Eurofins Scientific : 2022 Annual Report

Annual Report

2022

Disclaimer

This document is neither a prospectus for the purposes of Regulation (EU) 2017/1129 or other foreign regulations, nor an official authorised document, nor a sworn translation thereof and has not been approved, filed or reviewed by any regulatory authority. This document is intended for informational purposes only and does not constitute or form a part of any offer for sale or subscription or solicitation of any offer to buy or subscribe any securities of Eurofins Scientific SE (hereinafter the "Company" or "Eurofins Scientific") nor shall it, or any part of it, form the basis of or be relied upon in connection with any decision to purchase securities of the Company or enter in any contract with, or commitment to, the Company whatsoever.

The Company has taken reasonable care to ensure that the facts stated in this document are true and accurate in all material respects but makes no representations or warranties regarding the reliability or absence of material errors or omissions in or from this document. Information contained herein is based on sources believed to be reliable but is neither exhaustive nor guaranteed by our Company. No person has been authorised to give any information or make any representation not contained in the Company's annual and half year reports. Any information given or representation made by any person which is not contained in the Company's annual and half year reports may not be relied upon as being authorised by the Company or any of its subsidiaries or any of their respective employees, officers or agents. The Company's annual and half year reports can be obtained from the Company's investor relations team. This document is subject to all restrictions, limitations, non-warrantee and non-reliance provisions stated in this disclaimer.

This publication contains forward-looking statements and estimates that involve risks and uncertainties. The forward-looking statements and estimates contained herein represent the judgement in good faith of Eurofins Scientific as of the date of publication. These forward-looking statements are not guarantees for future performance and the events discussed in this document may not occur. Eurofins Scientific disclaims any intent or obligation to update all or one of these forward-looking statements and estimates. These forward-looking statements are also subject to change without notice.

To the extent permitted by law, the Company shall not be liable for any loss, damage or expense whatsoever arising out of or in connection with this document, directly or indirectly, including but not limited to, in contract, tort, strict liability or any other legal bases.

This document shall only be distributed as and if permitted by law. By accepting this document, you agree to be bound by the foregoing instructions and limitations.

Until it has been lawfully made public by Eurofins through approved distribution channels, this document contains inside information for the purpose of Regulation (EU) 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, as amended.

Publication date: 1 March 2023, 7:15am CET.

Shareholder information

Listing

Euronext Paris (IPO on 24 October 1997)

Indexes

Euronext Paris: CAC 40, EURONEXT 100, SBF 120, SBF TOP 80 EW, CAC ALL SHARES, CAC ALL-TRADABLE, CAC HEALTH CARE, CAC LARGE 60.

Euronext Amsterdam: EN CORE E100 EW, EN EUR N100 EW, EN EUROZONE 150 EW, EN EUROPE 500, EN EUROZONE 300, EN EZ L&M 60 EW, EN EZ 100 ESG.

Other: MSCI Europe, STOXX Europe 600, S&P Europe 350.

Industry Group/Prime Sector

Healthcare / Healthcare Providers

Codes

ISIN: FR0014000MR3

Tickers

Paris: Euronext ERF, Reuters EUFI.PA, Bloomberg ERF FP

Nominal Capital (as at 31 December 2022)

€1,927,395.83 (192,739,583 x €0.01)

Simplified Ownership Structure

Free Float 67.1%

Martin Family 32.8%

2022 Share Price Development

Eurofins Scientific: -38.4%

CAC 40 Index: -9.5%

Euronext 100: -9.6%

SBF 120: -10.3%

Nasdaq Composite Index: -33.1%

S&P 500: -19.4%

Dow Jones: -8.8%

Analyst Coverage
AlphaValue	Nupur Gupta
Barclays	James Rose
Berenberg	Sam England
Bryan Garnier	Bruno de La Rochebrochard
Citi	Arthur Truslove
Deutsche Bank	Dominic Edridge
Gilbert Dupont	Guillaume Cuvillier
Goldman Sachs	Suhasini Varanasi
HSBC	Rajesh Kumar
Jefferies	Allen Wells
Kepler Cheuvreux	Pablo Cuadrado
Morgan Stanley	Annelies Vermeulen
Morningstar	Julie Utterback
ODDO BHF	Geoffroy Michalet
Redburn	Neil Tyler
Société Générale	Delphine Le Louët
Stifel	Louise Boyer Gräbeldinger
Investor Relations
Eurofins Scientific Group
Phone: [phone]
E-mail:[e-mail]
Website
www.eurofins.com

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	Table of Contents
Management Report	4
1	CEO Review	5
2	The Business	8
3	Financial and Operating Review	29
4	Environment, Social and Governance	39
5	Risk Factors	130
6	Eurofins Group Remuneration Report 2022	148
7	Eurofins Scientific SE, the Group Parent Company	179
8	Corporate Governance	180
Corporate Governance	181
1	Corporate Governance Charter of Eurofins	182
2	Corporate Governance Statements for the Year Ended on 31 December 2022	198
3	Statement of Persons Responsible for the Annual Report	214
Annual Financial Statements	215
1	Consolidated Financial Statements	216
2	Auditor's Report on Eurofins Scientific SE's Consolidated Annual Financial Statements	297
3	Annual Accounts - EUROFINS SCIENTIFIC SE	305
4	Auditor's Report on Eurofins Scientific SE's Annual Accounts	324

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Management Report

4

CEO REVIEW

1 CEO Review

2022 was a year of many unexpected challenges, but also one in which Eurofins clearly demonstrated its resilience. Despite inflationary pressures, consequences of the ongoing war in Ukraine, supply chain disruptions for clients, general economic uncertainty and the over €800 million decrease in our COVID-19 testing activities, we were able to meet our objective of €6.7bn in revenues. This was made possible by an acceleration of Eurofins' organic growth in H2 2022 to 6.7%, above our mid-term objective of 6.5%. We generated strong cash flow that allowed us to further invest in our laboratory network, establish a record number of new start-ups, continue developing world-class IT solutions and make an exceptional number of acquisitions at a reasonable cost. Our ESG performance has also improved, as demonstrated by the decline in our carbon intensity by 9% year-on-year. I would like to thank our leaders and employees for their determination, agility and customer orientation, which made these achievements possible.

Eurofins' companies remain focussed on continual productivity improvements as well as other operational excellence programmes. We will continue to drive growth with innovative new tests to improve health and sustainability as well as further automate and digitalise our processes. Eurofins companies are entering 2023 with updated terms with most clients to better align prices with cost inflation and intend to recover the 2022 gap between costs and price growth over 2023.

Despite the current economic circumstances, Eurofins remains dedicated to its value creation strategy focussed on sustainable long-term growth and innovation. As the Global Leader in Testing for Life and increasingly as an ESG enabler, with nearly all of our revenues contributing to UN Sustainable Development Goals, Eurofins is in a strong position to address the continuously growing demand for our services. Doing so requires that we remain committed to investing in key elements of our physical and technological infrastructure, including building and owning high-throughput campuses, expanding our hub and spoke network with start-ups and acquisitions and deploying sector-leading proprietary IT solutions. We expect these investments to further increase Eurofins' leadership in providing the most innovative, high-quality,cost-competitive and secure services our clients expect from us today and into the future, as well as deliver the value creation expected by our shareholders.

Looking forward, I remain very confident in the capabilities and resilience of Eurofins teams and our ability to navigate challenges and achieve our FY 2023 to FY 2027 financial objectives.

Financial highlights

Eurofins delivered a solid performance in FY 2022 despite negative consequences of the war in Ukraine, which started two days after objectives were set on 22 February 2022:

• Revenues of €6,712m were stable on a reported basis vs FY 2021 despite the year-on-year decrease in revenues from COVID-19 testing and reagents of more than €800m.
• Revenues in the Core Business (excluding COVID-19 testing and reagent revenues) increased by +5.8% organically13 in FY 2022 and +6.7% in H2 2022 (both adjusted for the impact of public working days and +5.3% in FY 2022 and H2 2022 without the adjustment) vs FY 2021.
• As expected, COVID-19 related testing significantly decreased year-on-year:

• 1. Due to lower COVID-19 testing volumes and reimbursement rates, revenues from COVID-19 testing and reagents declined year-on-year by more than €800m (to just under €600m in FY 2022 from over €1,400m in FY 2021).
• Adjusted1 EBITDA3 of €1,513m (22.5% of revenues) declined vs €1,902m (28.3% of revenues) in FY
  2021, impacted by:
• 1. The decrease in COVID-19 testing volumes and reimbursement rates

1. Inflationary headwinds for personnel expenses, energy, logistics and consumables and lagging corresponding price increases by Eurofins companies

1. Labour-relatedeffects such as strikes in the French clinical diagnostics sector and COVID-19 related lockdowns and absenteeism

• 1. Volume challenges faced by some of our clients (food and consumer products industries, especially in Europe) following the start of the war in Ukraine
• Cash provided by operating activities and proceeds from disposals more than fully self-financed capex, acquisitions, lease repayments and interest and hybrid coupons:
• 1. Net operating cash flow of €1,136m benefitted from a year-on-year improvement in net working capital12 (4.2% of the Group's revenues in FY 2022 vs 4.5% in FY 2021) but was restrained by a high level of taxes paid following the higher profits made in FY 2021.

1. Net capital expenditures9 of €645m supported growth initiatives including capacity expansion, start-ups and development of bespoke proprietary IT solutions.

1. Divestment of non-core Eurofins' Digital Testing business for €220m created significant value
   (over 23% IRR and 6.5x cash multiple).

1. Free cash flow before investment in owned sites16 of €677m

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