Eurofins delivers strong revenue, profitability and cash flow growth in H1 2018

LUXEMBOURG--()--Regulatory News:

In Q2 2018 and the last few quarters Eurofins (Paris:ERF) continued to make significant progress towards its long term objectives. Thanks to organic growth and acquisitions signed Eurofins reached number one positions in several additional markets including the U.S. and Spain for Food testing, Ireland and Finland for Environment testing, Germany, France and the Netherlands for Biopharma Product testing. In an industry where scale matters this is key in order to offer the best service at the lowest cost to clients.

With over 100,000 m2 of additional world class laboratories coming on stream in 2018 and 7 more start-ups opened in H1 2018, Eurofins is building an unmatched infrastructure to serve its clients better on a global basis and is on track to building the world class platform defined in its 2020 plan.

  • In the traditionally weaker first half of the year revenues grew 24.8% to reach EUR 1,743m in H1 2018 despite an unfavourable FX impact of -5.8%. Organic growth10 for Q2 2018 was over 5% and close to 5% for H1 2018 in spite of a still slightly negative calendar day’s effect vs. H1 2017.
  • EBITDA3 grew 31.4% in H1 2018 to EUR 288m, resulting in a margin increase of 80bps. Adjusted1 EBITDA reached EUR 320m (18.4% of revenues, +50bps), up 28.1% vs. last year, thanks to accretive 2017 acquisitions and better operating leverage. Separately disclosed items2 (SDI) as a proportion of Adjusted EBITDA narrowed significantly to 10.2% (vs. 12.4% in H1 2017), and SDI as a proportion of sales also decreased from 2.2% to 1.9%. Revenues from start-ups and businesses in restructuring/reorganization now only account for 6.9% of Group revenues (vs. 9.1% in H1 2017).
  • In spite of all the investments in start-ups and reorganizations, adjusted basic EPS7 is up 35.2% to EUR 9.10 and basic EPS grew 21.2% in H1 2018 to EUR 5.32 thanks to stable depreciation (6.0% of revenues) and finance costs (1.8% of revenues) and improved income tax expense (1.8% of revenues, -60bps) compensating an increase in acquisition related costs (mainly amortization of acquired intangible assets). Finance costs amounted to EUR 31m and average interest rates on borrowings decreased by 40bps to 2.4% (vs. 2.8% in H1 2017).
  • Operating cash flow8 grew significantly to EUR 218m (+74%) thanks to the growth of revenues and margins and a well-controlled net working capital which improved to 4.7% of revenues (-20bps vs. 4.9% in H1 2017). Free cash flow to the firm9 also grew significantly to EUR 47m (+67%). In H1 2018 the Group continued its effort to build a unique platform of world class testing laboratories via significant capex in its infrastructure and bespoke IT solutions. Eurofins’ management remains confident in its objective of reducing capex towards 6% of sales by 2020, when the Group’s five year investment programme will be approaching completion.
  • Our third laboratories start-ups programme (2014-2018) is well on track with 94 openings at the end of June, and 137 since the year 2000. These 137 start-ups had an accretive effect of 40bps on the Group’s first half organic growth. In terms of margins, the first two programmes (2000-2009, 2010-2013) delivered a H1 2018 EBITDA margin in line with that of the Group, while those from our latest programme still represent significant investments.
  • Net debt at the end of June 2018 stood at EUR 1,639m and leverage (net debt to adjusted L12M EBITDA) at 2.44x on a pro-forma basis (2.61x on a reported basis quite stable vs. December 2017). Cash and equivalents amounted to EUR 559m at the end of June 2018.
  • Outlook: Management remains confident of achieving its recently upgraded revenue objectives* of EUR 3.8bn for 2018 (EUR 4bn pro-forma), EUR 4.3bn for 2019 and EUR 4.7bn for 2020 along with profitability improvement towards Eurofins’ 20% adjusted EBITDA margin objective for 2020.

Post-closing events:

  • As announced on July 30th 2018, Eurofins issued a EUR 550m Schuldschein loan to reinforce the Group’s liquidity position and benefit from very favourable market conditions (1.38% blended interest rate** for an average maturity of 5 years), enabling the Group to strengthen its liquidity position ahead of the Covance closing.

Comments from the CEO, Dr. Gilles Martin:

“Our financial and operational developments in the first half of 2018 highlight Eurofins’ clear progress towards its 2020 objective to build the largest and most efficient state-of-the-art laboratory network focusing on the end markets we serve. For the last 15 years, Eurofins has been consistently investing more than its peers to develop a hard-to-replicate global network of laboratories and the most comprehensive portfolio of advanced bio-analytical tests.

“In H1 2018, Eurofins continued to make significant investments in its laboratories infrastructure and in advanced bespoke IT solutions in line with its 2020 plan. Bioanalytical testing is a highly scalable activity and with the substantial capex investments and organic and inorganic market share gains made in H1 2018 we are better positioned to unlock economies of scale in testing and logistics which should further increase our significant cost, quality and breadth of service advantages vs. our competitors. After 2020, when Eurofins’ five-year expansion phase comes to completion, the company should be able to leverage its global network of laboratories, market leadership positions, scale and scientific excellence to significantly improve its cash flow generation and profitability to benefit its long-term oriented shareholders for years to come.

“Over the last years, strict financial discipline has allowed Eurofins to earn the trust of its financial partners and significantly reduce its average cost of funding by refinancing older more expensive debt instruments and issuing new ones at favourable rates. As a result, the majority of our debt instruments now bear low fixed interest rates for long maturities providing us with more strategic flexibility until higher operating cash flows kick in after our investment phase ends in 2020. The success and pricing of our recent EUR 550m Schuldschein issuance confirms the trust of our lenders in Eurofins to soon joining the group of large, mature and financially conservative companies generating over US$ 1 billion annual EBITDA.

“In 2019, after we repay our expensive 3.125% EUR 300m bond in November 2018, the average interest we pay on our debt should fall well below 2%. In less than 18 months in January 2020 Eurofins will also have the opportunity to repay its expensive 7.0% EUR 300m hybrid and thus further free cash for its shareholders. This will coincide with the end of Eurofins’ five year investment program.”

Business Review

The following figures are extracts from the Condensed Interim Consolidated Financial Statements and should be read in conjunction with the Condensed Interim Consolidated Financial Statements and the Notes.

Table 1: Half Year 2018 Results Summary

                 
    H1 2018   H1 2017   +/- % Adjusted Results   +/- % Reported Results
In EUR m except otherwise stated   Adjusted1 Results   Separately disclosed items2   Statutory Results   Adjusted Results   Separately disclosed items   Statutory Results    
Revenues   1,743.3   -   1,743.3   1,396.9   -   1,396.9   24.8%   24.8%
EBITDA3   320.4   -32.5   287.8   250.1   -31.0   219.1   28.1%   31.4%
EBITDA Margin (%)   18.4%       16.5%   17.9%       15.7%   +50bps   +80bps
EBITAS4   226.6   -43.7   182.9   179.1   -44.1   135.0   26.5%   35.5%
Net Profit6   155.9   -64.8   91.1   114.2   -39.7   74.5   36.6%   22.4%
Basic EPS7 (EUR)   9.10   -3.78   5.32   6.73   -2.34   4.39   35.2%   21.2%
Operating Cash Flow8           217.8           125.3       73.8%
Free Cash Flow to the Firm9           46.8           28.0       67.1%
Net capex           171.0           97.4        
Net Debt           1,638.9           758.7        
Leverage Ratio (net debt/Last 12 Months (L12M) adjusted EBITDA)   2.61x           1.48x        
Leverage Ratio (net debt/L12M pro-forma adjusted EBITDA)   2.44x           1.43x        

Note: Definitions of the terms used can be found at the end of this press release

Revenues

Revenues in Q2 2018 were EUR 904m, bringing Group revenues for the first half of 2018 to EUR 1,743m, representing a strong increase of 24.8% vs. H1 2017. Currency effect had a 5.8% negative impact in H1 2018. Organic growth for Q2 was over 5% and close to 5% as a whole for H1 2018.

Table 2: Geographical Revenue Breakdown

                     
(EUR m)   H1 2018   As % of Total   H1 2017   As % of Total   % change
North America   552.7   31.7%   445.4   31.9%   24.1%
France   370.1   21.2%   328.7   23.5%   12.6%
Germany   199.6   11.5%   147.7   10.6%   35.1%
Benelux   119.8   6.9%   98.4   7.0%   21.7%
UK & Ireland   112.1   6.4%   68.6   4.9%   63.4%
Nordic Region   110.6   6.3%   97.0   6.9%   14.1%
Others   278.4   16.0%   211.1   15.1%   31.9%
Total   1,743.3   100.0%   1,396.9   100.0%   24.8%

Eurofins’ businesses in North America generated total revenues of EUR 552.7m in the first half of 2018, representing 31.7% of total Group revenues, and an increase of 24.1% vs. H1 2017, on over 6% organic growth. The Food and Feed testing and BioPharmaceutical business lines were the main drivers of this growth together with EAG laboratories. Eurofins’ Food and Feed testing business in the U.S. won the highly esteemed Black Pearl Award from the International Association for Food Protection (IAFP), awarded to a single company each year in recognition of their outstanding achievements in advancing food safety and quality. Eurofins Microbiology Laboratories (Mounds View, Minnesota) closed a c. US$ 550k annual contract with Tuffy’s Pet Food, a renowned U.S. producer of dry dog and cat food kibble. Eurofins Central Analytical Laboratories (ECAL) became the UMHF official laboratory in the U.S. for Manuka honey authenticity testing, ECAL also won first place in the American Oil Chemists' Society (AOCS) award for dried distillers grains (DDG) and soybean meal testing, renewed its AOCS-approved chemist status and its International Olive Council (IOC) approved olive oil chemistry testing status. After a two year’s application process, ECAL was accepted as an approved laboratory for Korean agricultural imports. Eurofins BioDiagnostics (BDI) created a partnership with DuPont and designed gel based and Sanger sequencing methods for probiotic verification and identification for DuPont’s probiotic strains. Furthermore, BDI started its first significant bovine genotyping project worth US$ 220k per year. In 2018, BDI also developed three new assays for the first genetically modified crop in the market (high oleic soybean seeds) and was the first company to develop an assay to detect Palmer Amaranthus seed contamination in native seed lots, a major issue in the industry. Eurofins’ Environment testing business now offers water testing for micro plastics according to both the Freedonia method (designed for bottled water) and the National Oceanic and Atmospheric Administration (NOAA) method (designed for surface water and re-purposed “greywater” samples).

Eurofins continues to expand its broad offering in specialty clinical diagnostics in North America. This year Eurofins Craft Technologies (acquired in December 2017), received certification from the Hormone Standardization (HoSt) programme of the Centers for Disease Control and Prevention (CDC) for the measurement of estradiol in serum. Also, Eurofins purchased assets and know-how from Microarray to manufacture the array products used by Diatherix, Viracor and Biomnis. This purchase minimizes supply risks and reduces costs per test by c. 45%. This year, Viracor became the first laboratory to offer Nocardia polymerase chain reaction (PCR) – Nocardia is a difficult bacterium to culture, and in patients who are critically ill, fast diagnosis is key to getting proper treatment. In April, Viracor launched Nocardia Real-time PCR, to help physicians get results faster (within 8-12 hours of specimen receipt), when it matters most. Viracor now also offers the first and only commercially available genotypic sequencing test for patients with suspected resistance to Letermovir – the newest FDA-approved antiviral for prophylactic use in adult Hematopoietic Stem Cell transplants – and launched two cytomegalovirus (CMV) antiviral resistance assays to help physicians reduce the risk of morbidity and mortality in patients with CMV.

France generated revenues of EUR 370.1m in H1 2018, up 12.6% vs. H1 2017, representing 21.2% of total Group revenues. This year, Eurofins opened a dedicated business unit for Feed testing in Nantes (Eurofins Laboratoire de Nutrition Animale) providing the Feed industry with a comprehensive testing offering and tailored technical and scientific support. Eurofins also became the first laboratory in France whose indoor air quality assessment kit has been referenced by the French National Institute for Industrial Environment and Risks (INERIS). Eurofins Laboratoire Microbiologie Ouest (ELMO) became the first laboratory accredited for express confirmation of Campylobacter by mass spectrometry. In France, foodborne infections related to this pathogen (Campylobacter) rank in second place behind norovirus in number of cases.

Germany represented 11.5% of Group revenues (EUR 199.6m in H1 2018). Revenues were up 35.1% vs. H1 2017, on strong organic growth above Group’s objectives. Eurofins Analytik GmbH has established a new analytical method based on nuclear magnetic resonance (NMR) to verify the geographical origin of olive oils, one of the most frequently adulterated food products.

The Group’s businesses in the Benelux delivered EUR 119.8m of revenues (21.7% growth vs. H1 2017), representing 6.9% of the Group total. In May 2018, Eurofins Agroscience Services (EAS) received official Good Experimental Practices (GEP) accreditation in Belgium.

In the UK and Ireland, H1 2018 revenues increased 63.4% vs. H1 2017 to EUR 112.1m representing 6.4% of total sales. In January 2018, Eurofins’ Food testing business acquired Ashwood Ltd., expanding its geographical coverage into Scotland.

Eurofins’ Nordic businesses generated EUR 110.6m of revenues in H1 2018, making up 6.3% of total sales. In June 2018, VTT Expert Services Oy joined Eurofins.

Eurofins continues to place emphasis on growth opportunities in emerging markets and Asia Pacific. The Group’s expanding footprint and testing innovations resulted in revenue growth of 26.2% in this area. In Thailand, Eurofins’ Agroscience facility recently established the capability to test skin repellent products against Aedes, Culex and Anopheles mosquitoes based on World Health Organization (WHO) guidelines.

Year to date, Eurofins has again achieved a number of scientific breakthroughs across its markets and geographies significantly expanding its state-of-the-art portfolio of services to the benefit of its clients. The Group has also made significant investments in its network to increase testing capacity and to develop and commercialize new innovative testing methods.

Profitability

EBITDA grew by +31.4% in H1 2018 to EUR 288m, resulting in a margin increase of 80bps. Adjusted EBITDA reached EUR 320m (18.4% of revenues. +50bps), up by +28.1% vs. last year, thanks to accretive 2017 acquisitions and better operating leverage. Separately disclosed items2 (SDI) as a proportion of Adjusted EBITDA narrowed significantly to 10.2% (vs. 12.4% in H1 2017), and SDI as a proportion of sales also decreased from 2.2% to 1.9%. Revenues from start-ups and businesses in restructuring/reorganization now only account for 6.9% of Group revenues (vs. 9.1% in H1 2017).

Laboratories in their start-up phase had a positive contribution to Group revenues generating EUR 98m sales in H1 2018. The 137 start-up laboratories opened since the year 2000 had an accretive effect of 40bps on the Group’s H1 2018 organic growth. EBITDA margins generated by start-up laboratories launched in the first and second programmes (2000-2009, 2010-2013) were in line with the average of the Group, while those from the latest programme (2014-present) still represent significant investments. Start-ups usually break-even within 2 to 3 years after their start and we believe the strong acceleration in our start-up programme, although having a short-term negative impact on margins and Free Cash Flow, provides a solid base for future growth and profitability. After year 5, ROCE from start-up laboratories is generally better than growth via acquisitions.

Income tax expense was EUR 31.7m for H1 2018, the rate of income tax expense to profit before income tax was 25.8%, a significant improvement in comparison to the H1 2017 rate of 30.0%.

Reported net profit attributable to equity holders6 increased by 22.4% to EUR 91.1m in H1 2018. Strong revenue growth and significant profitability improvements in the first half of 2018 resulted in a 21.2% uplift in basic earnings per share (EPS)7 to EUR 5.32.

Cash Flow & Financing

Operating cash flow significantly increased 74% to EUR 218m thanks to the strong growth of revenues and margins in H1 2018. Moreover, net working capital (NWC) improved from 4.9% of sales in H1 2017 to 4.7% in H1 2018 highlighting the Group’s focus on cash flow discipline.

Net capital expenditures (CAPEX) in H1 2018 amounted to EUR 171m. The increase in CAPEX during the first six months of 2018 is directly linked to accelerating investments in Eurofins’ global laboratory network, advanced bespoke IT solutions and new start-up laboratories (7 in H1 2018), which should support Eurofins’ long-term value creation. Eurofins’ management retains the objective of bringing CAPEX closer to 6% of sales by 2020, as the Group’s site/infrastructure and IT programmes reach completion. Despite the year-on-year increase in CAPEX, free cash flow to the firm expanded significantly by 67% to EUR 47m driven by profitability and efficiency improvements with net operating costs as a proportion of sales down 80bps vs H1 2017.

Net debt at the end of June 2018 stood at EUR 1,639m, and leverage (net debt to adjusted L12M EBITDA) at 2.44x on a pro-forma basis and 2.61x on a reported basis (relatively stable vs 2.51x in December 2017). Thus, leverage remains well below the Group’s covenant limit of 3.5x (net debt to adjusted L12M EBITDA on a pro-forma basis). At the end of June 2018, Eurofins’ cash and cash equivalents amounted to EUR 559m.

Acquisitions

In H1 2018, Eurofins signed and/or closed acquisitions representing an aggregate amount of expected annual pro-forma revenues of c. EUR 400m in 2018, thereby exceeding its annual M&A revenue target (EUR 200m) in only six months. 25 acquisitions were closed in H1 2018, which contributed EUR 40m to consolidated revenues in the first half 2018. Some of Eurofins’ acquisitions completed in the first half of 2018 are discussed below.

In January, Eurofins expanded its footprint in Asia with the acquisition of Tsing Hua in Taiwan, one of the leading players in environment testing in Taiwan. In the same month, Eurofins entered the Hungarian market for food and feed testing with the acquisition of Food Analytica Group, one of the most modern microbiology laboratories in Central and Eastern Europe.

In February, Eurofins entered the specialty clinical diagnostics market in Belgium with the acquisition of Labo Van Poucke, a leading laboratory performing human medical testing covering all branches of clinical biology. This acquisition provided Eurofins with a license to operate and sell its specialties tests in this market. Moreover, Eurofins became the market leader in Environment testing services in Ireland with the acquisition of ELS and City Analysts. Eurofins further expanded its specialty clinical diagnostics footprint with the acquisition of NMDL-LCPL in the Netherlands. NMDL offers molecular diagnostics services, including molecular virology and bacteriology testing. LCPL is the largest pathology laboratory for General Practitioners in the Netherlands and offers advanced pathology services, including cervical cytology and molecular biological tests. In 2016, NMDL was proud to be selected as one of the parties to execute the bevolkingsonderzoek (BVO) for the Dutch national cervical cancer screening programme.

In April, Eurofins entered the analytical testing market in South Korea with the acquisition of Lab Frontier, which provides a broad suite of food, environment and cosmetics testing services. Also, Eurofins expanded its offering in radioactivity and environmental testing for the nuclear industry with the acquisition of Eichrom Laboratoires in France, a key player in radioactivity and asbestos testing. In the same month, Eurofins strengthened its footprint in France with the acquisition of Protec Group’s food and water testing activities (“Protec Bio-testing”), adding its first food testing laboratory in the South West region of France, complementing its nationwide network of food microbiology laboratories and providing a new one-stop-shop platform for new clients in this region. As announced on 30th April 2018, Eurofins signed an agreement with LabCorp (LH: NYSE) to acquire Covance Food Solutions, which provides product integrity, product safety and consulting solutions for end-use segments that span the entire food supply chain. The transaction is expected to close in the third quarter of 2018.

In May, Eurofins expanded its leadership in biopharmaceutical services with the acquisition of PHAST in Germany, one of Europe’s leading service providers in the field of testing for pharmaceutical products quality. Also in May, Eurofins further expanded its biopharmaceutical products testing footprint with an outsourcing agreement with Astellas in Japan to take over one of its internal testing laboratories Astellas Analytical Science Laboratories, Inc (“ASL”). ASL will become Eurofins’ first laboratory in Japan offering test services with the Good Manufacturing Practice (GMP) standard. As part of this outsourcing programme, Astellas committed to provide ASL work covering its current capacity for an agreed period of time.

In June, Eurofins reinforced its market leadership in testing, inspection and certification with the acquisition of two subsidiaries of the VTT Group in Finland. These subsidiaries cover all of VTT’s testing, inspection and certification (TIC) operations.

Infrastructure programme

Eurofins continues to make substantial strategic investments in infrastructure to build a unique and hard to replicate platform of world class testing laboratories designed to leverage on the highly scalable nature of bioanalytical testing activities to unlock economies of scale in testing and logistics.

During 2017 Eurofins added over 53,000 m2 of state-of-the-art laboratory surface. In H1 2018, as part of Eurofins’ continued efforts to build a unique platform for global leadership in its markets, an additional ca. 13,000 m2 of state-of-the-art laboratory surface was added, and a further ca. 92,000 m2 are expected to come on stream in the second half of 2018. Some of Eurofins’ infrastructure / laboratory network investments completed in the first half of 2018 are discussed below.

At the start of the year, Eurofins significantly expanded its laboratories and facilities in Dungarvan, Ireland, allowing the Group to double the volume of samples tested annually at this site. The state-of-the-art site offers nationwide services 7 days a week.

In May 2018, Eurofins announced the inauguration of a new food testing laboratory in Suzhou, China, with a surface area of 3,900 m2. The new laboratory received multiple Chinese and international accreditations. This project represents a total investment close to EUR 3m and, together with the laboratory opened in Qingdao last year, highlights Eurofins’ commitment to serving its clients in China and Asia Pacific with world-class testing services.

Eurofins Lancaster Laboratories, the largest independent single-site laboratory in the world, is on track to complete the largest building addition in the company’s history. The five-story 15,600 m2 addition began in early 2017 and building occupancy is anticipated for the end of 2018. In line with the positive growth outlook of Eurofins’ Lancaster Laboratories, our Lancaster campus has enough land reserves to be expanded a further 23,900 m2.

Construction of a new state-of-the-art Eurofins’ laboratory in Melbourne, Australia, is well underway with a surface area of 8,000 m2. It is expected to be completed in October 2018. The new site will house Eurofins Australia’s Food testing start-up laboratory and the Melbourne Environmental laboratory, as well as the National Service Centre (NSC) for Australia with administration, finance, IT and HR services centres.

Post-closing events

In July, Eurofins acquired Laboratoire de Bromatologie de l’Ouest (LBO) extending its network of food testing laboratories in France. This acquisition perfectly complements its French network of local laboratories, with a bacteriology testing laboratory in Brittany, providing Eurofins with better access to France's leading agri-food region.

As announced on July 30th 2018, Eurofins issued a EUR 550m Schuldschein loan to reinforce the Group’s liquidity position and benefit from very favourable market conditions (1.38% blended interest rate** for an average maturity of 5 years), enabling the Group to strengthen its liquidity position ahead of the Covance closing. As a result, Eurofins’ average cost of financing will further decrease, and the majority of its debt instruments now bear low interest rates for long maturities.

*At constant exchange rates vs. the average exchange rates of the year 2017

**Calculated on the fixed tranches

Table 3: Separately disclosed items2

         
In EUR m except otherwise stated   H1 2018   H1 2017
One-off costs from integrations, reorganizations and discontinued operations, and other non-recurring income and costs   9.1   10.9
Temporary losses and other costs related to network expansion, Start-ups and new acquisitions in significant restructuring   23.5   20.1
EBITDA3 impact   32.5   31.0
Depreciation costs specific to start-ups and new acquisitions in significant restructuring   11.1   13.1
EBITAS4 impact   43.7   44.1
Share-based payment charge and acquisition-related expenses, net5   40.8   14.3
Net finance costs related to borrowing and investing excess cash and one-off financial effects (net of finance income)   -6.9   -8.2
Tax effect from the adjustment of all separately disclosed items   -12.4   -9.5
Non-controlling interest on separately disclosed items   -0.3   -1.0
Total impact on Net Profit6   64.8   39.7
Impact on Basic EPS7 (EUR)   3.78   2.34

1 Adjusted - reflect the ongoing performance of the mature and recurring activities excluding “separately disclosed items2”.
2 Separately disclosed items - includes one-off costs from integration, reorganisation, discontinued operations and other non-recurring income and costs, temporary losses and other costs related to network expansion, start-ups and new acquisitions undergoing significant restructuring, share-based payment charge, impairment of goodwill, amortisation of acquired intangible assets, negative goodwill, loss/gain on disposal and transaction costs related to acquisitions as well as income from reversal of such costs and from unused amounts due for business acquisitions, net finance costs related to borrowing and investing excess cash and one-off financial effects (net of finance income) and the related tax effects.
3 EBITDA – Earnings before interest, taxes, depreciation and amortisation, share-based payment charge, impairment of goodwill, amortisation of acquired intangible assets, negative goodwill, loss/gain on disposal and transaction costs related to acquisitions as well as income from reversal of such costs and from unused amounts due for business acquisitions.
4 EBITAS – Earnings before interest, taxes, share-based payment charge, impairment of goodwill, amortisation of acquired intangible assets, negative goodwill, loss/gain on disposal and transaction costs related to acquisitions as well as income from reversal of such costs and from unused amounts due for business acquisitions.
5 Share-based payment charge and acquisition-related expenses, net – Share-based payment charge, impairment of goodwill, amortisation of acquired intangible assets, loss/gain on disposal, negative goodwill and transaction costs related to acquisitions as well as income from reversal of such costs and from unused amounts due for business acquisitions.
6 Net Profit - Net profit for equity holders after non-controlling interests but before payment to Hybrid capital holders.
7 Basic EPS – earnings per share (basic) total (to equity holders before payment of dividends to Hybrid capital holders).
8 Operating Cash Flow – Net cash provided by operating activities (after tax).
9 Free Cash Flow to the Firm - Operating Cash Flow, less Net capex.
10 Organic growth for a given period (Q1, Q2, Q3, Half Year, Nine Months or Full Year) - non-IFRS measure calculating the growth in revenues during that period between 2 successive years for the same scope of businesses using the same exchange rates (of year Y) but excluding discontinued operations.
For the purpose of organic growth calculation for year Y, the relevant scope used is the scope of businesses that have been consolidated in the Group's income statement of the previous financial year (Y-1). Revenue contribution from companies acquired in the course of Y-1 but not consolidated for the full year are adjusted as if they had been consolidated as from 1st January Y-1. All revenues from businesses acquired since 1st January Y are excluded from the calculation.

The First Half Year Report 2018 can be found on Eurofins website at the following location: https://www.eurofins.com/investor-relations/reports-presentations/

Notes for the editor:

Eurofins – a global leader in bio-analysis

Eurofins Scientific through its subsidiaries (hereinafter sometimes “Eurofins” or “the Group”) believes it is a scientific leader in food, environment and pharmaceutical products testing and in agroscience CRO services. It is also one of the independent market leaders in certain testing and laboratory services for genomics, discovery pharmacology, forensics, CDMO, advanced material sciences and for supporting clinical studies. In addition, Eurofins is one of the emerging players in specialty clinical diagnostic testing in Europe and the USA. With over 38,000 staff in more than 400 laboratories across 44 countries, Eurofins offers a portfolio of over 150,000 analytical methods for evaluating the safety, identity, composition, authenticity, origin and purity of biological substances and products, as well as for innovative clinical diagnostic. The Group objective is to provide its customers with high-quality services, accurate results on time and expert advice by its highly qualified staff.

Eurofins is committed to pursuing its dynamic growth strategy by expanding both its technology portfolio and its geographic reach. Through R&D and acquisitions, the Group draws on the latest developments in the field of biotechnology and analytical chemistry to offer its clients unique analytical solutions and the most comprehensive range of testing methods.

As one of the most innovative and quality oriented international players in its industry, Eurofins is ideally positioned to support its clients’ increasingly stringent quality and safety standards and the expanding demands of regulatory authorities around the world.

The shares of Eurofins Scientific are listed on the Euronext Paris Stock Exchange (ISIN FR0000038259, Reuters EUFI.PA, Bloomberg ERF FP).

Important disclaimer:

This press release contains forward-looking statements and estimates that involve risks and uncertainties. The forward-looking statements and estimates contained herein represent the judgment of Eurofins Scientific’s management as of the date of this release. These forward-looking statements are not guarantees for future performance, and the forward-looking events discussed in this release may not occur. Eurofins Scientific disclaims any intent or obligation to update any of these forward-looking statements and estimates. All statements and estimates are made based on the information available to the Company’s management as of the date of publication, but no guarantee can be made as to their validity. Eurofins provides in the Income Statement certain alternative performance measures (non-IFRS information such as “Adjusted Results1 and Separately Disclosed Items2”) that exclude certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends.

In addition, Eurofins shows the following measures: “EBITDA3, EBITAS4” in the Income Statement and “Organic growth10” with the objective to be close and consistent with the information used in internal Group reporting to measure the performance of Group companies and information published by other companies in the sector.

Management believes that providing these APMs (Alternative Performance Measures) enhances investors' understanding of the company’s core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. This information should be considered in addition to, but not in lieu of, information prepared in accordance with IFRS. These APMs are described in more detail in the Consolidated Financial Statements 2017 in Notes 1.28 and 1.29.

Contacts

For more information, please visit www.eurofins.com or contact:
Investor Relations
Eurofins Scientific
+32 2 766 1620
ir@eurofins.com

Contacts

For more information, please visit www.eurofins.com or contact:
Investor Relations
Eurofins Scientific
+32 2 766 1620
ir@eurofins.com