- Other operating expenses	(3,269)	(108)	-	-	(3,377)
Total operating income (expenses)	(8,830)	(13,086)	2,060	18,476	(1,380)
Operating income (loss)	3,964	(9,518)	-	18,476	12,922
EBITDA adjusted	9,846	(9,051)	-	-	795

STRONG AND PROFITABLE GROWTH Important milestone achievements, new and extended collaborations

Antibiotic Research UK's first research contract awarded to Evotec

Continued strengthening of existing drug discovery platforms with e.g. Trianni's next-generation transgenic technology and CRISPR/Cas9 licences

Phase I clinical start for the treatment of endometriosis with Bayer (after period-end)

EXPANSION OF FIRST-IN-CLASS TARGETS AND PLATFORMS Acceleration of TargetNASH programme funded by Ellersbrook GmbH & Co. KG

Innovation partnership with ex scientia to develop bispecific small molecule immuno-oncology therapeutics

Formation of spin-off company Topas Therapeutics GmbH in the field of nanoparticle-based therapeutics to treat immunological disorders; Series A funding of € 14 m

CHANGES IN GROUP STRUCTURE, CORPORATE STRATEGY AND OBJECTIVES, PRODUCT OFFERING AND BUSINESS ACTIVITIES

1. RESULTS OF OPERATIONS

2. OPERATING SEGMENTS EVT EXECUTE AND EVT INNOV ATE

3. FINANCING AND FINANCIAL POSITION

4. ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY Assets

Liabilities

Stockholders' equity

5. HUMAN RESOURCES

Employees

Stock-based compensation

SHAREHOLDINGS OF THE BOARDS OF EVOTEC AG

Number of shares

	01 Jan 16	Additions	Sales	30 June 16
Management Board
Number of stock options
	01 Jan 16	Additions	Exercise	30 June 16
Management Board
Number of Share Performance Awards
	01 Jan 16	Additions	Exercise	30 June 16
Management Board

*Colin Bond has been Chief Financial Officer and Member of the Management Board of Evotec until the end of June 2016. Enno Spillner started as Chief Financial Officer and Management Board Member of Evotec AG on 18 July 2016.

GLOBAL ECONOMIC DEVELOPMENT

TRENDS IN THE PHARMACEUTICAL AND BIOTECHNOLOGY SECTOR

PROFITABILITY GUIDANCE RAISED (AFTER PERIOD-END)

Guidance July 2016	Original Guidance 2016	Actual 2015

1) Excluding milestones, upfronts and licences

2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non operating result

3) Excluding any potential cash outflow for M&A or similar transactions

PERFORMANCE OF THE EVOTEC SHARE OVER THE PAST TWELVE MONTHS

II. UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EVOTEC AG AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2016

footnote reference	as of 30 June 2016	as of 31 December 2015

INTERIM CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM 01 JANUARY TO 30 JUNE 2016

Six months ended 30 June 2016	Six months ended 30 June 2015	Three months ended 30 June 2016	Three months ended 30 June 2015

EVOTEC AG AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM 01 JANUARY TO 30 JUNE 201 6

Six months ended 30 June 2016	Six months ended 30 June 2015	Three months ended 30 June 2016	Three months ended 30 June 2015

EVOTEC AG AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTH ENDED 30 JUNE 201 6

Six months ended 30 June 2016	Three months ended 30 June 2015

EVOTEC AG AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2016

Share capital			Income and expense recognised in other comprehensive income
Shares	Amount	Additional paid-in capital	Foreign currency translation	Revaluation reserve	Accumulated deficit	Stockholders equity attributable to the Shareholders of Evotec AG	Non controlling interest	Total stockholders' equity

1. BASIS OF PRESENTATION

2. PRINCIPLES OF CONSOLIDATION

3. USE OF ESTIMATES

4. SEGMENT INFORMATION

EVT Execute	EVT Innovate	Intersegment eliminations	Evotec Group

EVT Execute	EVT Innovate	Intersegment eliminations	Evotec Group

EVT Execute	EVT Innovate	Intersegment eliminations	Not allocated	Evotec Group

EVT Execute	EVT Innovate	Intersegment eliminations	Not allocated	Evotec Group

5. ACQUISITIONS

6. CURRENT TAX RECEIVABLES

7. OTHER CURRENT FINANCIAL ASSETS

8. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

9. INTANGIBLE ASSETS, EXCLUDING GOODWILL

10. OTHER NON-CURRENT ASSETS

11. CURRENT LOAN LIABILITIES

12. CURRENT PROVISIONS

13. OTHER CURRENT FINANCIAL LIABILITIES

14. OTHER CURRENT LIABILITIES

15. NON-CURRENT DEFERRED REVENUES

16. STOCK-BASED COMPENSATION

17. FAIR VALUES

30 June 2016		31 December 2015
Carrying amount	Fair value	Carrying amount	Fair value

30 June 2016
Level 1	Level 2	Level 3	Total

31 December 2015
Level 1	Level 2	Level 3	Total

January to June 2016 Contingent consideration

January to December 2015 Contingent consideration

HALF-YEAR REPORT 2016

18. RELATED PARTY TRANSACTIONS

19. SUBSEQUENT EVENTS

FINANCIAL CALENDAR 2016

22 March 2016	2015 Annual Report
10 May 2016	Quarterly Statement Q1 2016
14 June 2016	Annual General Meeting 2016
10 August 2016	Half-year 2016 Interim Report
10 November 2016	Quarterly Statement Q3 2016

FORWARD-LOOKING STATEMENTS

III. RESPONSIBILITY STATEMENT