Symrise AG — Interim / Quarterly Report 2021

Aug 5, 2021

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I N T E R I M G R O U P R E P O R T JANUARY – JUNE 2021

Financial Information H1 2021

Symrise Group

Sales in € million

In € million	H1 2020	H1 2021	Change in %
Gross profit	730.1	756.1	3.6
EBITDA	393.1	419.8	6.8
EBITDA margin in %	21.6	22.0
EBIT	265.8	296.6	11.6
EBIT margin in %	14.6	15.5
Depreciation	67.6	67.1	– 0.7
Amortization	59.7	56.1	– 6.1
Financial result	– 29.0	– 23.0	– 20.7
Earnings before income taxes	236.9	273.6	15.5
Net income of the period1	169.2	196.2	15.9
Earnings per share2 in €	1.25	1.45	15.9
R & D expenses	103.9	105.7	1.8
Investments	57.3	61.7	7.6
Business Free Cash Flow in % of Sales	10.5	9.5

Sales by Region in € million

(Organic growth in %)

Other Key Figures		Dec 31, 2020	Jun 30, 2021
Total assets		5,939.8	6,100.0
Equity		2,361.7	2,555.1
Equity ratio	in %	39.8	41.9
Net debt (incl. Provisions for pensions and similar obligations)3		2,028.8	2,145.1
Net debt (incl. Provisions for pensions and similar obligations)3 / EBITDA4	ratio	2.7	2.8
Net debt3		1,347.6	1,531.4
Net debt3 / EBITDA4	ratio	1.8	2.0
Employees (balance sheet day)	FTE5	10,531	10,812

Flavor & Nutrition

Sales in € million

In € million		H1 2020	H1 2021	Change in %
EBITDA		247.0	257.6	4.3
EBITDA margin	in %	22.2	22.2
EBIT		159.0	172.0	8.2
EBIT margin	in %	14.3	14.8

Scent & Care

Sales in € million

In € million	H1 2020	H1 2021	Change in %
EBITDA	146.1	162.2	11.0
EBITDA margin in %	20.6	21.7
EBIT	106.9	124.6	16.6
EBIT margin in %	15.0	16.6

1  attributable to shareholders of Symrise AG

2  undiluted 3  including lease obligations 4  annualized EBITDA

5  not including apprentices and trainees; FTE = full-time equivalent

Organic growth of 9.7% in the first six months and 8.8% in the second quarter despite the ongoing global coronavirus pandemic

Sales in the reporting currency in the first half of the year 4.8 % above the same period last year

EBITDA margin increases to 22% (+0.4 percentage points compared to the previous year)

EPS of €1.45 (+16% year-on-year)

Growth target for 2021 increased to over 7% and an EBITDA margin for 2021 targeted at over 21%

Symrise continued its growth course in the first half of 2021 and achieved a sales increase of 4.8% to € 1,908 million (H1 2020: € 1,821 million). Excluding currency effects as well as the portfolio effect from the acquisition of the Fragrance and Aroma Chemicals business from Sensient Technologies Corporation, Milwaukee, USA, sales grew organically by 9.7%. Both segments contributed to this positive development and grew organically, even in a global economic environment that remained tense due to the coronavirus pandemic.

Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 420 million and therefore was up 6.8% over the previous year's level (€ 393 million). With an EBITDA margin of 22.0%, the Group's profitability also improved significantly compared to the previous year's figure of 21.6%.

At € 196 million, net income for the period exceeded the previous year's figure of € 169 million by 15.9%.

ABOUT SYMRISE

Symrise develops, produces and sells fragrance, flavoring and food ingredients, cosmetic active ingredients and raw materials as well as functional ingredients and solutions that enhance the sensory properties and nutrition of various products. Its clients include perfume, cosmetics and food manufacturers, the pharmaceutical industry and producers of nutritional supplements, pet food and baby food.

Its sales of approximately € 3.5 billion in the 2020 fiscal year make Symrise a leading global provider. Headquartered in Holzminden, Germany, the Group is represented in more than 100 locations in Europe, Africa, the Middle East, Asia, the United States and Latin America.

Symrise works with its clients to develop new ideas and market-ready concepts for products that form an indispensable part of everyday life. Economic success and corporate responsibility are inextricably linked as part of this process. Symrise – always inspiring more …

Interim Group Management Report for the period from January 1 to June 30, 2021

Business environment

After the severe setback in 2020 caused by the effects of the coronavirus pandemic, the global economy finds itself in a phase of strong recovery in 2021. The economic catch-up effects are stronger than they have been for 80 years, though very unevenly distributed and threatened by a number of risks. In its "Global Economic Prospects" of June 2021, the World Bank expects global economic output to increase by 5.6% in the current year, following a decline of 3.5% in the previous year. Growth is concentrated in a few large economies and is being supported by government stimulus programs on a scale never seen before. However, many emerging and developing economies are lagging behind significantly in their pace of recovery. In 2022, global economic output will still be 2% below the pre-pandemic forecast. Furthermore, the economic recovery is threatened by a number of risks: The possibility of further waves of infection remains; vaccination campaigns could be delayed; growing national debt or rising inflationary pressure could force the introduction of countermeasures.

Economic output in industrialized nations, which slumped very sharply by 4.7% in 2020, should increase by 5.4% in the current year, according to World Bank estimates. In the USA in particular, economic recovery is very lively with a 6.8% increase in gross domestic product. In 2021, there should be economic growth of 4.2% in the eurozone and 2.9% in Japan. A major EU investment program is designed to strengthen sustainability and digital infrastructure in Europe, providing additional stimulus to the economy.

In developing and emerging economies, overall economic output is expected to grow by an average of 6.0% in 2021. This average is strongly influenced by the two largest and most dynamic economies in this group of countries: China's economy is expected to grow by 8.5%, while India's economic output is expected to increase by 8.3%. Asia remains the growth center of the global economy. The economic recovery in Latin America (+5.2%) and in sub-Saharan Africa (+2.8%) is much more restrained.

The global positioning of the Symrise Group both increases its business opportunities and limits its risks. For years, Symrise has pursued a strategy of achieving an outstanding market position, particularly in rapidly expanding countries. The macroeconomic environment supports our company's growth ambitions in 2021.

Significant events during the reporting period

The consequences of the coronavirus pandemic continue to have little impact on business development. Due to the classification of its industry as system relevant, Symrise was able to continue production at all sites without significant interruptions and remained able to deliver to customers.

Nevertheless, the coronavirus pandemic has also presented Symrise with challenges in its global supply chains. So far, Symrise has succeeded in satisfying all customer requirements by making adjustments. Symrise also introduced comprehensive measures at all locations to provide the best possible protection for its employees and business partners. At the same time, Symrise has largely dispensed with travel and instead relies on online meetings and video conferences.

The cyberattack on the IT systems of the entire Symrise Group in December 2020 was successfully averted and our ability to continue delivering was ensured at all times. The affected systems were already restored in the first quarter. Symrise did not meet the blackmailers' demands at any time. Due to the flexibility and resilience of the Symrise value chain and of the entire supply chain process, there were no major sales losses overall. Following to the cyberattack, Symrise initiated additional measures to increase the security of its systems.

Changes were made to the executive ranks effective April 1, 2021: Heinrich Schaper, the Executive Board member responsible for the Flavor segment, retired and left the company on March 31, 2021. In the course of succession planning, the Supervisory Board decided that Dr. Jean-Yves Parisot would take over global management of the Flavor segment in addition to his responsibility for the Nutrition segment. Within the framework of a strategic realignment, the two segments Flavor and Nutrition were merged to form a single Flavor & Nutrition segment. This consolidation of the previously separate Flavor and Nutrition segments is necessary above all due to the continued focus on the needs of Symrise customers and the resulting customer loyalty. It also reflects the overlap in raw materials, production processes and customers. Technologies as well as product knowledge and expertise are to be combined going forward to ensure optimum service and thus increase customer satisfaction. This is done with the intention of increasing the company's competitiveness and securing and expanding employment in the long term. In this context, the previous year's figures have been summarized in the following tables.

Symrise acquired the fragrance business unit (Fragrance and Aroma Chemicals) from Sensient Technologies Corporation, Milwaukee, USA, effective April 1, 2021. The acquired activities include various Aroma Molecules solutions and fragrances from natural and renewable sources. With this acquisition, Symrise is strengthening its backward integration in the Scent&Care segment and expanding its position as a provider of fragrances for applications in personal care and household products.

On June 17, 2021, Symrise announced that it had received an offer from Chr. Hansen Natural Colors A/S (Oterra™), Hoersholm, Denmark, to purchase its natural food color activities. With a focus on concentrating the core competencies of taste, nutrition and health in the Flavor & Nutrition segment, Symrise welcomes this offer. In the event of a sale, around 80 employees at two production sites in France and the United Kingdom would be affected. Symrise expects to sign a sales agreement within the next few months.

Group sales performance

SALES DEVELOPMENTS IN THE SYMRISE GROUP in € million

The Symrise Group achieved sales growth of 4.8% in the first half of 2021. The acquisition of Sensient's Fragrance and Aroma Chemicals business had a positive impact of € 14.4 million on sales development. Excluding portfolio and exchange rate effects, organic sales growth amounted to 9.7%. The overall strong growth in both segments must also be seen against the backdrop of the effects of the coronavirus pandemic in the same period last year. The respective figures for individual product categories and regions in the previous year were often positively or negatively impacted by shifts in demand due to the coronavirus pandemic. The cyberattack on the Symrise Group in December 2020 and the associated short-term disruptions to business processes led to a noticeable shift in sales from the fourth quarter of 2020 to the first quarter of 2021.

The Flavor & Nutrition segment achieved organic growth of 10.1% in the first half of 2021. Taking currency translation effects into account, segment sales in the reporting currency were € 1,159 million and thus significantly higher than the previous year's figure (H1 2020: € 1,110 million). The postponed delivery of orders from December 2020 due to the cyberattack supported the growth momentum in the first quarter. The second quarter saw a gradual normalization of consumer behavior as the coronavirus pandemic subsided. Demand for alcoholic and non-alcoholic beverages picked up noticeably, especially in the second quarter; purchase of out-of-home food also increased in most markets. At the same time, megatrends such as "pet nutrition" and "healthy cooking" continued to drive strong growth.

The Beverages Business unit recorded excellent growth in the high double-digit percentage range, driven mainly by the strong increase in takeout demand for beverages in all markets. Overall, the largest increases were achieved in the US market, China and Brazil, as well as in the European markets – and here particularly in Germany, the UK and Ireland.

Sales in the Savory business unit again exceeded the previous year's exceptionally high level, which had been driven by brisk demand in the early months of the coronavirus. Growth was particularly pronounced in the markets of South Africa, Egypt, Mexico, Brazil and China. Sales in the UK, Indonesia and Thailand were down.

In the Sweet business unit, overall sales were at the previous year's level. Mid single-digit volume growth was offset by the low price level for vanilla. Significant sales growth – driven by new customers – was achieved in the Asia/Pacific and Latin America regions; sales declined in EAME and North America.

Driven by the "pet nutrition" megatrend, the Pet Food business unit achieved overall organic growth in the double-digit percentage range, continuing its strong growth even compared to last year's particularly good first half. Sales development was particularly dynamic in Mexico, Argentina, China and Southeast Asia, especially with our global and regional customers.

In the Food business unit, demand recovered in many markets. On balance, good organic growth was achieved, driven by increasing sales in Western Europe, while the Asia/Pacific and Latin America regions were only just above the prior-year level. The ADF / IDF business unit developed very satisfactorily with double-digit organic growth. In addition to Group-wide synergies, business also grew strongly in both product categories (Food and Pet Food) in its American home market.

Sales development in the Aqua business unit remained below expectations due to continued low demand for aquafarming feed solutions.

Probi reported organic sales growth in the high single-digit percentage range, driven by new product launches in the EAME region; however, sales were down in the North America and Asia/Pacific regions compared to very high prior-year figures.

The Scent & Care segment achieved organic growth of 9.0% in the first half of 2021. Taking currency translation effects into account, sales in the first half of 2021 amounted to € 749 million in the reporting currency, significantly higher than the same period of the previous year (H1 2020: € 711 million). The postponed delivery of orders from December 2020 due to the cyberattack supported the growth momentum in the first quarter. The acquisition of Sensient's Fragrance and Aroma Chemicals business contributed € 14.4 million to the segment's sales starting on April 1, 2021. Consumer demand also became increasingly normalized in the Scent & Care segment. Product solutions for personal care and hygiene remained highly sought-after. Luxury articles such as Fine Fragrances, cosmetics and also sun protection products achieved strong growth compared to very weak prior-year sales.

Sales development in the Fragrance division was characterized by a low year-on-year level overall. In Fine Fragrances, the recovery in demand was reflected in very high double-digit growth rates in almost all regions; sales were already above the pre-coronavirus level of 2018 and 2019 in some cases. The Consumer Fragrances and Oral Care divisions reported further organic growth in the high single-digit range, despite exceptionally high sales in the previous year. Demand for personal care product solutions remained particularly strong in Asia and North America. Overall, the Fragrance division achieved organic growth in the low double-digit percentage range in all regions.

Sales in the Aroma Molecules division were on a par with the previous year in the first half of 2021. A significant increase in sales in the Menthols business unit, supported by the newly created capacities in the USA, was almost offset by lower demand for Fragrance Ingredients and their lower market prices.

Sales in the Cosmetic Ingredients division grew at a double-digit percentage rate in the first half of 2021, driven by a recovery in the cosmetics and high-quality personal care markets. Demand for sun protection products initially remained at the low level of the previous year. A trend reversal became apparent here in the second quarter, reflecting increasing travel activity toward the summer. Growth markets for Cosmetic Ingredients were the USA, Western Europe, China and Thailand.

Earnings situation

Operating result

Despite the continuation of the coronavirus pandemic, the overall earnings performance in the first half of 2021 was positive. Compared to the same period of the previous year, gross profit improved significantly by 3.6% to € 756 million (H1 2020: € 730 million). At 39.6%, the gross margin was down from the same period in the previous year (H1 2020: 40.1%), mainly as a result of higher production costs following the integration of Sensient's Fragrance and Aroma Chemicals business. The cost of goods sold showed a particularly strong year-on-year increase of 6.3% to € 331 million, primarily due to the inclusion of the Sensient activities and portfolio shifts resulting from changes in consumer behavior related to the coronavirus pandemic. The selling and marketing expenses remained almost level with the previous year at € 274 million; increased logistics costs were offset by rigid cost management. R & D expenses were € 106 million, 1.8% above the previous year's level. The R & D ratio amounted to 5.5%, compared to 5.7% in the first half of the previous year. The development of the R & D ratio reflects reduced project activity due to the coronavirus pandemic. Administration expenses totaled € 119 million and were 10.7% above the previous year (H1 2020: € 107 million). The increase also includes additional costs in connection with the Sensient acquisition.

In the first six months of 2021, the Group generated earnings before interest, taxes, depreciation and amortization (EBITDA) of € 420 million. Compared to the same period of the previous year, an increase of 6.8% was achieved, both through profitable sales growth and rigid cost management in operations. As a positive one-time effect, a profit of € 13.2 million from acquisition below fair value was recognized for the acquisition of Sensient's Fragrance and Aroma Chemicals business. The half-year result also includes transaction costs of € 2.6 million for this acquisition. The EBITDA margin improved by 0.4 percentage points to 22.0% (EBITDA margin H1 2020: 21.6%).

Earnings before interest and taxes (EBIT) increased by 11.6% from € 266 million to € 297 million, mainly due to the expiration of depreciation for IT systems.

EARNINGS OVERVIEW in € million/in%

EBITDA of the Flavor & Nutrition segment amounted to € 258 million in the reporting period (H1 2020: € 247 million) and thus increased by 4.3% compared to the same period of the previous year. The EBITDA margin remained at the strong prior-year level of 22.2%, with a slightly lower gross margin offset by reduced operating costs.

Scent & Care generated an EBITDA of € 162 million in the first half of 2021, € 16 million higher than in the same period of the previous year (H1 2020: € 146 million). Excluding the one-time effect from the acquisition of Sensient, EBITDA in 2021 was € 149 million. The EBITDA margin of the segment was 21.7% (reported) and 19.9% (excluding the one-time effect). The figure for the prior-year period was 20.6%.

Financial result

The financial result for the first six months of 2021 was € –23 million and was therefore € 6 million below the result from the same period of the previous year (€ –29 million). The reasons for this development were one-time effects in the prior-year period from interest on taxes and lower interest expense for pension and leasing obligations.

Taxes

In the first half of 2021, the income tax expense amounted to € 72 million. This corresponds to a tax rate of 26.2% (previous year: 27.0%).

Net income for the period and earnings per share

The net income for the period attributable to shareholders of Symrise AG for the first six months of 2021 amounted to € 196 million, which was € 27 million above the figure from the previous year of € 169 million. Basic earnings per share reached € 1.45, up from € 1.25 in the first half of the previous year (+16%). Diluted earnings per share stood at € 1.42, up from € 1.22 in the same period of 2020.

Cash Flow

At € 136 million, cash flow from operating activities for the first half of 2021 was € 83 million lower than in the previous year (€ 219 million). The decrease was mainly due to significantly higher trade receivables as well as higher tax payments that were partly offset by lower inventory levels.

The Business Free Cash Flow¹ decreased slightly from € 191 million to € 181 million in the first six months of the current fiscal year compared to the same period in the previous year.

Financial position

Over the course of the first half of 2021, Symrise reduced financial liabilities by € 1 million on a net basis.

Symrise signed a revolving credit facility with a specific sustainability component effective May 5, 2021. The new credit facility has a volume of € 500.0 million and a term of three years. It replaces the existing € 300.0 million revolving credit facility from 2015 and serves to finance further strategic growth initiatives. The amount of the interest rate, which is calculated from the prime rate and credit margin, is linked to three sustainability indicators relating to the areas of reducing greenhouse gas emissions, sustainable sourcing processes for strategically important plant-based raw materials and efficient water consumption in arid regions, among other things. Depending on whether these agreed sustainability objectives have been achieved, the credit margin changes by up to 2.5 basis points. All adjustments to the sustainability-related interest margin are donated to aid organizations before the end of the respective adjustment period.

Net debt increased by € 184 million to € 1,531 million compared to the reporting date of December 31, 2020. The ratio of net debt including lease liabilities to EBITDA thus amounts to 2.0. Including pension obligations and lease liabilities, net debt stood at € 2,145 million, which corresponds to a ratio of net debt (including lease liabilities and provisions for pensions and similar obligations) to EBITDA of 2.8.

1 Business free cash flow is defined as EBITDA minus investments (including cash effects from leasing) plus /minus changes in working capital.

Employees

As of June 30, 2021, the Group employed 10,812 people (full-time employees not including trainees and apprentices) worldwide. In comparison to December 31, 2020 (10,531), this represents an increase of 281 full-time employees.

Opportunities and risk report

No risks in accordance with Section 91 (2) of the German Stock Corporation Act (AktG) that could endanger the continued existence of the Symrise Group can be identified at present.

A detailed discussion of the opportunities and risks as well as a description of the risk management system can be found in the 2020 Group management report (see the 2020 Financial Report on pages 48 et seq.). The statements made there remain essentially unchanged.

Outlook

With its global presence, steadily growing portfolio and broad customer base, the Group considers itself to be robust and securely positioned even in the current challenging market environment. Symrise is fully operational worldwide and is able to supply customers sustainably. The coronavirus pandemic partially changed consumer behavior and has led to a shift in demand in our portfolio. A normalization of demand for luxury products and an increase in the purchase of takeout food, coupled with continued strong demand for personal care and hygiene products, support the company's growth course.

Despite the partially ongoing effects of the coronavirus pandemic, Symrise was able to increase its sales and also its profitability in the first half of the year. The Group therefore remains confident about the current fiscal year. Assuming largely unchanged pandemic conditions, the company expects to close the full year with organic growth of over 7%. The EBITDA margin for the year as a whole is expected to be more than 21%.

In the medium term, the company aims to increase its sales to € 5.5 to 6.0 billion by 2025. Annual organic growth of 5 to 7% (CAGR) as well as additional targeted acquisitions should contribute to this. Profitability should remain within a target corridor of 20 to 23% in the long term.

Subsequent report

Symrise acquired a strategic 5.06% stake in Swedencare AB, a listed company based in Malmö, Sweden, effective July 1, 2021. The purchase price amounted to € 57 million.

On July 6, 2021, the Swedish subsidiary Probi AB, Lund, Sweden, announced that it had acquired 13% of the shares in the listed company Blis Technologies Limited, based in Dunedin, New Zealand, for a purchase price of € 5.3 million.

Condensed Consolidated Interim Financial Statements as of June 30, 2021

Consolidated income statement

Sales	1,821,205	1,907,915
Cost of goods sold	– 1,091,122	– 1,151,782
Gross profit	730,083	756,133
Selling and marketing expenses	– 271,944	– 273,750
Research and development expenses	– 103,854	– 105,736
Administration expenses	– 107,273	– 118,746
Other operating income	18,971	37,923
Other operating expenses	– 1,586	– 1,775
Result of companies accounted for using the equity method	1,445	2,518
Income from operations/EBIT	265,842	296,567
Financial income	1,592	1,545
Financial expenses	– 30,553	– 24,522
Financial result	– 28,961	– 22,977
Earnings before income taxes	236,881	273,590
Income taxes	– 63,972	– 71,611
Net income for the period	172,909	201,979
of which attributable to shareholders of Symrise AG	169,185	196,166
of which attributable to non-controlling interests	3,724	5,813
Earnings per share (€)1
basic	1.25	1.45
diluted	1.22	1.42

1 For the calculation of basic and diluted earnings, please refer to note 2.5 of the 2020 consolidated financial statements.

Consolidated statement of comprehensive income

In € thousand	H1 2020	H1 2021
Net income for the period	172,909	201,979
of which attributable to shareholders of Symrise AG	169,185	196,166
of which attributable to non-controlling interests	3,724	5,813
Items that may be reclassified subsequently to the consolidated income statement
Exchange rate differences resulting from the translation of foreign operations1	– 71,869	81,925
Cash flow hedge (currency hedges)	4	– 390
Income taxes payable on these components	4,367	– 1,763
Items that will not be reclassified to the consolidated income statement
Remeasurement of defined benefit pension plans and similar obligations	– 6,112	73,908
Income taxes payable on these components	1,528	– 21,055
Other comprehensive income	– 72,082	132,625
Total comprehensive income	100,827	334,604
of which attributable to shareholders of Symrise AG	97,183	328,329
of which attributable to non-controlling interests	3,644	6,275

1 The most relevant exchange rates for the Symrise Group are presented in note 2.1.

Consolidated statement of financial position

In € thousand	December 31, 2020	June 30, 2021
ASSETS
Current assets
Cash and cash equivalents	725,136	552,262
Trade receivables	600,795	769,603
Inventories	862,887	913,139
Other non-financial assets and receivables	79,824	103,909
Other financial assets	15,175	68,229
Income tax assets	15,922	28,248
Assets held for sale	0	20,489
	2,299,739	2,455,879
Non-current assets
Intangible assets	2,194,060	2,178,558
Property, plant and equipment	1,205,214	1,229,915
Other non-financial assets and receivables	19,531	22,350
Other financial assets	16,823	17,230
Investments in companies accounted for using the equity method	80,354	91,665
Deferred tax assets	124,048	104,366
	3,640,030	3,644,084
TOTAL ASSETS	5,939,769	6,099,963

Consolidated statement of financial position

In € thousand	December 31, 2020	June 30, 2021
LIABILITIES
Current liabilities
Trade payables	334,178	349,910
Borrowings	9,666	16,080
Lease liabilities	22,234	20,624
Other non-financial liabilities	205,739	212,308
Other provisions	15,309	13,113
Other financial liabilities	2,459	5,306
Income tax liabilities	67,253	74,434
Liabilities directly associated with assets held for sale	0	972
	656,838	692,747
Non-current liabilities
Borrowings	1,963,682	1,968,643
Lease liabilities	77,173	78,340
Other non-financial liabilities	5,428	5,684
Other provisions	34,680	31,881
Provisions for pensions and similar obligations	681,175	613,634
Other financial liabilities	1,428	906
Deferred tax liabilities	154,441	153,046
Income tax liabilities	3,263	0
	2,921,270	2,852,134
TOTAL LIABILITIES	3,578,108	3,544,881
EQUITY
Share capital	135,427	135,427
Capital reserve	1,798,030	1,798,030
Reserve for remeasurements (pensions)	– 264,628	– 211,769
Cumulative translation differences	– 418,515	– 339,090
Accumulated profit	1,048,250	1,109,135
Other reserves	3,291	3,015
Symrise AG shareholders' equity	2,301,855	2,494,748
Non-controlling interests	59,806	60,334
TOTAL EQUITY	2,361,661	2,555,082
LIABILITIES AND EQUITY	5,939,769	6,099,963

Consolidated statement of cash flows

In € thousand	H1 2020	H1 2021
Net income for the period	172,909	201,979
Result of companies accounted for using the equity method	– 1,445	– 2,518
Income taxes	63,972	71,611
Interest result	27,727	18,506
Depreciation, amortization and impairment of non-current assets	127,296	123,192
Increase (+)/decrease (–) in non-current liabilities	8,282	3,350
Increase (–)/decrease (+) in non-current assets	– 4,943	– 2,530
Dividend from companies accounted for using the equity method	2,053	280
Other non-cash expenses and income	19,105	– 1,768
Cash flow before working capital changes	414,956	412,102
Increase (–)/decrease (+) in trade receivables and other current assets	– 110,297	– 162,269
Increase (–)/decrease (+) of inventories	– 57,980	– 29,095
Increase (+)/decrease (–) in trade payables and other current liabilities	27,092	1,798
Income taxes paid	– 55,047	– 86,695
Cash flow from operating activities	218,724	135,841
Payments for business combinations, plus acquired cash equivalents, for subsequent contingent purchase price components as well as for investments in companies accounted for using the equity method	88	– 33,153
Payments for investing in intangible assets and property, plant and equipment as well as for non-current financial assets	– 58,847	– 122,765
Cash flow from investing activities	– 58,759	– 155,918
Proceeds from (+)/redemption of (–) bank borrowings	– 67,881	10,619
Proceeds from (+)/redemption of (–) other borrowings	– 134	– 10,667
Interest received (+)/paid (–)	– 9,670	– 7,461
Dividends paid by Symrise AG	– 128,655	– 131,364
Dividends paid to non-controlling interests	– 995	– 4,559
Acquisition of non-controlling interests	– 1,875	– 5,218
Principal portion of lease payments	– 10,418	– 10,092
Cash flow from financing activities	– 219,628	– 158,742
Net change in cash and cash equivalents	– 59,663	– 178,819
Effects of changes in exchange rates	– 24,470	8,295
Loss on the net monetary position	– 1,050	– 2,350
Total changes	– 85,183	– 172,874
Cash and cash equivalents as of January 1	445,900	725,136
Cash and cash equivalents as of June 30	360,717	552,262

Consolidated statement of changes in equity

In € thousand	Share capital	Capital reserve	Reserve for remea surements (pensions)	Cumulative translation differences	Accumulated profit	Other reserves	Symrise AG share holders' equity	Non controlling interests	Total equity
January 1, 2020	135,427	1,798,030	–217,187	–194,047	874,443	3,197	2,399,863	57,261	2,457,124
Total comprehen sive income	–	–	–4,584	–67,433	169,185	15	97,183	3,644	100,827
Dividends paid	–	–	–	–	–128,655	–	–128,655	–995	–129,650
Other changes	–	–	–	–89	–1,778	–	–1,867	–7	–1,874
June 30, 2020	135,427	1,789,030	–221,771	–261,569	913,195	3,212	2,366,524	59,903	2,426,427

In € thousand	Share capital	Capital reserve	Reserve for remea surements (pensions)	Cumulative translation differences	Accumulated profit	Other reserves	Symrise AG share holders' equity	Non controlling interests	Total equity
January 1, 2021	135,427	1,798,030	–264,628	–418,515	1,048,250	3,291	2,301,855	59,806	2,361,661
Total comprehen sive income	–	–	52,853	79,586	196,166	–276	328,329	6,275	334,604
Dividends paid	–	–	–	–	–131,364	–	–131,364	–4,559	–135,923
Other changes	–	–	6	–161	–3,917	–	–4,072	–1,188	–5,260
June 30, 2021	135,427	1,798,030	–211,769	–339,090	1,109,135	3,015	2,494,748	60,334	2,555,082

Notes

1. GENERAL INFORMATION

The condensed consolidated interim financial statements as of June 30, 2021, for Symrise Aktiengesellschaft (Symrise AG, hereafter also referred to as "Symrise") were approved for submission to the Supervisory Board's Auditing Committee and subsequent publication by a resolution of the Executive Board on July 26, 2021.

2. ACCOUNTING POLICIES

2.1 Basis of preparation of the interim financial statements

Symrise has prepared its condensed consolidated interim financial statements as of June 30, 2021, in accordance with the International Financial Reporting Standards (IFRS) and their related interpretations (IFRIC) published by the International Accounting Standards Board (IASB) as mandatorily applicable within the European Union (EU). The condensed consolidated interim financial statements have been prepared in compliance with International Accounting Standard (IAS) 34 "Interim Financial Reporting." Accordingly, the condensed consolidated interim financial statements do not provide the full information and disclosures that are required in the consolidated financial statements for the full fiscal year and the condensed consolidated interim financial statements should therefore be read in conjunction with the consolidated financial statements as of December 31, 2020.

The following table shows the changes in exchange rates against the Euro for the most important currencies relevant to the Symrise Group:

			Closing rate = € 1		Average rate = € 1
Currency		December 31, 2020	June 30, 2021	H1 2020	H1 2021
Brazilian Real	BRL	6.355	5.951	5.418	6.487
Chinese Renminbi	CNY	8.002	7.663	7.747	7.795
British Pound	GBP	0.895	0.858	0.875	0.868
Mexican Peso	MXN	24.380	23.612	23.862	24.319
US Dollar	USD	1.224	1.186	1.102	1.205

Due to rounding, small differences may arise in this report when total amounts are disclosed or percentages are calculated.

2.2 Accounting policies

The same accounting policies that were used in preparing the consolidated financial statements as of December 31, 2020, which are described in detail in the Notes section of that report under note 2, were also used for this report. The amendments to various standards to be applied as of the 2021 fiscal year did not have a material effect on the condensed consolidated interim financial statements of Symrise AG.

3. SCOPE OF CONSOLIDATION

The number of companies included in the Symrise Group's financial statements as of the reporting date is 105 (December 31, 2020: 104), of which 99 (December 31, 2020: 100) are fully consolidated. One joint venture is still accounted for using the equity method. The number of associated companies accounted for using the equity method increased from three to five since December 31, 2020.

4. SIGNIFICANT EVENTS IN THE REPORTING PERIOD

ACQUISITION OF THE FRAGRANCE BUSINESS UNIT FROM SENSIENT TECHNOLOGIES CORPORATION Symrise acquired the fragrance business unit (Fragrance and Aroma Chemicals) from Sensient Technologies Corporation, Milwaukee, USA, effective April 1, 2021. The transaction comprises the acquisition of all shares (share deal) in the Spanish company Sensient Fragrances, S.A.U., Granada, Spain (now renamed Symrise Granada S.A.U., Granada, Spain) and the acquisition of further assets (asset deal), mainly from Sensient Fragrances Mexico S.A. de C.V., Celaya, Mexico.

The acquired activities include various Aroma Molecules solutions and fragrances from natural and renewable sources. With this acquisition, Symrise is strengthening its backward integration in the Scent & Care segment and expanding its position as a provider of fragrances for applications in personal care and household products. Furthermore, Symrise is receiving access to additional customers and strengthening its presence in the EAME (Europe, Africa, and the Middle East) and Latin America regions in particular.

The consideration paid as of the acquisition date for the shares and other assets totaling € 29.2 million consists of an underlying component that will be adjusted as of the acquisition date by contractually fixed items in the statement of financial position. At the time of payment, preliminary figures were used as the basis for the amount. The consideration consists solely of cash.

The fair value of the assets and liabilities acquired and intangible assets identified was not available for these condensed consolidated interim financial statements due to the temporal proximity of the transaction with the end of the reporting period. Following the premise that these will be assumed at their carrying amount, the gain on a bargain purchase would amount to € 13.2 million:

In € thousand	Preliminarily recognized fair value as of the acquisition date
Cash and cash equivalents	230
Trade receivables	16,957
Inventories	18,552
Intangible assets	4,768
Property, plant and equipment	13,381
Other assets	2,540
Trade payables	– 11,056
Other liabilities	– 2,995
Acquired net assets	42,377
Provisional consideration for the transaction	29,199
Gain on a bargain purchase	13,178

Efficiency gains can be generated due to greater flexibility in the supply chain by combining the acquired activities with the existing Symrise Scent&Care business. The company plans to strengthen the acquired production site in Granada with targeted investments to achieve the goal of leveraging synergies in the future.

The provisionally determined gain is recognized in other operating income. It is not required to be included for tax purposes under local regulations. General bad debt allowances of € 0.8 million are included in trade receivables. Acquisition costs of € 2.6 million were incurred for this transaction, which are recognized in administration expenses.

From the acquisition date, the acquired activities contributed € 14.4 million to sales and € 0.6 million to consolidated net income. Under the assumption that the business combination had taken place by January 1, 2021, Group sales would have amounted to € 1,922.3 million and consolidated net income to € 202.7 million. The pro forma numbers were determined using estimates. Simplifying assumptions were used as the basis for these.

ASSETS HELD FOR SALE/DISPOSAL GROUP (IFRS 5)

On June 17, 2021, Symrise announced that it had received an offer from Chr. Hansen Natural Colors A /S (Oterra™), headquartered in Hoersholm, Denmark, to purchase its natural food color activities. With a focus on the core competencies of taste, nutrition and health in the Flavor & Nutrition segment, Symrise welcomes this offer. In the event of a sale, around 80 employees at two production sites in France and the United Kingdom would be affected. Symrise expects to sign a purchase agreement within the next few months. The assets and liabilities associated with this business are therefore to be classified as a disposal group (in accordance with IFRS 5) and presented separately from the other assets and liabilities in the statement of financial position. The disposal group mainly comprises inventories (€ 12.2 million), property, plant and equipment (€ 8.3 million) and provisions for pensions and similar obligations (€ 0.5 million). The cumulative expenses and income associated with the disposal group and recognized in other comprehensive income are negligible. There was no impairment to be recognized on the fair value less costs to sell.

CHANGE IN THE SEGMENT STRUCTURE

Changes were made to the Executive Board effective April 1, 2021: Heinrich Schaper, the Executive Board member responsible for the Flavor segment, retired and left the company on March 31, 2021. In the course of succession planning, the Supervisory Board decided that Dr. Jean-Yves Parisot would take over global management of the Flavor segment in addition to his responsibility for the Nutrition segment. Within the framework of a strategic realignment, the two segments Flavor and Nutrition were merged to form a single Flavor & Nutrition segment. This consolidation of the previously separate Flavor and Nutrition segments is necessary above all due to the continued focus on the needs of Symrise customers and the resulting customer loyalty. It also reflects the overlap in raw materials, production processes and customers. Technologies as well as product knowledge and expertise are combined to ensure optimum service and thus increase customer satisfaction. This is done with the intention of increasing the company's competitiveness and securing and expanding employment in the long term.

ESTABLISHING A REVOLVING CREDIT FACILITY WITH A SUSTAINABILITY COMPONENT

Symrise signed a revolving credit facility with a specific sustainability component effective May 5, 2021. The new credit facility has a volume of € 500.0 million and a term of three years. It replaces the existing € 300.0 million revolving credit facility from 2015 and serves to finance further strategic growth initiatives. The amount of the interest rate, which is calculated from the prime rate and credit margin, is linked to three sustainability indicators relating to the areas of reducing greenhouse gas emissions, sustainable sourcing processes for strategically important plant-based raw materials and efficient water consumption in arid regions, among other things. Depending on whether these agreed sustainability objectives have been achieved, the credit margin changes by up to 2.5 basis points. All adjustments to the sustainability-related interest margin are donated to aid organizations before the end of the respective adjustment period.

5. SEGMENT INFORMATION

The customers of Symrise include large, multinational companies as well as important regional and local manufacturers of food, beverages, pet food, perfumes, cosmetics, personal care products and cleaning products as well as laundry detergents and from the pharmaceutical industry.

Symrise breaks down and reports sales growth by segment – based on the previous year's sales – as the components "organic growth," "portfolio effects" and "exchange rate differences." Comparable exchange rates are used as the basis to determine organic growth for the sales of the reporting year and the previous year. Portfolio effects include the impact of additions to and disposals from the scope of consolidation for a period of twelve months after acquisition or disposal. The remaining change is due to exchange rate movements.

In the 2021 fiscal year, the two segments Flavor and Nutrition were merged to form a single Flavor & Nutrition segment with a view to strategic realignment. In this context, the previous year's figures have been adjusted in the following presentation. The following table shows the aforementioned components for the two segments:

In € thousand	Flavor&Nutrition	Scent&Care
Sales June 30, 2020	1,110,296	710,909
Organic growth	112,103	63,649
Portfolio effects	0	14,394
Exchange rate differences	– 63,381	– 40,055
Sales June 30, 2021	1,159,018	748,897

Sales are recognized at a specific point in time and the resulting receivables are due within one year.

Portfolio effects resulted from the acquisition of the fragrance business unit from Sensient Technologies Corporation at the beginning of April (see note 4) and comprise the sales of this group in the period from April to June 2021.

Business activity in the Flavor & Nutrition and Scent&Care segments is hardly seasonal, but there are occasional limited seasonal effects.

In € thousand	H1 2020	H1 2021
EBITDA	393,138	419,759
Flavor&Nutrition	247,036	257,569
Scent&Care	146,102	162,190
Depreciation, amortization and impairment of non-current assets	– 127,296	– 123,192
Flavor&Nutrition	– 88,077	– 85,588
Scent&Care	– 39,219	– 37,604
EBIT	265,842	296,567
Flavor&Nutrition	158,959	171,981
Scent&Care	106,883	124,586
Financial result	– 28,961	– 22,977
Earnings before income taxes	236,881	273,590

For further details on the development of the two segments, please refer to the accompanying interim Group management report.

6. ADDITIONAL INFORMATION ON FINANCIAL INSTRUMENTS AND THE MEASUREMENT OF FAIR VALUE

INFORMATION ON FINANCIAL INSTRUMENTS ACCORDING TO CATEGORY

	Carrying amount	Value recognized under IFRS 9
December 31, 2020 In € thousand		Amortized cost	Fair value through other comprehensive income	Fair value through profit or loss	Fair value
ASSETS
Financial assets measured at amortized cost (FAAC)	1,155,963	1,155,963	–	–	1,155,963
Cash	499,180	499,180	–	–	499,180
Cash equivalents	40,927	40,927	–	–	40,927
Trade receivables	600,795	600,795	–	–	600,795
Other financial assets	15,061	15,061	–	–	15,061
Financial assets at fair value through profit or loss (FVTPL)	201,749	–	–	201,749	201,749
Cash equivalents	185,029	–	–	185,029	185,029
Securities	755	–	–	755	755
Equity instruments	10,370	–	–	10,370	10,370
Derivative financial instruments without hedge relationship	5,595	–	–	5,595	5,595
Derivative financial instruments with hedge relationship (n.a.)	217	–	217	–	217
LIABILITIES AND EQUITY
Financial liabilities at amortized cost (FLAC)	2,310,643	2,310,643	–	–	2,504,219
Trade payables	334,178	334,178	–	–	334,178
Borrowings	1,973,348	1,973,348	–	–	2,166,924
Other financial liabilities	3,117	3,117	–	–	3,117
Financial liabilities at fair value through profit or loss (FVTPL)	761	–	–	761	761
Derivative financial instruments without hedge relationship	296	–	–	296	296
Other financial liabilities	465	–	–	465	465
Derivative financial instruments with hedge relationship (n.a.)	9	–	9	–	9

	Carrying amount	Value recognized under IFRS 9
June 30, 2021 In € thousand		Amortized cost	Fair value through other comprehensive income	Fair value through profit or loss	Fair value
ASSETS
Financial assets measured at amortized cost (FAAC)	1,319,661	1,319,661	–	–	1,319,661
Cash	476,042	476,042	–	–	476,042
Trade receivables	769,603	769,603	–	–	769,603
Other financial assets	74,016	74,016	–	–	74,016
Financial assets at fair value through profit or loss (FVTPL)	87,663	–	–	87,663	87,663
Cash equivalents	76,220	–	–	76,220	76,220
Securities	901	–	–	901	901
Equity instruments	10,071	–	–	10,071	10,071
Derivative financial instruments without hedge relationship	471	–	–	471	471
LIABILITIES AND EQUITY
Financial liabilities at amortized cost (FLAC)	2,338,341	2,338,341	–	–	2,527,627
Trade payables	349,910	349,910	–	–	349,910
Borrowings	1,984,723	1,984,723	–	–	2,174,009
Other financial liabilities	3,708	3,708	–	–	3,708
Financial liabilities at fair value through profit or loss (FVTPL)	2,320	–	–	2,320	2,320
Derivative financial instruments without hedge relationship	1,856	–	–	1,856	1,856
Other financial liabilities	464	–	–	464	464
Derivative financial instruments with hedge relationship (n.a.)	184	–	184	–	184

FAIR VALUE ACCORDING TO HIERARCHY LEVELS

The following describes the hierarchy levels pursuant to IFRS 13 "Fair Value Measurement" for financial instruments that are measured at fair value on a recurring basis.

The cash equivalents and securities classified at fair value through profit or loss are assigned to Level 1 and the equity instruments to Level 3. Equity instruments include three investments, one of which was acquired in the first half of the year with acquisition costs of € 1.2 million. Another equity instrument was reclassified as an associated company following the acquisition of further shares. The valuation and thus the present value of the expected benefit from these equity instruments is based on a discounted cash flow calculation. Non-observable input factors were based on a weighted average cost of capital of 5.8% or 10.0% and a long-term growth rate of 1.0%. The valid forward exchange rates are used as the valuation rates for the mark-to-market valuation of currency forward contracts in Level 2 for currency forwards. These are established by the interest difference of the currencies involved while accounting for term duration. There are no significant ineffective parts as of the reporting date. The fair values were not adjusted for the components of counterparty-specific risk and its own credit risk (credit valuation adjustment – CVA /debt valuation adjustment – DVA) and the liquidity premium for the respective foreign currency (cross currency basis spread – CCBS) for reasons of materiality. There were no transfers between Levels 1 and 2 during the period under review. The determination of fair values is unchanged.

The fair values of financial liabilities are determined as the present value of future payments relating to these financial liabilities based on the corresponding valid reference interest rates and are adjusted by a corresponding credit spread (risk premium). The determination of the fair values of other financial instruments is unchanged. This did not cause any considerable deviations between their carrying amount and fair value.

Decreasing credit margins, a fundamentally positive capital market, and the enduringly very stable credit profile of Symrise mean that all capital market instruments, two Eurobonds and the convertible bond, are trading well above par. In addition, the convertible bond is significantly in the money, meaning the share is trading around 30% above the conversion price, resulting in a significant premium in the valuation compared to the carrying amount.

7. EVENTS AFTER THE REPORTING PERIOD

ACQUISITION OF AN INVESTMENT IN SWEDENCARE

Symrise acquired a strategic 5.06% stake in Swedencare AB, a listed company headquartered in Malmö, Sweden, effective July 1, 2021. The purchase price amounts to € 56.7 million and is recognized as a prepayment under other financial assets as of the reporting date. Swedencare is a supplier of premium pet products and specializes in pet health. With this step, Symrise is strengthening its leading position as a provider of innovative solutions and applications for pet food. The investment was made as part of a capital increase by Swedencare and was made in full agreement with the company and its management.

ACQUISITION OF AN INVESTMENT IN BLIS TECHNOLOGIES LIMITED

On July 6, 2021, the Swedish subsidiary Probi AB, headquartered in Lund, Sweden, announced that it had acquired 13% of the shares in the listed company Blis Technologies Limited, headquartered in Dunedin, New Zealand, for a purchase price of € 5.3 million. Blis Technologies Limited is an innovative company that sells probiotic products to prevent infections in the mouth and throat.

Holzminden, Germany, July 26, 2021

Symrise AG The Executive Board

Dr. Heinz-Jürgen Bertram Olaf Klinger Dr. Jean-Yves Parisot

23

Responsibility Statement

To the best of our knowledge and in accordance with the applicable reporting principles, for the half-year reporting, the consolidated interim financial statements of the Symrise Group give a true and fair view of the net assets, financial position and results of operations of the Group, and the Group interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected developments of the Group for the remainder of the fiscal year.

Holzminden, Germany, July 26, 2021

Symrise AG The Executive Board

Dr. Heinz-Jürgen Bertram Olaf Klinger Dr. Jean-Yves Parisot

Review Report of the Independent Auditor

To Symrise AG

We have reviewed the interim condensed consolidated financial statements, comprising the condensed income statement, the condensed statement of comprehensive income, the condensed statement of financial position, the condensed statement of cash flows, the condensed statement of changes in equity and selected explanatory notes, and the interim group management report of Symrise AG, Holzminden, for the period from January 1, 2021, to June 30, 2021, which are part of the six-monthly financial report pursuant to Section 115 WpHG ["Wertpapierhandelsgesetz": German Securities Trading Act]. The preparation of the interim condensed consolidated financial statements in accordance with IFRSs [International Financial Reporting Standards] on interim financial reporting as adopted by the EU and of the group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the Company's management. Our responsibility is to issue a report on the interim condensed consolidated financial statements and the interim group management report based on our review.

We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports. A review is limited primarily to making inquiries of company personnel and applying analytical procedures and thus does not provide the assurance that we would obtain from an audit of financial statements. In accordance with our engagement, we have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU or that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports.

Hanover, July 27, 2021 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Ludwig Dr. Janze

Wirtschaftsprüfer Wirtschaftsprüfer

[German Public Auditor] [German Public Auditor]

Financial Calendar

Oktober 26, 2021 Trading Statement January – September 2021

Imprint

Publisher

Symrise AG Mühlenfeldstrasse 1 Corporate Communications 37603 Holzminden Germany T +4955 31.90–0 F +4955 31.90–1649

Concept, Design and Realization 3st kommunikation, Mainz

Translation EnglishBusiness AG, Hamburg

Printing

AC medienhaus GmbH, Wiesbaden

The German version of this Interim Report is legally binding. German and English online versions are available on the Web at www.symrise.com.

The latest version of the Interim Report is available on our website.

Disclaimer

This document contains forward-looking statements, which are based on the current estimates and assumptions by the corporate management of Symrise AG. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate, and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by Symrise AG and its affiliated companies depend on a number of risks and uncertainties, and may, therefore, differ materially from the forward-looking statements. Many of these factors are outside Symrise's control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. Symrise neither plans nor undertakes to update any forward-looking statements.

© 2021 Symrise AG

Mühlenfeldstrasse 1 37603 Holzminden

www.symrise.com