Condensed Interim Financial Statements

Statement of Profit or Loss

2nd quarter1)
2019
€ in mn
2nd quarter1)
2018
€ in mn
6-month
2019
€ in mn
6-month
2018
€ in mn
Sales revenue 459.0 393.5 894.7 758.4
Cost of sales –222.9 –192.0 –435.5 –368.5
Gross profit on sales 236.1 201.5 459.2 389.9
Selling and distribution costs –93.3 –84.5 –182.6 –162.1
Research and development expenses –22.7 –19.5 –45.3 –41.1
General administrative expenses –25.0 –23.3 –52.3 –46.3
Other operating income and expenses2) –8.1 –6.6 –12.4 –16.9
Earnings before interest and taxes (EBIT) 87.0 67.5 166.6 123.3
Financial income 1.8 –0.4 4.5 3.1
Financial expenses –4.4 –6.5 –14.4 –14.1
Financial result –2.5 –6.9 –9.9 –11.0
Profit before tax 84.5 60.6 156.7 112.3
Income taxes –22.8 –16.4 –42.3 –30.3
Net profit for the period 61.7 44.3 114.4 82.0
Attributable to:        
Shareholders of Sartorius AG
44.5 30.7 82.3 57.3
Non-controlling interest
17.1 13.6 32.1 24.7
         
Earnings per ordinary share (€) (basic) 0.65 0.45 1.20 0.83
Earnings per preference share (€) (basic) 0.65 0.45 1.21 0.84
         
Earnings per ordinary share (€) (diluted) 0.65 0.45 1.20 0.83
Earnings per preference share (€) (diluted) 0.65 0.45 1.21 0.84

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

2) The item "Other operating income and expenses" includes extraordinary expenses for Group projects and acquisition and integration costs of €10.6 million for the six-month period of 2019 (6-mo. 2018: €13.9 million).

Statement of Comprehensive Income

2nd quarter1)
2019
€ in mn
2nd quarter1)
2018
€ in mn
6-month
2019
€ in mn
6-month
2017
€ in mn
Net profit for the period 61.7 44.3 114.4 82.0
Cash flow hedges 1.7 –12.3 –2.2 –9.7
– of which effective portion of the change in fair value 4.7 –8.8 –0.5 –2.1
– of which reclassified to profit or loss –3.0 –3.5 –1.7 –7.6
Income tax on cash flow hedges –0.3 3.6 0.8 2.8
Net investment in a foreign operation –5.1 20.9 2.2 10.7
Income tax on net investment in a foreign operation 1.4 –5.7 –0.6 –2.9
Currency translation differences –12.3 7.4 –1.6 1.2
Items that may be reclassified in the profit or loss statement,
net of tax
–14.6 14.0 –1.3 2.2
Remeasurements of the net defined benefit liability –6.8 0.2 –6.8 0.2
Income tax on items that will not be reclassified in the profit or loss
statement
2.0 0.0 2.0 0.0
Items that will not be reclassified in the profit or loss statement,
net of tax
–4.7 0.2 –4.7 0.2
Other comprehensive result after tax –19.4 14.2 –6.1 2.4
Total comprehensive income 42.3 58.4 108.3 84.3
Attributable to:        
Shareholders of Sartorius AG
28.6 44.3 77.9 60.6
Non-controlling interest
13.7 14.2 30.5 23.7

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

 

Statement of Financial Position

Assets June 30, 2019
€ in mn
December 31, 2018
€ in mn
Non-current assets    
Goodwill 662.1 662.2
Other intangible assets
401.0 401.0
Property, plant and equipment
766.6 659.6
Financial assets
25.6 28.8
Other assets 1.5 0.7
Deferred tax assets 25.8 20.6
  1,882.6 1,772.9
Current assets    
Inventories 369.8 321.7
Trade receivables 331.8 307.4
Other financial assets 17.5 29.3
Current tax assets 12.2 15.4
Other assets 49.0 35.1
Cash and cash equivalents 53.8 45.2
  834.0 753.9
Total assets 2,716.6 2,526.9
Equity and liabilities June 30, 2019 € in mn December 31, 2018
€ in mn
Equity    
Equity attributable to Sartorius AG shareholders 771.5 740.6
Issued capital
68.4 68.4
Capital reserves
40.4 40.2
Other reserves and retained earnings
662.7 632.0
Non-controlling interest 248.8 232.8
  1,020.3 973.4
Non-current liabilities    
Pension provisions 71.7 64.7
Other provisions 8.1 7.8
Loans and borrowings 916.5 878.5
Lease liabilities 52.0 16.1
Other financial liabilities 22.4 21.9
Deferred tax liabilities 80.6 83.7
  1,151.4 1,072.8
Current liabilities    
Provisions 15.6 16.3
Trade payables 200.6 173.5
Loans and borrowings 105.0 107.3
Lease liabilities 16.9 2.7
Employee benefits 68.5 63.0
Other financial liabilities 25.0 25.1
Current tax liabilities 49.3 38.1
Other liabilities 64.1 54.8
  544.9 480.7
Total equity and liabilities 2,716.6 2,526.9

 

Statement of Cash Flows

6-month 2019 € in mn 6-month 2018 € in mn
Profit before tax 156.7 112.3
Financial result 9.9 11.0
Depreciation | amortization of intangible and tangible assets 60.8 52.3
Gains | losses from the disposal of fixed assets 0.0 –2.0
Change in provisions –0.8 –2.8
Change in receivables and other assets –23.3 –44.1
Change in inventories –45.5 –34.8
Change in liabilities (without loans and borrowings) 40.2 32.9
Income taxes paid –33.9 –34.0
Other non-cash items 1.0 1.1
Cash flows from operating activities 165.1 92.0
Capital expenditures –114.7 –99.0
Proceeds from the disposal of fixed assets 0.0 2.0
Other payments –1.3 –0.3
Cash flow from investing activities, acquisitions and disposals –116.0 –97.4
Interest received 0.8 0.1
Interest paid and other financial charges
–12.2 –6.9
Dividends paid to:
   
– Shareholders of Sartorius AG
–42.1 –34.5
– Non-controlling interest
–14.5 –11.7
Loans repaid –41.3 –19.6
Loans raised 67.2 71.1
Cash flow from financing activities –41.9 –1.4
Net increase | decrease in cash and cash equivalents 7.2 –6.9
Cash and cash equivalents at the beginning of the period 45.2 59.4
Change in scope of consolidation 2.2 0.0
Net effect of currency translation on cash and cash equivalents –0.8 –1.3
Cash and cash equivalents at the end of the period 53.8 51.2

 

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 attri-
butable to
Sartorius AG
shareholders
Non-
controlling
interest
Total
equity
Balance at Dec. 31, 2017 68.4 39.7 11.4 –19.1 513.3 4.1 617.8 188.8 806.6
Adjustment on adoption of IFRS 9 0.0 0.0 0.0 0.0 0.4 0.0 0.4 0.0 0.4
Balance at January 1, 2018 68.4 39.7 11.4 –19.1 513.7 4.1 618.2 188.8 807.0
Net profit for the period 0.0 0.0 0.0 0.0 57.3 0.0 57.3 24.7 82.0
Cash flow hedges 0.0 0.0 –7.9 0.0 0.0 0.0 –7.9 –1.8 –9.7
Remeasurements of the net defined benefit liability 0.0 0.0 0.0 0.2 0.0 0.0 0.2 0.0 0.2
Currency translation differences 0.0 0.0 0.0 0.0 0.0 1.0 1.0 0.2 1.2
Net investment in a foreign operation 0.0 0.0 0.0 0.0 10.7 0.0 10.7 0.0 10.7
Tax effects 0.0 0.0 2.4 –0.1 –2.9 0.0 –0.5 0.5 0.0
Other comprehensive income after tax 0.0 0.0 –5.5 0.1 7.8 1.0 3.4 –1.0 2.4
Total comprehensive income 0.0 0.0 –5.5 0.1 65.1 1.0 60.6 23.7 84.3
Share-based payment 0.0 0.3 0.0 0.0 0.0 0.0 0.3 0.0 0.3
Dividends 0.0 0.0 0.0 0.0 –34.5 0.0 –34.5 –11.7 –46.2
Other changes in equity 0.0 0.0 0.0 0.0 –0.2 0.0 –0.2 0.0 –0.1
Balance at June 30, 2018 68.4 39.9 5.9 –18.9 544.1 5.1 644.4 200.8 845.2
                   
Balance at January 1, 2019 68.4 40.2 3.3 –19.2 639.8 8.0 740.6 232.8 973.4
Net profit for the period 0.0 0.0 0.0 0.0 82.3 0.0 82.3 32.1 114.4
Cash flow hedges 0.0 0.0 –1.7 0.0 0.0 0.0 –1.7 –0.5 –2.2
Remeasurements of the net defined benefit liability 0.0 0.0 0.0 –5.8 0.0 0.0 –5.8 –0.9 –6.8
Currency translation differences 0.0 0.0 0.0 0.0 0.0 –1.0 –1.0 –0.7 –1.6
Net investment in a foreign operation 0.0 0.0 0.0 0.0 2.2 0.0 2.2 0.0 2.2
Tax effects 0.0 0.0 0.5 1.9 –0.6 0.0 1.8 0.5 2.3
Other comprehensive result
after tax
0.0 0.0 –1.2 –3.9 1.6 –1.0 –4.5 –1.6 –6.1
Total comprehensive income 0.0 0.0 –1.2 –3.9 84.0 –1.0 77.9 30.5 108.3
Share-based payment 0.0 0.3 0.0 0.0 0.0 0.0 0.3 0.0 0.3
Dividends 0.0 0.0 0.0 0.0 –42.1 0.0 –42.1 –14.5 –56.5
Change in scope of consolidation 0.0 0.0 0.0 0.0 –4.8 0.0 –4.8 0.0 –4.8
Other changes in equity 0.0 0.0 0.0 0.0 –0.4 0.0 –0.4 0.0 –0.4
Balance at June 30, 2019 68.4 40.4 2.2 –23.1 676.5 7.1 771.5 248.8 1,020.3

 

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. Accordingly, 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 Sartorius 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 items 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. 2019 6-mo. 2018 6-mo. 2019 6-mo. 2018
Bioprocess Solutions 676.6 550.3 198.3 153.9
Lab Products & Services 218.1 208.1 39.4 35.5
Total 894.7 758.4 237.6 189.5
Reconciliation to the profit before tax        
Depreciation and amortization     –60.4 –52.3
Extraordinary items     –10.6 –13.9
Earnings before interest and taxes (EBIT)     166.6 123.3
Financial result     –9.9 –11.0
Profit before tax     156.7 112.3

 

Disaggregation of Revenue: Geographical Information by Segment

Under IFRS 15, revenue recognized from contracts with customers are disaggregated into the categories of the “nature of products” as well as “geographical regions” and presented in the following table. The categorization by “nature of products” corresponds to the reportable segments as the identification of the reportable segments is based, in particular, on the different products sold. Regional disaggregation of revenue is according to the customer's location.

6-mo. 2019 6-mo. 2018
€ in millions Group Bioprocess Solutions Lab Products & Services Group Bioprocess Solutions Lab Products & Services
Sales revenue 894.7 676.6 218.1 758.4 550.3 208.1
- EMEA 362.0 264.7 97.3 324.4 229.5 94.9
- Americas 308.2 248.5 59.7 249.6 195.8 53.9
- Asia | Pacific 224.5 163.4 61.1 184.4 125.1 59.3


Notes to the Condensed Interim Financial Statements

1.  General Information

Sartorius AG is a listed joint stock corporation established 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 Göttingen (HRB 1970) and is headquartered at Otto-Brenner-Str. 20 in Göttingen, Federal Republic of Germany.

The Sartorius Group is a leading international partner of biopharmaceutical research and the industry. With innovative laboratory instruments and consumables, the Group’s Lab Products & Services Division (LPS) concentrates on serving the needs of laboratories performing research and quality control at pharma and biopharma companies and those of academic research institutes. The Bioprocess Solutions Division (BPS) with its broad product portfolio focusing on single-use solutions helps customers to manufacture biotech medications and vaccines safely and efficiently.

2. Significant Accounting Policies

The consolidated annual financial statements of Sartorius AG for the period ended December 31, 2018, 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 2018 were based with the exception of those principles that were effective in 2019 for the first time.

Furthermore, all interpretations of the International Financial Reporting Standards Interpretations Commit-tee (IFRS IC) to be applied effective June 30, 2019, 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, 2018. The material Standards applied for the first time and the amended significant accounting policies are explained in Section 4 below.

A list of the companies included in the scope of consolidation for the Group financial statements is provided in our 2018 Annual Report. In the current fiscal year, the following entities - that previously were not consolidated due to materiality considerations - were included for the first time in the consolidated financial statements of the Group:

  • Sartorius Argentina S.A., Buenos Aires, Argentina
  • Sartorius do Brasil Ltda., São Paulo, Brazil
  • Sartorius de México S.A. de C.V., Tepotzotlán, Mexico
  • Sartorius Vietnam Co. Ltd., Ho Chi Minh City, Vietnam

Furthermore, the Group obtained control over the company Sartorius South Africa (Pty) Ltd. that is domiciled in South Africa as of January 1, 2019. The acquired company is not consolidated based on materiality considerations.

For calculation of income tax expenses, the rule of IAS 34.30c was applied to the interim financial statements; i.e., the best estimate of the weighted average annual income tax rate expected for the full financial year, 27%, is applied as a matter of principle.

3. Use of Judgements 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 and the key sources of estimation uncertainty have remained the same as those applied to the consolidated financial statements for the year ended December 31, 2018.

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

Standards to Be Applied for the First Time in 2019

The Group initially applied the following new accounting rules for the reporting period:

  • Annual Improvements to IFRSs – Cycle 2015–2017 (issued in Dec. 2017), Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23
  • Amendments to IAS 19, Plan Amendment, Curtailment or Settlement
  • Amendments to IAS 28, Long-term Interests in Associates and Joint Ventures
  • Amendments to IFRS 9, Prepayment Features with Negative Compensation
  • IFRIC 23, Uncertainty over Income Tax Treatments
  • IFRS 16, Leases

Only IFRS 16 had an impact on the consolidated financial statements. For lessees, IFRS 16 eliminates the distinction between operating and finance leases. Instead, IFRS 16 introduces a standardized accounting model according to which leases are generally to be recognized on the lessee's balance sheet. A lessee recognizes a right-of-use asset as well as a liability resulting from the lease, which represents its obligation to make lease payments.

The Group makes use of the exemptions for short-term leases and leases of low-value assets, and recognizes the lease payments for such leases as an expense generally on a straight-line basis over the contract period. Accordingly, no right-of-use assets and lease liabilities are recognized for these leases. In addition, no right-of-use assets and lease liabilities according to IFRS 16 are recognized for leases between Group entities. Furthermore, the Group does not apply the standard to leases of intangible assets.

In the statement of financial position, the Group presents the right-of-use assets according to the nature of the underlying lease assets within “Property, plant and equipment.” The right-of-use assets are recognized at cost less accumulated depreciation and any impairments. The cost of the right-of-use assets comprises the present value of the future lease payments, any payments paid upon or before commencement of the lease, any initial direct costs, and costs for dismantling or removing the lease asset. The right-of-use assets are typically depreciated over the lease term. If the transfer of legal ownership of the lease asset is planned at the end of the lease term, the right-of-use asset is depreciated over the economic useful life of the lease asset. In the statement of profit or loss, depreciation is recognized in functional costs.

The lease liabilities are presented separately on the face of the statement of financial position. Lease liabilities are initially recognized at an amount equal to the present value of the future lease payments. In general, the incremental borrowing rate of the Group specific to the respective country and lease term is used for discounting. Subsequently, the carrying amount of the lease liabilities is increased by the interest expenses and reduced by the lease payments. Interest expenses are reported within the financial result.

Accounting for the lessor is largely comparable to that of the previous standard IAS 17; i.e., lessors continue to classify leases as finance or operating leases.

The transition method and the effects from the initial application of the standard on the interim financial report are described below.

Initial Application of IFRS 16, Leases

The Group has initially applied IFRS 16 in the 2019 reporting period. Accordingly, the date of initial application is January 1, 2019. In accordance with IFRS 16, the Group applies this standard using the modified retrospective transition approach. Therefore, the cumulative effect of initially applying the standard is recognized on January 1, 2019. There was no material transition effect to be recognized in retained earnings. In line with the transition regulations, the Group does not adjust the prior-year figures.

The Group is mainly affected by the new standard in its role as a lessee as its lessor activities are not material. For leases that were previously classified as operating leases under IAS 17, the Group recognized a lease liability on January 1, 2019. The liabilities were measured at the present value of the remaining lease payments discounted using the respective incremental borrowing rate of the Group as of the date of initial application. The weighted average incremental borrowing rate was 2.1%. On the same date, for each of these leases, a right-of-use asset was recognized at an amount equal to the corresponding lease liability, adjusted for any prepaid or deferred lease payments. At the date of initial application, initial direct costs were not taken into consideration when the right-of-use assets were measured. Furthermore, the Group did not perform an impairment review but relied on its assessment of whether a lease was onerous in accordance with IAS 37 immediately before the date of initial application of IFRS 16. On this basis, no adjustments were necessary on the date of initial application.

No lease liabilities and no right-of-use assets were recognized in the course of the initial application of IFRS 16 for short-term leases and leases of low value assets that were previously classified as operating leases. Instead, in accordance with this standard, the lease payments for these leases are recognized as an expense on a straight-line basis over the lease term. Regardless of their original lease term, leases for which the remaining lease term did not exceed 12 months from the date of initial application onwards were generally not considered lease liabilities and right-of-use assets. Accounting for such leases follows the general accounting rule for short-term leases. The remaining lease terms of the leases were determined based on the knowledge of the Group as of January 1, 2019.

For leases that were previously classified as finance leases and, thus, already reflected on the Group’s statement of financial position, the carrying amounts of the corresponding assets and liabilities as of December 31, 2018 were considered as carrying amounts of the right-of-use assets and lease liabilities at the date of initial application of IFRS 16 without any adjustments.

In the course of the transition to IFRS 16, right-of-use assets of €68 million (including €18 million related to leases previously classified as finance leases), as well as lease liabilities of €70 million (including €19 million related to leases previously classified as finance leases), were recognized as of January 1, 2019. In addition, the Group recognized lease receivables from sub-leases of about €1 million. As expected, the new standard led to an increase in total assets of about €51 million at the date of initial application. This corresponds to a reduction in the equity ratio of somewhat less than one percentage point.

Based on the financial commitments from operating leases according to IAS 17 as of December 31, 2018, reconciliation with the opening balance of the lease liabilities as of January 1, 2019, is presented in the table below.

€ in millions
Financial obligations from operating lease commitments according to IAS 17 as of December 31, 2018 65
– of which short-term leases –2
– of which leases of low value assets –5
Other –4
Relevant financial obligations from operating leases (undiscounted) 54
Discounting –3
Relevant financial obligations from operating leases (discounted) 51
Carrying amount of lease liabilities from finance leases in accordance with IAS 17 as of December 31, 2018 19
Carrying amount of lease liabilities in accordance with IFRS 16 as of January 1, 2019 70

As of June 30, 2019, lease liabilities stood at €69 million. This includes lease liabilities from finance leases existing as of December 31, 2018, amounting to €18 million. The composition of the right-of-use assets included in “Property, plant and equipment” as of the date of initial application as well as of June 30, 2019, is presented in the table below. Assets of around €17 million related to finance leases that already existed as of December 31, 2018, are included in these right-of-use assets reported as of June 30, 2019. The total depreciation of right-of-use assets amounted to €9 million in the first half of fiscal 2019.

Right-of-use assets € in millions Jan. 1, 2019June 30, 2019
Land, buildings and improvements 5756
Technical machinery and equipment 22
Factory and office equipment and other equipment 99
Carrying amount of right-of-use assets (total) 6868

5. Financial Instruments

The following table presents the carrying amounts and fair values of the Group's financial instruments as of June 30, 2019, and December 31, 2018, according to IFRS 9.

Category acc. to IFRS 9 Carrying amount June 30, 2019 € in mn Fair value June 30, 2019 € in mn
Investments in non-consolidated subsidiaries n/a 11.0 11.0
Financial assets Equity instruments at fair value through profit or loss 2.1 2.1
Financial assets Debt instruments at fair value through profit or loss 10.3 10.3
Financial assets Measured at amortized cost 2.1 2.1
Financial assets (non-current) 25.6 25.6
Amounts due from customers for contract work (contract assets) n/a 8.0 8.0
Trade receivables Measured at amortized cost 323.8 323.8
Trade receivables 331.8 331.8
Receivables and other assets Measured at amortized cost 16.2 16.2
Derivative financial instruments in hedge relationships1) n/a 1.2 1.2
Other financial assets (current) 17.5 17.5
Cash and cash equivalents Measured at amortized cost 53.8 53.8
       
Loans and borrowings Financial liabilities at cost 1,021.5 1,036.3
Trade payables Financial liabilities at cost 132.1 132.1
Trade payables | payments received for orders n/a 68.5 68.5
Trade payables   200.6 200.6
Derivative financial instruments in hedge relationships1)n/a 0.8 0.8
Other financial liabilities Financial liabilities at cost 46.5 47.2
Other financial liabilities   47.3 48.1

1) These amounts include the non-designated part of the derivatives in the total amount of - €3.1 million (December 31, 2018: - €4.1 million).

 

Category acc. to IFRS 9 Carrying amount Dec. 31, 2018 € in mn Fair value Dec. 31, 2018 € in mn
Investments in non-consolidated subsidiaries n/a 13.4 13.4
Financial assets Equity instruments at fair value through profit or loss 2.1 2.1
Financial assets Debt instruments at fair value through profit or loss 7.8 7.8
Financial assets Measured at amortized cost 5.4 5.4
Financial assets (non-current) 28.8 28.8
Amounts due from customers for contract work (contract assets) n/a 3.9 3.9
Trade receivables Measured at amortized cost 303.5 303.5
Trade receivables 307.4 307.4
Receivables and other assets Measured at amortized cost 25.9 25.9
Derivative financial instruments in hedge relationships1) n/a 3.4 3.4
Other financial assets (current) 29.3 29.3
Cash and cash equivalents Measured at amortized cost 45.2 45.2
       
Loans and borrowings Financial liabilities at cost 985.9 1,001.8
Trade payables Financial liabilities at cost 120.5 120.5
Trade payables | payments received for orders n/a 53.0 53.0
Trade payables   173.5 173.5
Derivative financial instruments in hedge relationships1) n/a 1.7 1.7
Other financial liabilities Financial liabilities at cost 45.3 45.2
Other financial liabilities   47.0 47.0

1) These amounts include the non-designated part of the derivatives in the total amount of - €3.1 million (December 31, 2018: - €4.1 million).

The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 measured on the basis of prices quoted on active markets for identical assets and liabilities. In Level 2, financial instruments are measured 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 measured 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 mainly derivatives in the form of forward contracts. 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”) were measured on the basis of the market interest rate curve, taking the current indicative credit spreads into account (Level 2).

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 or unchanged cost of acquisition.

The maximum credit loss risk is reflected by the carrying amounts of the financial assets recognized in the statement of financial position.

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.

6. 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 €0.3 million (H1 2018: €5.0 million) was generated by these com-panies; there were liabilities from loans and borrowings as well as trade payables, both totaling €4.7 million (H1 2018: €14.9 million). A long-term service contract exists with an affiliate for which expenses of €3.7 million (H1 2018: €3.8 million) were incurred in the reporting period.

For further details, also on related companies and per-sons, see page 161 in our 2018 Annual Report.

7. Other Disclosures

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

In the reporting period, Sartorius AG paid dividends totaling €42.1 million, of which €20.9 million were for ordinary shares and €21.2 million for preference shares.

The condensed consolidated financial statements of the Group were authorized for issue by the Executive Board on July 18, 2019. 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.

8. Material Events After the Reporting Date

No material events occurred up to completion of the preparation of these interim financial statements.

Independent Auditors‘ Review Report

To Sartorius Aktiengesellschaft, Goettingen

We have reviewed the condensed interim consolidated financial statements of the Sartorius Aktiengesellschaft AG – comprising the profit and loss statement and the statement of comprehensive income, the balance sheet, the consolidadet statement of cash flows, the statement of changes in equity and notes to condensed interim consolidated financial statements – together with the interim group management report of the Sartorius Aktiengesellschaft, Göttingen, for the period from 1 January to 30 June, 2019 that are part of the semi annual according to § 115 WpHG [“Wertpapierhandelsgesetz“: “German Securities Trading Act“]. The preparation of the condensed interim consolidated financial statements in accordance with International Accounting Standard IAS 34 “Interim Financial Reporting” as adopted by the EU, and of the interim 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 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 promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with IAS 34, “Interim Financial Reporting” as adopted by the EU, and that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, 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 IAS 34, “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 the WpHG applicable to interim group management reports.

 

Hanover, Germany, July 19, 2019

KPMG AG
Wirtschaftsprüfungsgesellschaft

 

Dr. Tonne
Wirtschaftsprüfer
German Public Auditor


Thiele
Wirtschaftsprüfer
German Public Auditor

Responsibility Statement of the Legal Representatives

Declaration of the Executive Board

We declare to the best of our knowledge that the con-densed interim consolidated financial statements for the first half ended June 30, 2019, present a true and fair view of the actual net worth, financial situation and profitability of the Group in accordance with the ac-counting 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 de-scribe the most important opportunities and risks of the Group’s projected development for the remaining six months of the financial year.

Goettingen, July 19, 2019

Sartorius AG
The Executive Board

Dr. Joachim Kreuzburg

Rainer Lehmann

Dr. René Fáber

John Gerard MacKay