Consolidated Financial Statements and Notes

Statement of Profit or Loss

 2nd quarter1) 2016 € in mn   2nd quarter1) 2015 € in mn  1st half 2016 € in mn 1st half 2015 € in mn
Sales revenue 323.5 277.3 625.4 535.3
Cost of sales –167.3 -137.0 –320.4 –270.5
Gross profit on sales 156.2 140.3 305.1 264.8
Selling and distribution costs –62.3 -55.7 –123.1 –109.7
Research and development expenses –15.2 –12.6 –29.6 –25.3
General administrative expenses –18.5 –16.1 –36.2 –31.7
Other operating income and expenses²) –0.3 -7.7 –6.3 –7.5
Earnings before interest and taxes (EBIT) 60.0 48.2 109.9 90.6
Financial income 3.6 0.3 8.1 5.0
Financial expenses –6.7 –0.8 –12.0 –20.1
Financial result –3.1 -0.5 –3.9 –15.2
Profit before tax 56.9 47.7 106.0 75.5
Income taxes –17.1 -14.3 –31.8 –22.7
Profit after tax from continuing operations 39.8 33.4 74.2 52.8
Profit after tax from discontinued operation 0.0 2.9 0.0 38.9
Net profit for the period 39.8 36.3 74.2 91.7
Attributable to:
Shareholders of Sartorious AG
29.1 27.1 53.4 76.9
Non-controlling interest
10.7 9.2 20.8 14.8
         
Earnings per ordinary share (€) (basic)
0.43 0.40 0.78 1.12
Of which from continuing operations 0.43 0.35 0.78 0.55
Of which from discontinued operation 0.00 0.04 0.00 0.57
Earnings per preference share (€) (basic) 0.43 0.40 0.79 1.13
Of which from continuing operations 0.43 0.35 0.79 0.56
Of which from discontinued operation 0.00 0.04 0.00 0.57
         
Earnings per ordinary share (¤) (diluted) 0.43 0.40 0.78 1.12
Of which from continuing operations 0.43 0.35 0.78 0.55
Of which from discontinued operation 0.00 0.04 0.00 0.57
Earnings per preference share (€) (diluted) 0.43 0.40 0.79 1.13
Of which from continuing operations 0.43 0.35 0.79 0.56
Of which from discontinued operation 0.00 0.04 0.00 0.57

1) The 2nd quarter figures were not included in the auditors’ review.

2) The item "Other operating income and expenses" includes extraordinary expenses of €9.9 million for the six-month period of 2016 (6-mo. 2015: €3.8 million).

 

Disclosures in the statement of profit or loss were restarted. Amortization on capitalized development costs of €2.5 million are now disclosed in the cost of sales (earlier, this amortization item had been reported in the research and development expenses). This does not yield any impacts on Group EBIT or net profit for the period.

In addition, the prior-year figures were slightly restated due to the final purchase price allocation of BioOutsource.

Statement of Comprehensive Income

2nd quarter1)
2016
€ in mn
2nd quarter1)
2015
€ in mn
1st half
2016
€ in mn
1st half
2015
€ in mn
Net profit for the period 39.8 36.3 74.2 91.7
Cash flow hedges –0.3 9.0 0.5 –1.6
Of which effective portion of the changes in fair value –0.8 7.6 –1.4 –6.5
Of which reclassified to profit or loss 0.5 1.3 1.9 4.9
Income tax on cash flow hedges 0.1 –2.7 –0.2 0.5
Net investment in a foreign operation –2.1 2.1 0.2 –4.1
Income tax on net investment in a foreign operation 0.5 –0.5 –0.2 1.4
Currency translation differences 3.1 –11.1 –13.7 22.3
Items that may be reclassified in the profit or loss statement,
net of tax
1.4 –3.3 –13.2 18.6
Remeasurements of the net defined benefit liability –7.4 5.3 –7.4 5.2
Income tax on items that will not be reclassified in the profit or loss
statement
2.2 –1.6 2.2 –1.6
Items that will not be reclassified in the profit or loss statement,
net of tax
–5.2 3.8 –5.2 3.7
Other comprehensive result after tax –3.8 0.5 –18.4 22.2
Total comprehensive income 36.0 36.8 55.8 113.9
Attributable to:
Shareholders of Sartorius AG
25.2 27.5 38.8 94.0
Non-controlling interest
10.8 9.3 17.0 20.0

1) The 2nd quarter figures were not included in the auditors’ review.

Statement of Financial Position

Assets June 30,
2016
€ in mn
December 31,
2015
€ in mn
Non-current assets    
Goodwill 444.7 405.4
Other intangible assets 258.4 209.3
Property, plant and equipment 356.1 317.4
Financial assets 6.2 8.1
Other assets 0.9 0.8
Deferred tax assets 20.9 18.9
  1,087.2 959.9
Current assets    
Inventories 220.5 189.8
Trade receivables 238.0 193.0
Other financial assets 15.8 11.8
Current tax assets 11.0 12.0
Other assets 25.2 17.9
Cash and cash equivalents 76.0 52.8
  586.6 477.4
Total assets 1,673.8 1,437.2


Equity and liabilities June 30,
2016
€ in mn
December 31,
2015
€ in mn
Equity    
Equity attributable to Sartorius AG shareholders 519.0 517.7
Issued capital
68.4 17.1
Capital reserves
37.7 88.4
Other reserves and retained earnings
412.9 412.3
Non-controlling interest
135.1 127.0
  654.2 644.8
Non-current liabilities    
Pension provisions 66.6 59.8
Other provisions 7.9 7.7
Loans and borrowings 500.7 346.8
Finance lease liabilities 19.2 19.3
Other financial liabilities 70.3 54.5
Deferred tax liabilities 54.8 33.4
  719.5 521.5
Current liabilities    
Provisions 19.8 18.1
Trade payables 131.1 113.2
Loans and borrowings 37.5 28.2
Finance lease liabilities 2.6 2.5
Other financial liabilities 67.3 66.9
Current tax liabilities 20.4 20.7
Other liabilities 21.4 21.4
  300.1 271.0
Total equity and liabilities 1,673.8 1,437.2


Statement of Cash Flows

6-month
2016
€ in mn
6-month
2015
€ in mn
Profit before tax 106.0 115.0
Financial result 3.9 14.9
Earnings before interest and taxes (EBIT) 109.9 129.8
Depreciation | amortization of intangible and tangible assets 33.6 26.9
Increase | decrease in provisions 1.1 11.6
Gains | losses from the disposal of fixed assets 0.0 –38.5
Income taxes paid –32.0 –23.2
Other non-cash items 0.7 0.9
Gross cash flows from operating activities 113.3 107.6
Increase | decrease in receivables and other assets –51.8 –26.8
Increase | decrease in inventories –29.8 –31.0
Increase | decrease in liabilities (without loans and borrowings) 11.5 6.5
Net cash flow from operating activities 43.1 56.2
Net cash flow from operating activities – continuing operations 43.1 54.8
Net cash flow from operating activities – discontinued operation 0.0 1.4
Capital expenditures –69.4 –40.6
Proceeds from the disposal of fixed assets 0.4 0.3
Other payments 0.0 –0.3
Net cash flow from investing activities –69.0 –40.6
Payments for acquisitions of consolidated subsidiaries and other business operations, net of cash
acquired
–79.1 –29.3
Proceeds from the disposal of consolidated subsidiaries, net of cash disposed 0.0 72.9
Net cash flow from investing activities, acquisitions and disposals –148.1 3.1
Net cash flow from investing activities - continuing operations –148.1 –69.7
Net cash flow from investing activities - discontinued operation 0.0 72.7
Interest received 2.1 0.2
Interest paid and other financial charges –3.6 –4.4
Dividends paid to:
– Shareholders of Sartorius AG
–25.8 –18.2
– Non-controlling interest
–8.7 –5.6
Gross cash flows from financing activities –36.0 –28.1
Changes in non-controlling interest 0.0 –1.4
Loans repaid –2.3 –130.7
Loans raised 164.5 90.0
Net cash flow from financing activities 126.3 –70.2
Net cash flow from financing activities – continuing operations 126.3 –70.2
Net cash flow from financing activities – discontinued operation 0.0 0.0
Net increase | decrease in cash and cash equivalents 21.3 –10.9
Cash and cash equivalents at the beginning of the period 52.8 56.4
Net effect of currency translation on cash and cash equivalents 2.0 3.3
Cash and cash equivalents at the end of the period 76.0 48.8

The cash flows shown for the 6-month period of 2015 generally include our discontinued operation. For the net cash flows from operating, investing and financing activities, these to tal figures are each broken down into the net cash flow for continuing operations and for our discontinued operation, respectively.

Statement of Changes in Equity

€ in millions Issued capital Capital reserves Hedging reserves Pension reserves Earnings reserves and retained profits Difference resulting from currency translation Equity attributable to Sartorius AG shareholders Non-
controlling interest
Total equity
Balance at January 1, 2015 17.0 87.0 –2.2 –19.4 307.6 7.8 397.9 99.7 497.7
Net profit for the period 0.0 0.0 0.0 0.0 76.9 0.0 76.9 14.8 91.7
Other comprehensive result
after tax
0.0 0.0 –0.9 3.2 –2.0 16.8 17.1 5.2 22.2
Total comprehensive income 0.0 0.0 –0.9 3.2 74.9 16.8 94.0 20.0 113.9
Share-based payment 0.0 0.7 0.0 0.0 0.0 0.0 0.7 0.0 0.7
Dividends 0.0 0.0 0.0 0.0 –18.2 0.0 –18.2 –5.6 –23.8
Reclassification of pension reserves for Intec 0.0 0.0 0.0 2.7 –2.7 0.0 0.0 0.0 0.0
Other changes in non-controlling interest 0.0 0.0 0.0 0.0 0.5 0.0 0.5 –0.5 0.0
Other changes in equity 0.0 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.1
Balance at June 30, 2015 17.0 87.0 –5.3 –13.5 362.1 4.4 391.1 113.7 588.5


€ in millions Issued capital Capital reserves Hedging reserves Pension reserves Earnings reserves and retained profits Difference resulting from currency translation Equity attributable to Sartorius AG shareholders Non-
controlling interest
Total equity
Balance at January 1, 2016 17.1 88.4 –3.1 –15.1 406.5 24.0 517.7 127.0 644.8
Net profit for the period 0.0 0.0 0.0 0.0 53.4 0.0 53.4 20.8 74.2
Other comprehensive result after tax 0.0 0.0 0.2 –4.6 –0.1 –10.2 –14.6 –3.8 –18.4
Total comprehensive income 0.0 0.0 0.2 –4.6 53.3 –10.2 38.8 17.0 55.8
Share-based payment 0.0 0.7 0.0 0.0 0.0 0.0 0.7 0.0 0.7
Dividends 0.0 0.0 0.0 0.0 –25.8 0.0 –25.8 –8.7 –34.5
Capital increase1) 51.3 –51.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Reclassification of pension reserves for Japanese subsidiaries 0.0 0.0 0.0 0.5 –0.5 0.0 0.0 0.0 0.0
Put option for Sartorius Israel 0.0 0.0 0.0 0.0 13.4 0.0 –13.4 0.0 –13.4
Other changes in non-controlling interest 0.0 0.0 0.0 0.0 0.2 0.0 0.2 –0.2 0.0
Other changes in equity 0.0 0.0 0.0 0.0 0.8 0.0 0.8 0.0 0.8
Balance at June 30, 2016 68.4 37.7 –2.9 –19.2 421.1 13.9 519.0 135.1 654.2

1) In fiscal 2016, capital was increased by the use of retained earnings to perform a stock split; see Section 6.

Segment Reports

According to IFRS 8, Operating Segments, the identification of reportable operating segments is based on the "management approach"; i.e., the segments are defined analogously to the internal control and reporting structure of an entity. As a result of the classification of the Intec Division as a discontinued operation, the divisions called Bioprocess Solutions and Lab Products & Services are to be considered operating segments.

"Underlying EBITDA" is the key performance indicator of the operating segments of the Group. EBITDA corresponds to earnings before interest (financial result), taxes, depreciation and amortization. "Underlying EBITDA" means EBITDA adjusted for extraordinary items. In this connection, extraordinary ite ms are expenses and income that are of an exceptional or a one-time nature and accordingly distort the sustainable profitability of a segment and, from the Group's perspective, have a material impact on the net worth, financial position and earnings of the Group.

Apart from that, the recognition and measurement methods for the reportable segments conform to the general Group accounting principles.

Sales revenue Underlying EBITDA
€ in millions 6-mo. 2016 6-mo. 2015 6-mo. 2016 6-mo. 2015
Bioprocess Solutions 469.8 384.9 128.1 97.8
Lab Products & Services 155.7 150.5 25.3 23.4
Total continuing operations 625.4 535.3 153.4 121.1
Reconciliation to the profit before tax        
Depreciation and amortization     –33.6 –26.7
Extraordinary items     –9.9 –3.8
Earnings before interest and taxes (EBIT)     109.9 90.6
Financial result     –3.9 –15.2
Profit before tax from continuing operations     106.0 75.5

Geographical Information

Sales revenue
€ in millions 6-mo. 2016 6-mo. 2015
EMEA 288.1 245.9
Americas 212.3 172.4
Asia | Pacific 125.1 117.0
Group 625.4 535.3

Notes to the Condensed Interim Financial Statements

1.  General Information

Sartorius AG is a listed joint stock corporation estab- lished according to German law and is the highest-level parent company of the Sartorius Group. The corporation is recorded in the German Commercial Register of the District Court of Goettingen (HRB 1970) and is headquartered at Weender Lan dstrasse 94-108 in Goettingen, Federal Republic of Germany.

The Sartorius Group organizes its business in two divisions: Bioprocess Solutions and Lab Products & Services. With its Bioprocess Solutions Division, Sartorius is a leading international supplier of products and technologies for the manufacture of medications and vaccines on a biological basis, so-called biopharmaceuticals. As part of its total solutions provider strategy, the Bioprocess Solutions Division offers the biopharmaceutical industry a product portfolio that covers nearly all process steps of the industry's manufacture. These products encompass cell culture media for the cultivation of cells, bioreactors of various sizes for cell propagation and different technologies, such as filters and bags for cell harvesting, purification and concentration, all the way to filling.

The Lab Products & Services Division focuses on laboratories in the research and quality assurance sectors of pharmaceutical and biopharmaceutical companies and on academic research institutes. It serves further customers in the chemical and food industries. The division's portfolio covers instruments and consumables that laboratories use, for example, in sample preparation or in other standard applications. The Industrial Technologies Division (formerly called Industrial Weighing) was sold in the first quarter of 2015.

2. Significant Accounting Policies

The consolidated annual financial statements of Sartorius AG for the period ended December 31, 2015, were prepared in accordance with the accounting standards of the International Accounting Standards Board (IASB) - the International Financial Reporting Standards (IFRS) - as they are to be applied in the EU. In the present interim financial statements that were prepared in conformance with the requirements of IAS 34 "Interim financial reporting," basically the same accounting and measurement principles were applied on which the past consolidated financial statements of fiscal 2015 were based.

Furthermore, all interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC) to be applied effective June 30, 2016, were observed. An explanation of the individual accounting and measurement principles applied is given in the Notes to the Financial Statements of the Group for the year ended December 31, 2015.

A list of the companies included in the scope of consolidation for the Group financial statements is provided in our 2015 Annual Report in the current fiscal year, the following companies were consolidated for the first time in the reporting period:

  • OOO Sartorius Stedim RUS
  • OOO Sartogosm
  • Sartorius Israel Ltd.
  • IntelliCyt Corporation (see also Section 5)

For calculation of income tax expenses, the provisions of IAS 34.30c were adopted; i.e., the best estimate of the weighted average annual income tax rate expected for the full financial year, 30%, was applied.

3. Use of Judgments and Estimates

In preparing these interim financial statements, management has made judgments, estimates and assumptions, based on their best knowledge of the current and future situation, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates, however.

The significant judgments and estimates made by management in applying the Group's accounting policies and the key sources of estimation uncertainty have remained the same as those that were applied to the consolidated financial statements as at and for the year ended December 31, 2015.

4. Accounting Rules Applied for the First Time in the Current Fiscal Year

The following new accounting rules were applicable for the first time to the present interim financial statements and had no impact on the presentation of the company's net worth, financial position and profitability or earnings per share:

  • Amendments to IAS 19, Employee Contributions
  • Annual Improvements to IFRSs - 2010-2012 Cycle (issued in Dec. 2013); various standards
  • Amendments to IAS 1, Disclosure Initiative
  • Amendments to IAS 16 and IAS 41, Agriculture: Bearer Plants
  • Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of Depreciation and Amortization
  • Amendments to IAS 27, Equity Method in Separate Financial Statements
  • Annual Improvements to IFRSs - 2012-2014 Cycle (issued in Sep. 2014); various standards

Standards or interpretations that were not yet mandatory as of June 30, 2016, were not applied in advance. Presently, first-time application is planned for each reporting period in which the standards, interpretations or amendments enter into force. The following amendments are to be applied as of 2018 and 2019, respectively:

IFRS 15, Revenue from Contracts with Customers, defines a comprehensive framework for determining whether, in which amount and at which point in time revenue is to be recognized.

IFRS 15 will essentially have an impact on the accounting of construction contracts as defined by IAS 11. Based on the latter, revenue is currently recognized according to the percentage of completion (PoC method) under which the progress of the project work performed is measured according to the costs incurred (cost-to-cost method). Under IFRS 15, control of an asset is the decisive criterion for recognition of revenue. Compared with the former recognition method according to IAS 11, IFRS 15 principles may prompt changes in the recognition of revenue.

The new standard for accounting of leases, IFRS 16, eliminates the classification of leases as either operating leases or finance leases for a lessee. Instead, all leases are treated in a way similar to that of finance leases under IAS 17. Leases are "capitalized" by recognizing the present value of the lease payments and showing them either as lease assets (right-of-use assets) or together with property, plant and equipment.

As a consequence of the application of IFRS 16, the Group expects an increase in lease assets and financial liabilities. According to its present state of knowledge, the Group does not anticipate any material impacts on its key performance indicators, such as equity ratio or underlying EBITDA, however.

IFRS 9 ultimately changes the rules for classification and measurement and impairment testing of financial instruments, as well as the guidelines for hedge accounting.

The impacts of these and other future amendments are currently being analyzed. According to the current audit review status, the Group does not anticipate any overall significant impact on its consolidated accounts arising from the application of new or amended standards.

5. Business Acquisitions and Divestitures

Acquisition of IntelliCyt Corporation

On June 28, the Sartorius Group acquired the U.S. IntelliCyt Corporation based in Albuquerque, New Mexico. This purchase expands the product portfolio of the Lab Products & Services Division for its customers at research laboratories in the biopharmaceutical industry and in public research.

Founded in 2006, the company developed a novel cell screening platform that integrates instruments, software and reagents, enabling rapid, high-throughput cell analysis for assessing multiple cellular parameters.

IntelliCyt has achieved a compound annual growth rate above 50% over the past years and, with 55 employees, is expected in 2016 to generate sales revenue of more than U.S. $18 million.

As the time this company was acquired was close to the reporting date, the purchase price could be allocated only on a preliminary basis:

Preliminary purchase price allocation € in mn
Other intangible assets 56.9
Property, plant and equipment 0.5
Inventories 2.1
Trade receivables and other assets 3.3
Cash and cash equivalents 7.4
Provisions and liabilities –5.6
Deferred tax –22.7
Net assets acquired 41.9
Purchase price 86.5
Goodwill 44.5

The converted purchase price of €86.5 was paid in cash. The expenses directly attributable to the acquisition amounting to €0.1 million were recognized as other operating expenses. Goodwill is not expected to be tax-deductible.

6. Financial Instruments

Carrying Amounts and Fair Values

€ in millions Categories June 30, 2016
Carrying amount
June 30, 2016
Fair value
Dec. 31, 2015
Carrying amount
Dec. 31, 2015
Fair value
Financial assets Held for sale 3.4 3.4 4.8 4.8
Financial assets Loans and receivables 2.6 2.6 3.3 3.3
Financial assets
(non-current)
6.1 6.1 8.1 8.1
Trade receivables Loans and receivables 238.0 238.0 193.0 193.0
Receivables and other assets Loans and receivables 15.5 15.5 11.8 11.8
Derivative financial instruments Held for trading 0.0 0.0 0.0 0.0
Derivative financial instruments designated as
hedging instruments
n/a 0.4 0.4 0.0 0.0
Other financial assets (current) 15.9 15.9 11.8 11.8
Cash and cash equivalents Loans and receivables 76.0 76.0 52.8 52.8
           
Loans and borrowings Financial liabilities at cost 538.2 554.3 375.0 389.2
Finance lease liabilities IAS 17 21.7 33.3 21.8 28.5
Trade payables Financial liabilities at cost 77.8 77.8 70.9 70.9
Trade payables n/a 53.3 53.3 42.2 42.2
Trade payables   131.1 131.1 113.2 113.2
Derivative financial instruments Held for trading 7.4 7.4 6.4 6.4
Derivative financial instruments designated as hedging instruments n/a 5.8 5.8 6.0 6.0
Other financial liabilities Financial liabilities at cost 72.7 82.3 59.4 67.0
Other financial liabilities Fair value through profit or loss 5.4 5.4 5.4 5.4
Other financial liabilities n/a 46.3 46.3 44.1 44.1
Other financial liabilities   137.6 147.2 121.4 129.0


For the equity investments measured at acquisition cost (financial assets), it is not possible to determine fair values reliably due to the absence of active markets. This applies mainly to shares in non-consolidated subsidiaries. These are essentially sales companies of the Group; the calculation of fair values for their activities would therefore not be relevant for the economic decisions of the users. There is currently no intention to sell the assets of Sartorius Group affiliates.

The fair values of the financial instruments were determined on the basis of the market information available on the reporting date and are to be allocated to one of the three levels of the fair value hierarchy in accordance with IFRS 13.

Level 1 financial instruments are calculated on the basis of prices quoted on active markets for identical assets and liabilities. In Level 2, financial instruments are calculated on the basis of input factors, which are derivable from observable market data or on the basis of market prices for similar instruments. Level 3 financial instruments are calculated on the basis of input factors that cannot be derived from observable market data.

The financial instruments to be recognized at fair value on the reporting date are exclusively derivatives in the form of forward contracts and interest rate swaps. They were measured on the basis of their quoted exchange rates and market yield curves (Level 2).

The fair values to be disclosed for financial liabilities recognized at amortized cost, especially liabilities to banks and those related to note loans ("Schuldscheindarlehen"), as well as finance lease liabilities, were measured on the basis of the market interest rate curve, taking the current indicative credit spreads into account (Level 2).

Regarding the potential purchase of non-controlling interest in AllPure and in Sartorius Israel Ltd., the Group has forward contracts and options in place. These liabilities are required to be disclosed in the amount of the present value of the expected purchase price payments for the non-controlling interest in these companies. Their present value is to be derived in both cases from the expected revenues as of the exercise date and from the risk-adjusted discount rate presented above (Level 3).

The fair values of the remaining financial assets and liabilities to be disclosed approximate the carrying amounts on account of their predominantly short-term maturity.

Measurement of Fair Value

The Group recognizes transfers between the levels of the fair value hierarchies at the end of the reporting period during which the change has occurred. In the current reporting period, there were no transfers between the levels.

The valuation of the level 3 liability is based on a discounted cash flow technique in which the expected future payments that are discounted using a risk-adjusted discount rate are taken into account. The expected payments are determined by considering possible developments of future revenue and the amounts to be paid under each scenario. The significant unobservable input in this calculation is the future revenue which was considered at a growth rate of approximately €3 million per year on average for the AllPure liability.

The carrying amount of the liability developed as follows:

2016 €
in mn
2015 €
in mn
Balance at January 1 5.4 6.2
Changes in fair value 0.0 0.0
Financial expenses 0.0 0.1
Payments 0.0 –1.5
Translation effects –0.1 0.5
Balance at June 30 5.4 5.2

An increase (decrease) of the sales revenue by 10% in each of the following years would lead to an increase (decrease) of the liability by €0.5 million (€0.5 million).

Concerning the liability for the purchase of the non-controlling interest in Sartorius Israel Ltd., the input factor that cannot be derived from observable market data is also sales growth for which a compound annual growth rate of approx. €1.6 million was assumed.

The carrying amount of this liability developed as follows:

2016
€ in mn
Balance at January 1 0.0
Initial measurement 13.4
Financial expenses 0.2
Payments 0.0
Translation effects –0.1
Balance at June 30 13.5

An increase (decrease) in expected sales revenue by 10% in each of the following years would like to an increase (decrease) of the liability by €1.4 million (€1.4 million).

7. Related Companies and Persons

The Group companies included in the consolidated financial statements carry out business activities and transactions in related party relationships as defined by IAS 24. In particular, this concerns transactions with non-consolidated subsidiaries and are generally concluded according to the customary market terms.

In the reporting period, sales revenue of € 4.2 million (H1 2015: €7.3 million) were generated by these companies; there were liabilities from loans and borrowings as well as trade payables, both totaling €10.8 million (H1 2015: €11.2 million). A long-term service contract exists with an affiliate for which expenses of €3.1 million (H1 2015: €2.9 million) were incurred in the reporting period.

For further details, also on related companies and persons, see page 151 in our 2015 Anual Report.

8. Other Disclosures

In the interim reporting period, no asset impairments were identified. Generally, asset impairment tests need to be performed for goodwill and other assets with indefinite useful lives.

In the reporting period, Sartorius AG paid dividend s totaling €25.8 million, of which €12.8 million were for ordinary shares and €13.0 million for preference shares.

Independent, certified auditors performed an audit review of this consolidated six-month report. The figures of the individual second quarter in the statement of profit or loss, as well as the statement of comprehensive income, were not part of this review.

9. Material Events After the Reporting Date

On July 6, Sartorius signed an agreement through its subgroup Sartorius Stedim Biotech to acquire the centrifuge specialist kSep Holdings, Inc., based in Morrisville, North Carolina, USA. For fiscal 2016, kSep is expected to achieve significant double-digit growth and to generate sales revenue of more than U.S. $7 million and a strong double-digit EBITDA margin. The transaction values kSep at around $28 million and is expected to close by the end of July 2016.

On July 14, the Sartorius Group acquired ViroCyt Incorporated based in Broomfield, Colorado, USA. The start-up is expected to achieve high double-digit growth and to generate sales revenue of more than $3 million in 2016 while achieving break-even underlying EBITDA by the end of 2018. The purchase price is around U.S. $16 million.

Among ViroCyt's major customers are pharma and biopharma R&D laboratories, vaccine manufacturers and academic institutes focusing on virology. This acquisition, along with the purchase of IntelliCyt, extends the product portfolio of the Lab Products & Services Division in the segment of bioanalytics.

Independent Auditors’ Review Report

To Sartorius Aktiengesellschaft, Goettingen

We have reviewed the condensed interim consolidated financial statements of the Sartorius Aktiengesellschaft, Goettingen - comprising the condensed statement of profit or loss, statement of comprehensive income, statement of financial position, statement of cash flows, statement of the changes in equity and selected explanatory notes - together with the interim Group management report of the Sartorius Aktiengesellschaft, Goettingen, Germany, for the period from January 1 to June 30, 2016, that are part of the semi-annual financial report according to § 37 w WpHG ("Wertpapierhandelsgesetz": German Securities Trading Act). The preparation of the condensed interim consol- idated financial statements in accordance with those IFRSs applicable to interim financial reporting as adopted by the EU, and of the interim Group management report in accordance with the requirements of WpHG applicable to interim Group management reports, is the responsibility of the company's management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim Group management report based on our review.

We performed our review of the condensed interim consolidated financial statements and the interim Group management report in accordance with the German generally accepted standards for the review of financial statements established by the German Institute of Independent Auditors, Institut der Wirtschaftsprüfer ("IDW"). These standards require that we plan and perform the review to obtain reasonable assurance that the condensed interim consolidated financial statements have been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, and that the interim Group management report has been prepared, in all material respects, in accordance with WpHG requirements applicable to interim Group management reports. A review is limited primarily to company employees' responses to our inquiries and to analytical assessments and, therefore, does not provide the assurance attainable in a financial statement audit. Since, in accordance with our audit review assignment, we have not performed a full audit of the financial statements, we cannot issue an auditor's report.

Based on our review, no matters have come to our attention that cause us to presume that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRSs applicable to interim financial reporting as adopted by the EU or that the interim Group management report has not been prepared, in material respects, in accordance with the requirements of WpHG applicable to interim Group management reports.

Hanover, Germany, July 22, 2016

KPMG AG
Wirtschaftsprüfungsgesellschaft

 

Ufer
Auditor
(German Public Auditor)

Thiele
Auditor
(German Public Auditor)

Responsibility Statement of the Legal Representatives

Declaration of the Executive Board

We declare to the best of our knowledge that the condensed interim consolidated financial statements for the first half ended June 30, 2016, present a true and fair view of the actual net worth, financial situation and profitability of the Group in accordance with the accounting standards to be applied in preparing these statements. We also certify that the progress of the Group's business, including its business performance and its situation, are represented accurately in the Group interim report in all material respects and describe the most important opportunities and risks of the Group's projected development for the remaining six months of the financial year.

Goettingen, July 22, 2016

Sartorius AG
The Executive Board