Agc Biologics A/S

Ledelsesberetning

Financial Highlights2023 2022* 2021 2020 2019Income statement(DKK million)Revenue 2,093 2,518 2,185 1,455 996 Gross profit 501 937 832 452 257 Operating profit 352 796 733 371 204 Financial income/expenses, net -36 -27 1 -13 -5 Profit before tax 316 768 734 357 198 Profit for the year 244 599 572 279 154 Statement of financial position(DKK million)Total assets 3,624 3,357 3,141 2,348 1,182 Investments in Tangible assets 675 639 253 152 60 Equity 307 661 634 340 215 StaffAverage number of full-timeemployees 956 894 730 441 377 Key figures in percent**Return on assets 10 24 27 21 22 Equity ratio 8 20 20 15 18 * 2022 figures are restated due to a prior period error explained in accounting policies** For definitions, see page 33Financial reviewIn 2023, the Company’s revenue was DKK 2,092m corresponding to an decrease of 17% compared to 2022 mainly due to lower revenue from COVID-19 vaccine production. Investments and increase in operational cost continued in anticipation of continued growing activity in 2024 and beyond, particularly from our new mammalian procuction facility and a strengthening of the Company’s platform for commercial manufacturing. The decreased revenue and increased operating expenses resulted in an operating profit of DKK 352.2m in 2023 (2022: DKK 793.5m).After financial charges and tax, the Company generated a net profit in 2023 of DKK 244.0m (2022: DKK 598.9m).For 2023 a decrease in both in revenue and operating profit was anticipated with a result in the range of DKK 325m-375m. Considering the challenging market conditions Management consider 2023 to fulfill expectations. Due to a material error, the comparative figures 2022 have been changed compared to the figures shown in the Annual Report for 2022. The financial effect on of those changes are described in Note 1 Accounting policies.Research activitiesIn 2023, AGC continued to enhance its technologies and processes in the development laboratories and in the production lines. In particular, High Throughput Technologies are continuously being improved in the development laboratories. In several instances, these efforts lead to improved production yields, faster timelines, better-refined products and better characterization. It is the Company’s strategy to continue to invest in technology with the objective to provide better value to our customers.Scientific resourcesAGC also enhanced its already strong scientific and practical knowledge platforms within the areas of: development, scale-up, manufacturing, process characterization and validation, and the analysis of biopharmaceuticals covering all aspects of pre-clinical, cGMP clinical trials and commercial production.Increasingly high demandsToday, AGC provides manufacturing services for several late stage clinical products, which are expected to receive final approval by the health authorities to be marketed commercially in the coming years. As a “knowledge and experience based company” AGC has the need to retain and develop its employees. The Company is well aware of these challenges and is therefore working on increasing the career opportunities within AGC as well as introducing improvements in other aspects of the work life that are important to the employees.AGC Biologics' dedication to continuous sustainability improvementAs a Contract Development and Manufacturing Organization (CDMO), we recognize the importance of sustainability in our operations and in the Life Science industry as a whole. At our core, we strive to develop and manufacture life-saving drugs and therapies while minimizing our negative sustainability impact.We hold ourselves responsible for our values, which include Environment and Diversity, as part of our shared values with our parent company AGC Inc. We are dedicated to embrace challenges and have a positive impact on our surroundings. We believe that diversity is a key factor in our ability to understand the needs of our employees, customers, and the patients we serve. Moreover, it allows us to attract and retain talented individuals from around the world, enabling us to operate more effectively in the fast-growing global business environment.We have a long-standing commitment to reduce our environmental impact, and we continuously strive to improve our performance in areas such as consumption, emissions, and processes. As an integral part of AGC Inc., we provide annual input for the AGC Inc. "Sustainability Data Book" to contribute to the larger context of sustainability.DataboxOur parent Company (AGC Inc.) publishes the annual "Sustainability Data Book”, covering AGC and its consolidated subsidiaries (Group companies worldwide), and AGC Biologics provides annual input for the AGC Inc. “Sustainability Data Book”.The Sustainability Data Books can be found here: https://www.agc.com/en/csr/book/index.htmlAt AGC Biologics, we understand that our responsibility to sustainability is an ongoing journey, and we are dedicated to continually improve our practices to ensure a better future for generations to come. Events after December 31, 2023As of January 1, 2024 a credit facility with our parent company AGC Inc. was increased from EUR 130 million to EUR 210 million.No other significant subsequent events occurred after the financial year-end that would have a material impact on these annual accounts.Outlook for 2024The challenging market conditions experienced in 2023 appear to sligtly improve in 2024 and further improve in 2025 and onwards. We however still see a high demand and interest from both new and existing clients.The Company has a signed backlog for 2024 at the same level as 2023. We are also beginning to see a build-up of the 2025 and 2026 backlogs. Management however expect a lower result for 2024 as we will incur additional cost starting up and running our new mammalian facility. The expectations for 2024 on financial performance are naturally subject to uncertainty and in particular in regards to the global situation, geopolitical turmoil and interest. The conctruction of our new facility is in it's final phase and the facility will be become operational in June offering significantly more capacity.For 2024 a result in range of DKK 50m -100m is expected.Final remarksSince AGC Biologics A/S was started in 2001, the Company has experienced overall strong performance and demonstrated an ability to continue a successful development despite, at times, very challenging periods. We would like to thank all our customers, employees, shareholders, and other partners for making this possible.

Beskrivelse af virksomhedens væsentligste aktiviteter

Activities and Business ModelAGC Biologics A/S (“AGC” or the “Company”) is a Contract Development Manufacturing Organization (CDMO) that provides high value added process and analytical development, scale-up and production of biological drug substances such as antibodies to the biopharmaceutical industry.The Company has a comprehensive service offering and is capable of taking a product from the early stage to commercial production. The service palette goes from cell line and process development over analytical testing and formulation development to both clinical and commercial manufacturing. All supported by quality services, including regulatory support.The Company is owned by AGC Inc. and is a part of the AGC Biologics Group.AGC Biologics Group has fully integrated process development and manufacturing operations in Copenhagen, Denmark (AGC Biologics A/S), Seattle, Boulder and Longmont, USA (AGC Biologics Inc.), Heidelberg, Germany (AGC Biologics GmbH) and Chiba, Japan (AGC Inc.). The AGC Biologics Group also has cell & gene therapy facilities in Milan, Itality (AGC Biologics S.p.A.) and in Longmont, Colorado (AGC Biologics Inc.). AGC Biologics A/S is conducting all its activities out of the Danish facility.2023 was a year characterized by challenging market conditions due to the global economical and political situation, that together with a significant reduction in our supplies to the COVID-19 vaccine programs, impacted both revenue and profit negatively. Several late stage clinical programs continued drug substance manufacturing at AGC in 2023. The Company will continue supply drug substance for final clinical registration trials and also supply drug substance for long-term commercial launch. In order to accommodate the expected strong business intake going forward AGC has continued to strengthen its infrastructure and increased its workforce.In 2023, the construction of a new mammalian production facility next to the existing production facility continued. The DKK 1.5 billion investment will more than double the current mammalian production capacity when completed in June 2024. Further, in 2023 AGC continued to emphasize safety, compliance, quality, customer satisfaction, increased market reach, timely and reliable delivery, highest quality standards and “best-in-class” technology.Since AGC was started in 2001, the Company’s growth is a result of significant repeat business from customers, combined with an enlarged customer base and an important increase in the average customer contract size. This positive development has to a very large extent been possible due to the highly skilled and dedicated employees at AGC.As the number of customers and projects increases and contracts become larger, higher demands are imposed on the Company's ability to manage a complex and increasingly differentiated production portfolio. To ensure flexibility, high quality, robustness and efficient production AGC continued also in 2023 to strengthen its organization and production processes.