BRAIN Biotech : Annual Report 2020/21

Creating a

#Biobased Future

BRAIN Biotech AG

Darmstädter Straße 34 - 36

64673 Zwingenberg, Germany

Fon: +49 (0) 62 51 / 9331- 0

Fax: [phone] / 9331-1 1

E-Mail:[e-mail]

Web: www.brain-biotech.com

BRAIN Biotech AG Annual Report 2020/21

BRAIN Biotech AG

BRAIN Group key financials

Overview

BRAIN at a glance

in € million	2020/21	2019/20	2018/19

Consolidated income statement data:

Revenue	38.4	38.2	38.6
Total operating performance	40.7	39.2	41.2
EBITDA		-2.5		-3.9		-2.5
Adjusted EBITDA		-2.1		-2.0		-2.2
Net loss for the reporting period		-4.7		-9.0		-11.1
Consolidated balance sheet data:
Total equity	41.8	26.1	20.2
Equity ratio (in %)	53.8	36.2	30.5
Total assets	77.7	72.2	66.1
Consolidated cash flow data:
Cash flows from operating activities		-3.9		-4.8		-3.4
Cash flows from investing activities		-2.2		-4.5		-6.7
Cash flows from financing activities	11.6	13.1		-0.3

BRAIN Biotech AG ("BRAIN") is one of Eu- rope's leading companies in the industrial ("white") biotechnology. The company identifies previously unutilized powerful enzymes, microbial production organisms and natural substances from biological systems for industrial applications and healthcare. We optimize microbial production strains and develop efficient bioprocesses. With the BRAIN-Engineered-Cas (BEC) nuclease, we are developing a proprietary technology for genome editing and are continuously expanding it internationally into a powerful platform.

With our bio-based B2B products and solutions in the areas of nutrition, health, and the environ- ment, we support our customers on their path to sustainable processes and products. Our own research and our partner programs address some of the most important issues to make people's lives better and healthier. Our innovative solutions are successfully deployed in the nutrition manufacturing, in healthcare and in environmental applications. Many of these serve to make products and processes more sustainable.

Since the company was founded in 1993, BRAIN Biotech AG has developed from an "R&D powerhouse" into an integrated company that covers the entire value chain from the laboratory through to production - such as for enzyme products.

Our mission:We develop disruptive bio- based products and solutions for industry, with a focus on nutrition, health, and the environment. We thereby support companies on their path to greater sustainability, and we are helping society to move towards a bioeconomy.

Our vision:We are the sought-after specialist in industrial biotechnology. With our service and products business we successfully occupy and develop niches offering high added value for our customers. We are more agile than our competitors and strive to produce our innovations ourselves or together with our partners.

Our business is divided into two segments: Our BioScience segment includes the R&D business with industrial partners as well as the incubator business. This area is characterized by research projects lasting one or more years with renowned global companies. Our BioIndustrial segment focuses on the specialty business in the production and refinement of enzymes, microorganisms and bioactive natural substances, as well as on related trading.

Our products are aimed at less cyclical end- markets, among others. Furthermore, natural-based products exhibit above-average market growth in line with rising consumer demand.

The BRAIN Group

The headquarter and the technology campus of the	The BRAIN Group consists of the following companies:
BRAIN Group is located in Zwingenberg, south of	AnalytiCon Discovery GmbH, AnalytiCon Discovery LLC,
Frankfurt am Main.	Biocatalysts Ltd. (82.2%), Biocatalysts Inc., Biosun
	Biochemicals Inc., L.A. Schmitt GmbH, SolasCure Ltd.
	(41 %), WeissBioTech GmbH.

2	BRAIN Biotech AG

From the laboratory to the product: Our value added for the B2B industry

RESOURCES		from microorganisms or plants				from microorganisms or plants
		Enzymes / proteins		Microorganisms		Bioactive substances (bioactives)
DEVELOPMENT	·	Identification & characterization	·	Discovery	·	Discovery	·	Development
·	Formulation	·	Production scale-up
PROCESSES	·	Analytics	·	Production
	·	Protein optimization	·	Strain optimization
	·	Production scale-up	·	Process development	·	Evaluation		scale-up
PRODUCTS	Optimized enzymes / proteins e.g. for	Optimized microorganisms/ starter cultures	Bioactive natural compounds
·	food and beverages production	·	as cell factories	as ingredients for
	·	wound care preparation	·	replacing chemicals	·	food	·	feed
	·	lubricants	·	transforming waste streams	·	beverages	·	cosmetics
	·	starch processing		into valuable resources

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BRAIN Biotech AG

Contents

01 Company management	6
Letter from the CEO	8
Report from the Supervisory Board	12
BRAIN Management Board interview	20

02 The company	30
acts and figures	32
Equity story	34
Value drivers	38
ESG	40
Incubator pipeline	42
Important events in the 2020/21 financial year	46
Corporate culture	50
The BRAIN share and the capital market	54
03 Declaration on Corporate	60
Governance
04 Group management report	77
Basis of the Group	78
Economic and business report	80
Compensation report	91
Events after the reporting date	96
Outlook	97
Report on risks and opportunities	98
Takeover-relevant information pursuant to Section 315a
of the German Commercial Code (HGB)	111
Corporate governance statement of conformity
pursuant to Section 289f and Section 315d of the
German Commercial Code (HGB)	114
Responsibility statement	115

Contents

05 Consolidated Financial statements	117
Consolidated balance sheet	119
Consolidated statement of comprehensive income	120
Consolidated statement of changes in equity	122
Consolidated statement of cash flows	123
Notes	124
Auditor's report	191

06 Further information	199
Glossary	200
List of graphs and tables	205
Image credits	206
Financial calendar	207
Contact and imprint	208

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01

Company management

01 Company management

6

Letter from the CEO	8
Report from the Supervisory Board	12
BRAIN Management Board interview	20

Company management

Letter from the CEO

Dear shareholders,

Adriaan Moelker - CEO BRAIN Biotech AG

We completed the 2020/21 financial year in September 2021 satisfactorily and in line with our earnings and revenue forecast. In a financial year still marked overall by pandemic effects, we successfully compensated for weak revenues in some business areas with a strong products business at our subsidiaries Biocatalysts, Biosun and L.A. Schmitt. Thanks to stringent cost control, we improved our EBITDA as planned, despite continuing to realize a high level of high investments in our incubator pipeline and infrastructure.

Around two years ago, my management team and I launched a crucial transformation process at BRAIN: from its origins as a research-driven biotech network with a focus on the BRAIN BioArchive, the company has now developed into a solutions provider with strong biotechnology expertise. This transformation - from visionary pioneer into an entrepreneurial innovation partner to industry and an independent producer - is also illustrated by our new mission statement "Creating a bio-based Future".

Vigorous pursuit of transformation

Over the past few months, we have also vigorously pursued this important transformation process within our company. I would like to illustrate this with a few examples presented below.

Together within the BRAIN Group, we are increasingly succeeding in our goal of covering the entire value chain through to finished enzyme products and process solutions. To this end, it was important for us to increase the interest we hold in enzyme producer Biocatalysts Ltd. to around 81%, thereby realizing further investment in the large-scale production of enzymes and our scaling expertise. With the acquisition of US distributor Biosun Biochemicals Inc., a company that is well established within the sector, we have taken an important step towards further expanding the BRAIN Group's product business and distribution structures in North America.

Good progress with integration of subsidiaries

The complete integration of the subsidiaries into the BRAIN Group is an important task, which I was pleased to take on personally. Regular communication at management level, as well as operational cooperation among the respective experts, have brought us a big step forward in this process. As the coronavirus pandemic has made travel difficult, we have successfully digitalized related processes.

In controlling, we have introduced extended guidelines and standards that ensure that processes within the Group are now fundamentally standardized and coordinated, which save resources, harmonize processes and also form the basis for efficient internal controlling.

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