STRATEC SE

Quarterly Report • Oct 26, 2017

QUARTERLY STATEMENT 9M| 2017

January 1 to September 30, 2017

STRATEC CONTINUES TO DELIVER GROWTH

• Sales of € 151.1 million in 9M|2017 (+19.6%; 9M|2016: € 126.3 million) Sales of € 50.3 million in Q3|2017 (+4.2%; Q3|2016: € 48.3 million)
• Organic sales growth of 9.6% in first nine months
• Adjusted EBIT margin of 15.9% in 9M|2017 (9M|2016: 14.6%) Adjusted EBIT margin of 22.1% in Q3|2017 (Q3|2016: 12.0%)
• Outlook for 2017 financial year confirmed
• New platforms presented at AACC 2017

Dear Shareholders, Dear Partners and Friends of STRATEC,

We are pleased to report a continuing positive business performance for the third quarter of the 2017 financial year.

Our nine-month sales increased by 19.6% to € 151.1 million, with this growth being driven in particular by rising instrument sales and a strong performance in the service parts business. It should be noted that the previous year's figures only include the newly acquired subsidiaries on a prorated basis. The Group's organic sales showed year-on-year growth of 9.6% in 2017. In terms of our profitability, we also made substantial progress in the third quarter compared to the slightly more subdued developments seen in the second quarter. Given the expected seasonal course of our business and resultant product mix changes, profitability should continue to develop positively in the fourth quarter. We are therefore confident that we will reach the financial targets set for the full year.

Our operating business continues to be shaped by very substantial development activities in connection with planned new product launches, a factor also reflected in the ongoing growth in our workforce. At the AACC, one of the most important fairs for the healthcare and diagnostics industries, which took place in July and August, we were able to present our newly developed Diatron platforms 'KleeYa' and 'Aquila' to a wider audience for the first time.The consistently positive feedback we have received from customers underlines our expectation that extending our platform concept has significantly boosted our offering to new and existing partners. Given our wellstocked development pipeline and the development milestones already achieved, we expect launches of further new products in the coming quarters.

We are currently also holding promising negotiations on numerous additional development projects and supply arrangements and are thus laying a foundation for further long-term, sustainable growth.

Thank you for the trust you have placed in our company.

On behalf of the Board of Management of STRATEC Biomedial AG

Marcus Wolfinger Chief Executive Officer

€ 000s	9M 2017	9M 2016	Change	Q3 2017	Q3 2016	Change
Sales	151,067	126,334	+19.6%	50,344	48,302	+4.2%
EBITDA1	29,464	22,671	+30.0%	12,972	7,512	+72.7%
EBITDA margin (%)1	19.5	17.9	+160 bps	25.8	15.6	+1,020 bps
EBIT1	23,973	18,391	+30.4%	11,111	5,775	+92.4%
EBIT margin (%)1	15.9	14.6	+130 bps	22.1	12.0	+1,010 bps
Consolidated net income1	18,6273	15,2512	+22.1%	8,6793	4,939	+75,7%
Earnings per share (€)1	1.573	1.292	+21.7%	0.733	0.42	+73,8%

Major key figures for 9M|2017 and Q3|2017

bps = basis points

Adjusted to exclude items relating to acquisition activities

² Additionally adjusted to exclude one-off items resulting from tax audit performed for 2009 to 2013 assessment periods

³ Additionally adjusted to exclude deferred tax benefits resulting from loss carry forwards at companies acquired in 2016

BUSINESS PERFORMANCE

Nine-month sales increased by 19.6% from € 126.3 million in the previous year to € 151.1 million for the same period in 2017. Excluding sales contributed by the subsidiaries acquired in the 2016 financial year, this corresponds to organic sales growth of 9.6%. Sales benefited in particular from the strong performance of the service parts business and from good call-up figures for established systems.

Nine-month adjusted EBIT grew by 30.4% from € 18.4 million in the previous year to € 24.0 million in 2017. The adjusted EBIT margin rose by 130 basis points to 15.9%, up from 14.6% in the previous year's nine-month period. The positive development in the margin was driven in particular by the Group's strong performance in the third quarter. Factors worth highlighting in this respect are a strong product mix, the recognition of revenues for development services performed in Q1 to Q3 2017, and the progress made in integrating and enhancing profitability at the subsidiaries acquired in 2016.

Adjusted consolidated net income increased year-on-year by 22.1% to € 18.6 million in the first nine months of the year. Earnings per share came to € 1.57 (+21.7%, previous year: € 1.29).

These earnings figures have been adjusted to exclude amortization for purchase price allocations (PPAs) resulting from acquisitions and to exclude one-off items incurred in connection with transaction activities and associated restructuring expenses.

A reconciliation of the adjusted results to the results shown in the consolidated statement of comprehensive income is presented below:

€ 000s	01.01. – 09.30.2017
Adjusted EBIT	23,973
Adjustments • Expenses incurred in connection with transactions and associated restructuring	-861
expenses • Scheduled amortization (PPA)	-5,587
EBIT	17,525

€ 000s	01.01. – 09.30.2017
Adjusted consolidated net income	18,627
Adjusted earnings per share in €	1.57
Adjustments • Expenses incurred in connection with transactions and associated restructuring expenses	-861
• Scheduled amortization (PPA)	-5,587
• Financing expenses due to company acquisitions	-510
• Current tax expenses	377
• Deferred tax income	3,680
Consolidated net income	15,726
Earnings per share in €	1.32

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Year-on-year comparison of nine-month sales (€ 000s)

Year-on-year comparison of nine-month adjusted EBIT and EBIT margin (€ 000s)

PROJECTS AND OTHER DEVELOPMENTS

STRATEC is currently at an advanced stage of negotiations for several development and supply agreements and has signed further significant agreements in the third quarter. Furthermore, its partners are due to implement several market launches in the quarters ahead. Given the measures already taken at the Group to extend its capacities, STRATEC is prepared for this growth.

The newly developed 'KleeYa' and 'Aquila' platforms were presented to a wider audience for the first time at the AACC fair held in July and August. The positive feedback received from customers confirms the Company's strategic approach of developing an extended platform concept as an additional offering for new and existing partners. In the period under report, STRATEC already managed to conclude two cooperation agreements for the KleeYa platform, a new fully automated chemiluminescence immunoassay system.

Hologic, one of STRATEC's largest customers, was able to report the successful European market launch of 'Panther Fusion' in the first half of 2017. This was followed in October by FDA (Food and Drug Administration) approval for the first test using 'Panther Fusion' in the US.

In the current financial year, STRATEC will continue to focus on achieving major development milestones and market launches.

DEVELOPMENT IN PERSONNEL

The STRATEC Group had a total of 1,075 employees as of September 30, 2017 including temporary employees and trainees. This corresponds to a 9.6% increase compared with the previous year's reporting date. This marked growth in the size of the workforce continues to be driven by the company's increased development activities in connection with planned new product launches.

STRATEC continues to seek suitably qualified personnel and expects to report further workforce growth in the coming quarters to enable it to manage the large numbers of development projects and seize future growth opportunities.

FINANCIAL FORECAST

Based on its positive performance in the first nine months and on its existing budgets, STRATEC confirms its sales forecast of € 205 million to € 220 million for the 2017 financial year. STRATEC continues to expect to exceed the lower end of the sales range and to generate an adjusted EBIT margin of around 17%.

Given upcoming market launches and the significant progress being made in numerous project negotiations, STRATEC continues to expect to generate average annual organic sales growth (CAGR) in the high single-digit or low double-digit percentage range in the years ahead. The expected positive development in profitability, due primarily to benefits of scale resulting from recent acquisitions, will be countered by a temporary increase in investment activity – to prepare the growth planned for the future – and by up-front financing of select customer projects. Overall, STRATEC expects the EBIT margin to remain broadly consistent.

Number of employees

CONSOLIDATED BALANCE SHEET as of September 30, 2017

Assets

€ 000s	09.30.2017	12.31.2016
Non-current assets
Goodwill	42,081	42,841
Other intangible assets	72,469	75,935
Property, plant and equipment	33,657	32,789
Financial assets	239	378
Deferred taxes	394	99
	148,839	152,042
Current assets
Inventories • Raw materials and supplies • Unfinished products, unfinished services • Finished products and merchandise	17,136 8,269 4,976 30,381	13,029 5,302 6,188 24,519
Receivables and other assets • Trade receivables • Receivables from construction contracts • Receivables from associates • Financial assets • Other receivables and assets • Income tax receivables	30,813 5,964 760 5,538 4,614 2,325 50,013	38,890 2,348 22 5,695 3,870 4,081 54,906
Cash and cash equivalents	26,194	26,500
	106,588	105,925
	255,427	257,967

Shareholders' equity and debt

€ 000s	09.30.2017	12.31.2016
Shareholders' equity
Share capital	11,913	11,861
Capital reserve	22,099	20,437
Revenue reserves	111,631	105,033
Treasury stock	-118	-118
Other equity	2,986	6,506
	148,511	143,719
Non-current debt
Non-current financial liabilities	62,833	3,035
Other non-current liabilities	226	434
Provisions for pensions	1,930	1,753
Deferred taxes	11,758	14,829
	76,746	20,051
Current debt
Current financial liabilities	6,935	72,793
Trade payables	9,217	7,100
Liabilities to associates	23	0
Other liabilities	9,950	12,631
Provisions	1,320	1,348
Income tax liabilities	2,725	325
	30,170	94,197
	255,427	257,967

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period from January 1 to September 30, 2017

€ 000s	01.01. – 09.30.2017	01.01. – 09.30.2016
Sales	151,067	126,334
Cost of sales	-100,921	-80,447
Gross profit	50,146	45,886
Research and development expenses	-7,059	-6,911
Sales-related expenses	-10,099	-8,581
General administration expenses	-14,555	-11,708
Other operating income /expenses	-908	-6,971
Earnings before interest and taxes (EBIT)	17,525	11,716
Net financial expenses	-412	-932
Earnings before taxes (EBT)	17,113	10,784
Current tax expenses	-4,529	-3,927
Deferred tax income	3,142	1,026
Consolidated net income	15,726	7,833
Items that may be subsequently reclassified to profit or loss
Currency translation differences from translation of foreign business operations	-3,532	275
Change in value of financial investments	13	2,027
Comprehensive income	12,207	10,184
Basic earnings per share in €	1.32	0.67
No. of shares used as basis (basic)	11,870,930	11,849,634
Diluted earnings per share in €	1.31	0.66
No. of shares used as basis (diluted)	11,975,801	11,937,704

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period from July 1 to September 30, 2017

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€ 000s	01.07. – 30.09.2017	01.07. – 30.09.2016
Sales	50,344	48,302
Cost of sales	-32,295	-32,258
Gross profit	18,049	16,043
Research and development expenses	-2,223	-1,784
Sales-related expenses	-2,996	-3,218
General administration expenses	-4,074	-4,407
Other operating income /expenses	123	-4,870
Earnings before interest and taxes (EBIT)	8,879	1,765
Net financial expenses	-183	-231
Earnings before taxes (EBT)	8,696	1,534
Current tax expenses	-2,077	-832
Deferred tax income	2,892	781
Consolidated net income	9,511	1,483
Items that may be subsequently reclassified to profit or loss
Currency translation differences from translation of foreign business operations	-2,337	1,198
Change in value of financial investments	-300	-19
Comprehensive income	6,874	2,661
Basic earnings per share in €	0.80	0.12
No. of shares used as basis (basic)	11.900.666	11.855.261
Diluted earnings per share in €	0.79	0.12
No. of shares used as basis (diluted)	11.972.707	11.945.992

CONSOLIDATED CASH FLOW STATEMENT for the period from January 1 to September 30, 2017

€ 000s	01.01. – 09.30.2017	01.01. – 09.30.2016
I. Operations
Consolidated net income (after taxes)	15,726	7,883
Depreciation and amortization	11,078	7,884
Current income tax expenses	4,529	3,927
Income taxes paid less income taxes received	-1,327	-4,487
Financial income	-100	-138
Financial expenses	585	756
Interest paid	-442	-336
Interest received	95	138
Other non-cash expenses	1,233	849
Other non-cash income	-701	-723
Change in net pension provisions through profit or loss	177	15
Change in deferred taxes through profit or loss	-3,142	-1,026
- Profit/+loss on disposals of non-current assets	-13	484
- Increase /+reduction in inventories, trade receivables, and other assets	-3,781	-1,863
+ Increase /-reduction in trade payables and other liabilities	1,869	-891
Cash flow from operating activities	25,786	12,473
II. Investments
Incoming payments from disposals of non-current assets • Property, plant and equipment • Financial assets	14 4	54 0
Outgoing payments for investments in non-current assets • Intangible assets • Property, plant and equipment • Financial assets	-4,252 -5,446 -11	-2,144 -5,715 0
Incoming/outgoing payments from granting /repayment of financial liabilities	0	3
Outgoing payments for acquisitions of consolidated companies less cash and cash equivalents thereby acquired	0	-94,428
Cash flow from investing activities	-9,691	-102,230
III. Financing
Incoming funds from taking up of financial liabilities	27,500	67,550
Outgoing payments for repayment of financial liabilities	-36,055	-1,215
Incoming payments from issue of shares for employee stock option programs	1,580	194
Dividend payments	-9,128	-8,885
Cash flow from financing activities	-16,103	57,644
IV. Cash-effective change in cash and cash equivalents	-8	-32,114
Cash and cash equivalents at start of period	26,500	56,415
Changes in scope of consolidation	0	25
Impact of exchange rate movements	-298	243
Cash and cash equivalents at end of period	26.194	24,569

FINANCIAL CALENDAR

Subject to amendment

Quarterly statements and half-yearly financial reports are neither audited nor subject to an audit review by the group auditor Ebner Stolz GmbH & Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Stuttgart.

ABOUT STRATEC

STRATEC Biomedical AG (www.stratec.com) designs and manufactures fully automated analyzer systems for its partners in the fields of clinical diagnostics and biotechnology. Furthermore, the company offers sample preparation solutions, integrated laboratory software, and complex consumables for diagnostic and medical applications. STRATEC covers the entire value chain – from development to design and production through to quality assurance.

The partners market the systems, software and consumables, in general together with their own reagents, as system solutions to laboratories, blood banks, and research institutes around the world. STRATEC develops its products on the basis of its own patented technologies.

Shares in the company (ISIN: DE000STRA555) are traded in the Prime Market segment of the Frankfurt Stock Exchange.

IMPRINT AND CONTACT

Published by

STRATEC Biomedical AG Gewerbestr. 37 75217 Birkenfeld Germany Phone: +49 7082 7916-0 Fax: +49 7082 7916-999 info@stratec.com www.stratec.com

Investor Relations & Corporate Communications Jan Keppeler Phone: +49 7082 7916-6515 Fax: +49 7082 7916-9190 j.keppeler@stratec.com