Ad hoc: Evotec OAI Updates Guidance for 2004 and Provides Preliminary Third Quarter Revenues

For the first nine months of 2004 Evotec OAI's (WKN 566480) revenues reached EUR 47.4m (2003: EUR 56.7m). In the third quarter, revenues amounted to EUR 16.1m, down 26% over Q3 of the previous year (2003: EUR 21.9m). The decline is mainly a result of a strong Q3 for Evotec OAI in 2003 due to above average sales in Evotec Technologies following the delivery of a suite of discovery instruments to Pfizer. The weak third quarter 2004 has been anticipated and communicated in our Q2 financial report. Detailed Q3 results will be communicated with the full earnings report on 11 November 2004.

The 2004 sales and order book as of September amounted to EUR 71m. Our 2004 order intake in September and early October was lower than planned, and this effect will result in lower 2004 numbers than expected. In light of the Q3 results and the current status of contracted revenues and contract negotiations we are revising our revenue guidance for the year 2004 to approximately EUR 70-75m. Timing risks of revenue recognition in our instrumentation business are the main reason for such a broad range. This means that in Q4 we will grow about 10 to 35% year on year. Based on this updated revenue guidance, currency effects and continued focused investments into our internal discovery efforts, EBITDA for 2004 is now expected to be between EUR -4 and -7 m.

This updated situation may lead to a non-cash impairment of parts of our assets, in particular the goodwill in our balance sheet. The annual impairment review under US-GAAP is scheduled for the end of October. Our contract pipeline for 2005 for the services business is better today than it was for 2004 at the same time last year.
Jörn Aldag, President and CEO of Evotec OAI AG, said: In the first six months of 2004 the contract service industry experienced substantial downward pressure on revenues. Also some of our long-term customers scaled-down or terminated discovery and development contracts during 2003 which had a negative impact on Q1 sales for 2004. Our business has recovered since then. We outpaced competition in the first half of the year significantly and we were successful in gaining business with many new customers. We are also making progress in our goal to shift focus to higher value strategic partnerships as witnessed by our new alliance with Boehringer Ingelheim and the progress in our metabolic disease venture. We are in a strong financial position to take the company forward and benefit from an industry upswing. While the environment is still challenging we are looking forward to a still very good Q4."
Contact: Anne Hennecke, Evotec OAI AG, Investor Relations and Corporate Communications, Phone: +49 40 56081 286, E-mail: