Condensed Interim Financial Statements
Statement of Profit or Loss
| 2nd quarter 20201 € in mn | 2nd quarter 20191 € in mn | 6 month 2020 € in mn | 6 month 2019 € in mn | |
| Sales revenue | 546.9 | 459.0 | 1,056.8 | 894.7 |
| Cost of sales | –262.3 | –222.9 | –508.0 | –435.5 |
| Gross profit on sales | 284.6 | 236.1 | 548.8 | 459.2 |
| Selling and distribution costs | –108.3 | –93.3 | –211.0 | –182.6 |
| Research and development expenses | –24.3 | –22.7 | –49.9 | –45.3 |
| General administrative expenses | –30.7 | –25.0 | –60.6 | –52.3 |
| Other operating income and expenses | –21.9 | –8.1 | –39.1 | –12.4 |
| Earnings before interest and taxes (EBIT) | 99.5 | 87.0 | 188.3 | 166.6 |
| Financial income | –0.3 | 1.8 | 12.3 | 4.5 |
| Financial expenses | –20.4 | –4.4 | –32.6 | –14.4 |
| Financial result | –20.7 | –2.5 | –20.3 | –9.9 |
| Profit before tax | 78.8 | 84.5 | 168.0 | 156.7 |
| Income taxes | –26.3 | –22.8 | –50.4 | –42.3 |
| Net profit for the period | 52.5 | 61.7 | 117.6 | 114.4 |
| Attributable to: | ||||
| Shareholders of Sartorius AG | 35.3 | 44.5 | 81.1 | 82.3 |
| Non-controlling interest | 17.2 | 17.1 | 36.5 | 32.1 |
| Earnings per ordinary share (€) (basic) | 0.52 | 0.65 | 1.18 | 1.20 |
| Earnings per preference share (€) (basic) | 0.52 | 0.65 | 1.19 | 1.21 |
| Earnings per ordinary share (€) (diluted) | 0.52 | 0.65 | 1.18 | 1.20 |
| Earnings per preference share (€) (diluted) | 0.52 | 0.65 | 1.19 | 1.21 |
1 The 2nd quarter figures were not included in the auditors’ review.
Statement of Comprehensive Income
| 2nd quarter 20201 € in mn | 2nd quarter 20191 € in mn | 6 month 2020 € in mn | 6 month 2019 € in mn | |
| Net profit for the period | 52.5 | 61.7 | 117.6 | 114.4 |
| Cash flow hedges | 7.8 | 1.7 | 5.4 | – 2.2 |
| of which effective portion of the change in fair value | 6.8 | 4.7 | 4.7 | –0.5 |
| of which reclassified to profit or loss | 1.0 | –3.0 | 0.8 | –1.7 |
| Income tax on cash flow hedges | –2.2 | –0.3 | –1.5 | 0.8 |
| Net investment in a foreign operation | –25.2 | –5.1 | –16.1 | 2.2 |
| Income tax on net investment in a foreign operation | 7.1 | 1.4 | 4.7 | –0.6 |
| Currency translation differences | –5.9 | –12.3 | –13.0 | –1.6 |
| Items that may be reclassified in the profit or loss statement, net of tax | –18.3 | –14.6 | –20.5 | –1.3 |
| Remeasurements of the net defined benefit liability | 0.5 | –6.8 | 0.5 | –6.8 |
| Income tax on items that will not be reclassified in the profit or loss statement | –0.2 | 2.0 | –0.2 | 2.0 |
| Items that will not be reclassified in the profit or loss statement, net of tax | 0.4 | –4.7 | 0.4 | –4.7 |
| Other comprehensive income after tax | –17.9 | –19.4 | –20.1 | –6.1 |
| Total comprehensive income | 34.6 | 42.3 | 97.5 | 108.3 |
| Attributable to: | ||||
| Shareholders of Sartorius AG | 18.1 | 28.6 | 63.9 | 77.9 |
| Non–controlling interest | 16.5 | 13.7 | 33.5 | 30.5 |
1 The 2nd quarter figures were not included in the auditors’ review.
Statement of Financial Position
| Assets | June 30, 2020 € in mn | Dec. 31, 20191 € in mn |
| Non-current assets | ||
| Goodwill | 991.7 | 695.8 |
| Other intangible assets | 839.1 | 431.6 |
| Property, plant and equipment | 866.1 | 832.9 |
| Financial assets | 30.1 | 30.0 |
| Other assets | 1.4 | 1.5 |
| Deferred tax assets | 29.1 | 25.8 |
| 2,757.5 | 2,017.5 | |
| Current assets | ||
| Inventories | 503.8 | 412.7 |
| Trade receivables | 297.8 | 302.7 |
| Other financial assets | 30.7 | 21.6 |
| Current tax assets | 14.1 | 16.4 |
| Other assets | 55.8 | 43.1 |
| Cash and cash equivalents | 190.7 | 54.4 |
| 1,092.8 | 851.0 | |
| Total assets | 3,850.4 | 2,868.5 |
| Equity and liabilities | June 30, 2020 € in mn | Dec. 31, 20191 € in mn |
| Equity | ||
| Equity attributable to Sartorius AG shareholders | 850.0 | 810.4 |
| Issued capital | 68.4 | 68.4 |
| Capital reserves | 41.4 | 40.7 |
| Other reserves and retained earnings | 731.9 | 701.3 |
| Non-controlling interest | 307.4 | 282.8 |
| 1,157.4 | 1,093.2 | |
| Non-current liabilities | ||
| Pension provisions | 77.0 | 76.6 |
| Other provisions | 8.5 | 8.4 |
| Loans and borrowings | 1,609.8 | 822.2 |
| Lease liabilities | 60.7 | 58.8 |
| Other financial liabilities | 55.7 | 56.1 |
| Deferred tax liabilities | 84.8 | 90.7 |
| 1,869.4 | 1,112.8 | |
| Current liabilities | ||
| Provisions | 23.0 | 15.4 |
| Trade payables | 242.0 | 225.2 |
| Loans and borrowings | 170.4 | 168.9 |
| Lease liabilities | 19.3 | 18.6 |
| Employee benefits | 86.4 | 68.1 |
| Other financial liabilities | 104.3 | 51.7 |
| Current tax liabilities | 68.0 | 57.5 |
| Other liabilities | 83.1 | 57.2 |
| 796.5 | 662.6 | |
| Total equity and liabilities | 3,850.4 | 2,868.5 |
1 The previous year's figures have been restated due to finalization of the purchase price allocations for Biological Industries.
Statement of Cash Flows
| 6 months 2020 € in mn | 6 months 2019 € in mn | |
| Profit before tax | 168.0 | 156.7 |
| Financial result | 20.3 | 9.9 |
| Depreciation | amortization of intangible and tangible assets | 80.4 | 60.8 |
| Change in provisions | 7.3 | –0.8 |
| Change in receivables and other assets | –12.9 | –23.3 |
| Change in inventories | –58.1 | –45.5 |
| Change in liabilities (without loans and borrowings) | 52.9 | 40.2 |
| Income taxes paid | –44.2 | –33.9 |
| Other non-cash items | 1.9 | 1.0 |
| Cash flows from operating activities | 215.4 | 165.1 |
| Capital expenditures | –89.6 | –114.7 |
| Other payments | –3.8 | –1.3 |
| Cash flow from investing activities | –93.3 | –116.0 |
| Payments for acquisitions of consolidated subsidiaries and other business operations, net of cash acquired | –756.1 | 0.0 |
| Cash flow from investing activities, acquisitions and disposals | –849.5 | –116.0 |
| Interest received | 4.7 | 0.8 |
| Interest paid and other financial charges | –12.2 | –12.2 |
| Dividends paid to: | ||
| – Shareholders of Sartorius AG | 0.0 | – 42.1 |
| – Non-controlling interest | –0.8 | –14.5 |
| Changes in non-controlling interest | –1.0 | 0.0 |
| Loans repaid | –209.1 | –41.3 |
| Loans raised | 988.2 | 67.2 |
| Cash flow from financing activities | 769.8 | –41.9 |
| Net increase | decrease in cash and cash equivalents | 135.7 | 7.2 |
| Cash and cash equivalents at the beginning of the period | 54.4 | 45.2 |
| Change in scope of consolidation | 0.0 | 2.2 |
| Net effect of currency translation on cash and cash equivalents | 0.5 | –0.8 |
| Cash and cash equivalents at the end of the period | 190.7 | 53.8 |
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 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 income 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 |
| Balance at January 1, 2020 | 68.4 | 40.7 | 1.4 | –26.0 | 710.0 | 15.8 | 810.4 | 282.8 | 1,093.2 |
| Net profit for the period | 0.0 | 0.0 | 0.0 | 0.0 | 81.1 | 0.0 | 81.1 | 36.5 | 117.6 |
| Cash flow hedges | 0.0 | 0.0 | 4.4 | 0.0 | 0.0 | 0.0 | 4.4 | 1.0 | 5.4 |
| Remeasurements of the net defined benefit liability | 0.0 | 0.0 | 0.0 | 0.4 | 0.0 | 0.0 | 0.4 | 0.1 | 0.5 |
| Currency translation differences | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | –9.6 | –9.6 | –3.4 | –13.0 |
| Net investment in a foreign operation | 0.0 | 0.0 | 0.0 | 0.0 | –15.6 | 0.0 | –15.6 | –0.5 | –16.1 |
| Tax effects | 0.0 | 0.0 | –1.3 | -0.1 | 4.7 | 0.0 | 3.3 | –0.2 | 3.1 |
| Other comprehensive income after tax | 0.0 | 0.0 | 3.1 | 0.3 | –10.9 | –9.6 | –17.1 | –3.0 | –20.1 |
| Total comprehensive income | 0.0 | 0.0 | 3.1 | 0.3 | 70.1 | –9.6 | 63.9 | 33.5 | 97.5 |
| 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 | –24.3 | 0.0 | –24.3 | –8.9 | –33.1 |
| Other changes in non-controlling interest | 0.0 | 0.0 | 0.0 | 0.0 | –0.9 | 0.0 | –0.9 | –0.1 | –1.0 |
| Other changes in equity | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.0 | 0.3 | 0.0 | 0.3 |
| Balance at June 30, 2020 | 68.4 | 41.4 | 4.5 | -25.7 | 755.3 | 6.2 | 850.0 | 307.4 | 1,157.4 |
Segment Report
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 | |||
| 6 months 2020 € in mn | 6 months 20191 € in mn | 6 months 2020 € in mn | 6 months 20191 € in mn | |
| Bioprocess Solutions | 809.3 | 665.8 | 247.2 | 191.5 |
| Lab Products & Services | 247.5 | 228.9 | 46.4 | 46.2 |
| Total | 1,056.8 | 894.7 | 293.5 | 237.6 |
| Reconciliation to the profit before tax | ||||
| Depreciation and amortization | –79.2 | –60.4 | ||
| Extraordinary items | –26.1 | –10.6 | ||
| Earnings before interest and taxes (EBIT) | 188.3 | 166.6 | ||
| Financial result | –20.3 | –9.9 | ||
| Profit before tax | 168.0 | 156.7 | ||
1 The figures for the prior-year comparative period were adjusted due to the reallocation of two small product groups.
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 months 2020 € in mn | 6 months 20191 € in mn | |||||
| € in millions | Group | Bioprocess Solutions | Lab Products & Services | Group | Bioprocess Solutions | Lab Products & Services |
| Sales revenue | 1056.8 | 809.3 | 247.5 | 894.7 | 665.8 | 228.9 |
| EMEA | 419.5 | 310.9 | 108.6 | 362.0 | 263.9 | 98.0 |
| Americas | 373.1 | 304.8 | 68.3 | 308.2 | 246.2 | 62.0 |
| Asia | Pacific | 264.2 | 193.7 | 70.5 | 224.5 | 155.7 | 68.8 |
1 The figures for the prior-year comparative period were adjusted due to the reallocation of two small product groups.
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 life science research and the biopharmaceutical 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, 2019, 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 2019 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 Committee (IFRS IC) to be applied effective June 30, 2020, 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, 2019. The 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 2019 Annual Report. In the current fiscal year, the following entities were included for the first time in the consolidated financial statements of the Group:
- BI Shanghai Co. Ltd., Shanghai, China
- Biological Industries Hong Kong Ltd., Kowloon, Hong Kong
- Biological Industries USA Inc., Cromwell, Connecticut, USA
- Sartorius BioAnalytical Instruments, Inc., Dover, Delaware, USA
- Sartorius ForteBio (Shanghai) Co., Ltd., Shanghai, China
- Sartorius Stedim Chromatography Systems Ltd., Royston, UK
- Sartorius Stedim Chromatography Resins S.A.S., Cergy, France
The entities BI Shanghai Co. Ltd., Biological Industries Hong Kong Ltd., and Biological Industries USA Inc. joined the Group in the course of the acquisition of a majority stake in Biological Industries Israel Beit Haemek Ltd. in December 2019. Following the finalization of the purchase price allocation in 2020, the entities were included in the scope of consolidation as of December 15, 2019. Sartorius BioAnalytical Instruments, Inc., Sartorius Stedim Chromatography Systems Ltd. and Sartorius Stedim Chromatography Resins S.A.S. were founded for the acquisition of selected life science assets from Danaher. The assets were purchased on April 30, 2020. In the course of this acquisition, the entity Sartorius ForteBio (Shanghai) Co., Ltd. was acquired via a share deal. See Section 5 for details about the acquisition of Biological Industries and that of the selected life science businesses from Danaher.
For the calculation of income tax expenses, the provisions of IAS 34.30(c) were applied in the interim consolidated financial statements; i.e., the best estimate of the weighted average annual income tax rate expected for the full financial year was generally applied (30%). This expected tax rate includes adjustments for the consideration of tax risks.
3. Use of Judgments and Estimates
In preparing these interim financial statements, management has made judgments, estimates and assumptions, based on the conditions and expectations as of the reporting date. Actual results may differ from these estimates, however. The significant judgments and estimates have remained the same as those applied to the consolidated financial statements for the year ended December 31, 2019. However, the general level of uncertainty that is inherent in accounting estimates and assumptions increased as a result of the recent COVID-19 pandemic crisis. For a description of the impact on the global economy as well as that on the Group’s Divisions please refer to the interim management report.
In the first half of 2020 the Group achieved double-digit growth and a corresponding order intake. The biopharma industry that is of particular relevance for the Group is largely independent from economic fluctuations, a development that is expected also for the reporting year. This is especially true for the BPS Division, a total solutions provider for the biopharma industry, which may even benefit in the short term from increasing demand as a result of the expected production of vaccines. For the LPS Division that also serves other customer segments besides the biopharma industry, a more differentiated picture emerges regarding its products. The Group therefore performed a qualitative assessment to determine any potential impairment indications for the LPS Division. On this basis, no indications of impairment were observed as of June 30, 2020.
4. Accounting Rules Applied for the First Time in the Current Fiscal Year
Standards to Be Applied for the First Time in 2020
The Group initially applied the following new accounting rules for the reporting period:
- Amendments to IFRS 3, Business Combinations, Definition of a Business
- Amendments to IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material
- Amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition and Measurement, and IFRS 7, Financial Instruments: Disclosures, Interest Rate Benchmark Reform
- Amendments to References to the Conceptual Framework in IFRS Standards
The application of the new rules did not have an impact on the consolidated interim financial statements.
5. Business Combinations
Acquisition of Biological Industries in 2019
On December 15, 2019, the Group acquired just above 50% of the shares in the Israeli cell culture media developer and manufacturer Biological Industries. In the course of the transaction, the Group obtained control of this company based on contractual agreements.
Biological Industries focuses on cell culture media, particularly for cell and gene therapy, regenerative medicine and other advanced therapies. Founded in 1981, the company currently employs approximately 130 people, mainly at its headquarters, R&D and manufacturing site close to Haifa, Israel, and at sales locations in the USA, Europe and China.
The determination of the acquisition-date fair values of the assets acquired and liabilities assumed was completed in 2020. Non-controlling interests are measured at their proportionate share of the net assets. The following table presents preliminary and final valuations:
| Preliminary purchase price allocation € in mn | Final purchase price allocation € in mn | |
| Other intangible assets | 0.0 | 28.5 |
| Property, plant and equipment | 5.2 | 8.5 |
| Inventories | 5.0 | 5.9 |
| Trade receivables | 5.1 | 4.5 |
| Other assets | 1.4 | 0.9 |
| Cash and cash equivalents | 3.2 | 3.7 |
| Deferred taxes – net | 0.0 | –6.3 |
| Loans and borrowings | –0.3 | –3.6 |
| Other liabilities | –6.6 | –6.1 |
| Net assets acquired | 12.9 | 36.0 |
| Non-controlling interest | 6.5 | 18.5 |
| Purchase price | 40.6 | 42.4 |
| Goodwill | 34.2 | 24.9 |
The purchase price for the acquired shares equals approximately €42.4 million and was fully paid in cash with the exception of a liability amounting to around €2.2 million. The directly attributable acquisition-related costs totaled €0.3 million and were recognized in other expenses in 2019. The resulting goodwill is not deductible for tax purposes. The intangible assets recognized separately relate mainly to technologies and customer relationships.
Besides being attributable to synergies – e.g., those realized by the acquiree's access to the Group's global sales and distribution network - the resulting goodwill reflects the expansion of the product offering of the two divisions as well as intangible assets that are not recognized separately, such as the know-how of the acquired workforce. Based on expected synergy potential, goodwill was allocated in the proportions of about 60% to the Bioprocess Solutions Division and about 40% to the Lab Products & Services Division.
In the course of the acquisition, the holder of the non-controlling interest was granted a right to sell its remaining shares in Biological Industries to the Sartorius Group in several tranches up to 2027. For the obligation to purchase own equity interests, the Group recognized financial liabilities of €61.0 million against equity at the acquisition date. On the other hand, the Group has the right to purchase an additional 20% of the shares exercisable within a three-year period as of the acquisition.
In the course of the transaction, the non-controlling interests in Sartorius Israel were acquired as well, as these are held by Biological Industries. For the acquisition of these non-controlling interests, an amount of €6.9 million was considered in the determination of the consideration transferred for the business combination. The respective cash outflow is presented in the cash flow from financing activities in 2019. The financial liability that was recognized to account for the put option of the holder of the non-controlling interests was reclassified in retained earnings at the acquisition date.
Acquisition of Selected Life Science Assets from Danaher
On April 30, 2020, the Group completed the acquisition of selected life science businesses of Danaher Corporation after receiving the required regulatory approvals. The assets and liabilities related to the businesses were mainly acquired via asset deals. In the course of the transaction, about 300 employees were assimilated into the Sartorius Group workforce.
The businesses acquired by the Group generated revenue of approximately $170 million in 2019 and cover various laboratory and bioprocessing technologies, which are complementary to the product portfolio of both Divisions. The broader product offering will support customers even more comprehensively in the development of biotech medicines and vaccines, as well as in the safe and efficient production of such pharmaceuticals. Sartorius is thus extending its market position in bioanalytics as well as in key areas of the manufacture of biotech medications.
The FortéBio business for label-free biomolecular characterization includes innovative protein analysis instruments, biosensors and reagents that are used in drug discovery and will be integrated into the Bioanalytics portfolio of the Lab Products & Services Division. The products are based on patented biolayer interferometry technology and perform real-time analysis of various biomolecular interactions. FortéBio employs approximately 200 people worldwide at its production sites in Fremont, California, USA, and Shanghai, China, as well as in various sales locations worldwide.
With the chromatography systems and resins business acquired, the Group is expanding the portfolio of its Bioprocess Solutions Division in the downstream processing area. This business addresses an essential step in the purification of biopharmaceuticals and encompasses both reusable and single-use equipment, columns and resins. Furthermore, selected product groups in the areas of stainless steel hollow-fiber and single-use technology tangential flow filtration systems and single-use flow kits will additionally strengthen the Group’s portfolio in downstream processing. The various units employ approximately 100 people at their sites in Portsmouth, U.K.; Cergy, France; Ann Arbor, Michigan, USA; and Hopkinton, Massachusetts, USA.
The purchase price of approximately €777.4 million was fully paid in cash. Expenses of €4.8 million directly attributable to the acquisition were recognized as other expenses in profit or loss.
Due to the size and complexity of the business combination the determination of the acquisition date fair values of the assets acquired and liabilities assumed has not yet been completed. Furthermore, the purchase price is subject to customary adjustments, e.g., for working capital. Therefore, the purchase price allocation is preliminary based on the current knowledge of management and resulted in the following valuation:
| Preliminary purchase price allocation € in mn | |
| Other intangible assets | 428.2 |
| Property, plant and equipment | 13.8 |
| Inventories | 39.4 |
| Trade receivables | 0.1 |
| Other assets | 2.2 |
| Cash and cash equivalents | 6.8 |
| Deferred taxes – net | 0.0 |
| Loans and borrowings | –5.7 |
| Other liabilities | –18.7 |
| Net assets acquired | 466.1 |
| Purchase price | 777.4 |
| Goodwill | 311.3 |
Goodwill resulting from the acquisition is expected to represent the broadening of the product offering for biopharmaceutical customers, synergies and intangible assets that are not separately recognized such as the know-how of the workforce. Due to the transaction structure, the Group expects that goodwill will mostly be deductible for tax purposes. Based on its present level of knowledge, the Group expects that the intangible assets recognized separately are primarily technology-based and customer-related intangible assets as well as brands.
In October 2019, the Group concluded a bridge loan agreement with BNP Paribas Fortis SA/NV to finance the acquisition of selected life science businesses from Danaher. This agreement provided the Group with the financing needed at the time the acquisition was closed. This financing is still in place as of June 30, 2020 and is available to the Group until November 2021. The foreign currency exchange risk related to the financing of the acquisition has been hedged with options of a nominal value of $750 million. The value changes of the options amounting to +€4.7 million since December 31, 2019, were recognized in profit or loss in 2020.
The acquired businesses are included in the consolidated interim financial statements effective as of May 1, 2020. They have contributed sales revenue of approximately €22.9 million, the respective operating margin was on a level comparable to the Group. A reliable determination of the impact on the consolidated interim financial statements based on the assumption that the acquisition was completed on January 1, 2020, was not possible due to the transaction structure as asset deals and the effects of the COVID-19 pandemic crisis.
6. Financial Instruments
The following table presents the carrying amounts and fair values of the Group's financial instruments as of June 30, 2020, and December 31, 2019, according to IFRS 9.
| Category acc. to IFRS 9 | Carrying amount June 30, 2020 € in mn | Fair value June 30, 2020 € in mn | Carrying amount Dec. 31, 20191 € in mn | Fair value Dec. 31, 20191 € in mn | |
| Investments in non-consolidated subsidiaries and associates | n/a | 11.1 | 11.1 | 11.0 | 11.0 |
| Financial assets | Equity instruments at fair value through profit or loss | 4.4 | 4.4 | 4.4 | 4.4 |
| Financial assets | Debt instruments at fair value through profit or loss | 10.7 | 10.7 | 10.7 | 10.7 |
| Financial assets | Measured at amortized cost | 3.9 | 3.9 | 3.9 | 3.9 |
| Financial assets (non-current) | 30.1 | 30.1 | 30.0 | 30.0 | |
| Amounts due from customers for contract work (contract assets) | n/a | 5.1 | 5.1 | 8.5 | 8.5 |
| Trade receivables | Measured at fair value through other comprehensive income | 106.1 | 106.1 | 38.3 | 38.3 |
| Trade receivables | Measured at amortized cost | 186.7 | 186.7 | 255.9 | 255.9 |
| Trade receivables | 297.8 | 297.8 | 302.7 | 302.7 | |
| Receivables and other assets | Measured at amortized cost | 24.7 | 24.7 | 19.5 | 19.5 |
| Derivative financial instruments | n/a | 0.0 | 0.0 | 0.7 | 0.7 |
| Derivative financial instruments in hedge relationships2 | Held for trading | 6.1 | 6.1 | 1.5 | 1.5 |
| Other financial assets (current) | 30.7 | 30.7 | 21.6 | 21.6 | |
| Cash and cash equivalents | Measured at amortized cost | 190.7 | 190.7 | 54.4 | 54.4 |
| Loans and borrowings | Financial liabilities at cost | 1,780.2 | 1,761.2 | 991.1 | 1,000.3 |
| Trade payables | Financial liabilities at cost | 135.9 | 135.9 | 141.1 | 141.1 |
| Trade payables | payments received for orders (contract liabilities) | n/a | 106.1 | 106.1 | 84.0 | 84.0 |
| Trade payables | 242.0 | 242.0 | 225.2 | 225.2 | |
| Derivative financial instruments in hedge relationships2 | n/a | 0.4 | 0.4 | 1.1 | 1.1 |
| Other financial liabilities | Financial liabilities at cost | 159.6 | 159.9 | 106.7 | 106.6 |
| Other financial liabilities | 160.0 | 160.3 | 107.8 | 107.7 |
1 Figures adjusted for finalization of purchase price allocation Biological Industries
2 The amounts include the non-designated part of the contracts which amounts to -2.0mn € in total. (December 31, 2019: - 1.8mn €)
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 derivatives in the form of forward contracts to be recognized at fair value on the reporting date were measured on the basis of their quoted exchange rates and market yield curves (Level 2).
The financial investments measured at fair value are measured on the basis of the most recent reliable indicators available as of the reporting date, e.g., on the basis of the most recent financing round or historical cost of acquisition.
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 a change occurs. In the current reporting period, there were no transfers between the levels.
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 €0.9 million (H1 2019: €0.3 million) was generated by sales to these companies; there were receivables from loans and borrowings as well as trade receivables, both totaling €11.7 million (H1 2019: €4.7 million). A long-term service contract exists with an affiliate for which expenses of €5.4 million (H1 2019: €3.7 million) were incurred in the reporting period.
For further details, also on related companies and persons, see page 162 in our 2019 Annual Report.
8. 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, the Annual Shareholders’ Meeting of Sartorius AG approved dividends totaling €24.3 million, of which €12.0 million are for ordinary shares and €12.3 million for preference shares. The dividend was paid after June 30, 2020.
The condensed consolidated financial statements of the Group were authorized for issue by the Executive Board on July 20, 2020. Independent, certified auditors performed an audit review of this consolidated sixmonth 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
No material events occurred up to completion of the preparation of these interim financial statements.
Independent Auditors’ Review Report
To Sartorius Aktiengesellschaft, Göttingen
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 consolidated 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, 2020 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 re-quire 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, July 21, 2020
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 condensed interim consolidated financial statements for the first half ended June 30, 2020, 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.
Göttingen, July 21, 2020
Sartorius AG
The Executive Board
Dr. Joachim Kreuzburg
Rainer Lehmann
Dr. René Fáber
John Gerard MacKay