ANNUAL REPORT

ANNUAL REPORT
2022
2020
 CONTENT

4 Letter to our Shareholders

9 Evolva at a Glance

10 Financial Review

12 Stock Review

14 Technology Platform

22 Product Pipeline

28 Flavors and Fragrances

34 Health Ingredients

42 Health Protection

46 Corporate Sustainability

52 Corporate Governance

72 Compensation Report

86 Consolidated Financial Statements

91 Notes to the Consolidated

Financial Statements

146 Statutory Financial Statements

of Evolva Holding SA
CORPORATE PURPOSE
At Evolva, we help resolve sourcing bottle­necks
in nature through our proprietary technology
platforms. This enables us to provide products
which contribute to wellness, health and
sustainability.

We research, develop and bring to market high

quality, affordable ready-to-formulate products
and solutions around natural ingredients based on
fermentation.

RESOLVING THE BOTTLENECKS OF NATURE

This Annual Report contains certain forward-looking statements. These forward-looking statements may be identified by
words such as “believes”, “expects”, “anticipates”, “projects”, “should”, “seeks”, “estimates”, “future” or similar expressions or
by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ
materially from those reflected in the forward-looking statements contained in this Annual Report.
4 ANNUAL REPORT 2022
DEAR SHAREHOLDERS,
Evolva demonstrated a good performance
during 2022 under the new leadership
team. Targets both in terms of revenue
and profitability were fully met.

Revenues increased by 57% to CHF 15.5

million, while the gross contribution margin
increased from -59% in 2021 to +16% in
2022. Main drivers for the strong profitability
increase were the strengthening of the CMO
network, value pricing and cost efficiency
initiatives.

Under the new leadership team, with

Christian Wichert joining as new CEO
at the beginning of February 2022, we
especially turned the focus to boosting
commercial performance, to which the
strong revenue growth is testimony. The
initial focus thereby was on the Flavor &
Fragrances business area where revenues
more than tripled in 2022. For 2023, we
will extend this focus now to boosting the
Health Ingredients business, too.

ANNUAL REPORT 2022 5

 Business highlights
Flavors & Fragrances (F&F)
F&F achieved a record revenue level of CHF 10.6 million, which corresponds to a growth
of 265% year-on-year. This increase was primarily fueled by the upscaling of Vanillin
production, enabling the successful delivery of continuous commercial batches.
Valencene and Nootkatone also saw continuous profitable growth. The introduction
of Natural Nootkatone for the EU with key customers towards the end of 2022 further
prepared for the expansion of our addressable market going into 2023.

Health Ingredients (HI)

In HI, the initial focus was on achieving a positive gross contribution margin through
market segmentation, value pricing and cost improvements. Initiatives included
the onboarding of a new distribution partner for Latin America for human dietary
supplements as well as animal nutrition and health, and the refinement of the value
proposition and go-to-market approaches per segment for Veri-teTM Resveratrol.
Revenues amounted to CHF 4.2 million, a decline of 32% for the full year. We have
now laid out a solid foundation for profitable growth and for targeting new attractive
segments like the personal care market.

Health Protection
In 2022, our NootkaSHIELD™ insect repellent was approved for use by regulatory
authorities in Hong Kong. Together with launch activities in Singapore, which resulted
in initial sales in the second half of 2022, these test markets provide valuable insights
for further launch activities in other markets. NootkaSHIELD™ also received prominent
support in our key market USA with a grant of USD 0.5 million awarded from the US
Centers for Disease Control and Prevention (CDC) towards the development of new
formulations and applications for tick bite repellency and prevention.

The EVERSWEETTM royalty stream in 2022 was below expectations. The product is being
marketed by Avansya, a partnership between Cargill and DSM. We are in regular
contact with the respective leadership teams and remain positive about the potential
of EVERSWEETTM as a sugar replacement.

Operations and R&D

Evolva significantly strengthened the CMO network in 2022 and built a strong lean
team, focused on technology improvements to manage for cost efficiencies. The
whole organization was reviewed with the idea to run a tight ship and direct resources
to their most effective use. The R&D pipeline was assessed based on clear quantitative
criteria to focus on the most promising candidates for internal development and
research projects with third parties.

6 ANNUAL REPORT 2022

Financial highlights
Total revenue grew by 57% to CHF 15.5 million, while product-related revenue even
grew by 62% to CHF 14.8 million. Gross contribution margin turned positive and reached
16% for the full year. As a result of the revenue growth and margin increase, adjusted
EBITDA improved by CHF 9.3 million (from CHF -22.6 million in 2021 to CHF -13.3 million
in 2022). This was also supported by a reduction of recurring operational expenses of
CHF 2.5 million compared to 2021 as a result of our cost efficiency initiatives. In terms
of liquidity, we ended the year with a cash position of CHF 5.1 million and CHF 16 million
of open financing lines.

Moving into 2023 and beyond

We expect the positive business momentum to continue. For the full year 2023, we aim
for revenues of more than CHF 20 million and a gross contribution margin of above
20%. As a result, we expect EBITDA and cash flow to further improve.

On the basis of the solid foundation laid in 2022 by transforming the organization for
commercial success, we expect to reach our mid-term targets as announced on 25
August 2022, namely to surpass CHF 30 million in sales in 2024 and to reach a revenue
level of between CHF 45-50 million as well as EBITDA and cash breakeven in 2025.

Thank you
We thank you, our shareholders, for your trust and ongoing support in our journey
to bring Evolva to the next level by boosting growth, improving profitability and
ultimately cash generation. We are grateful for the commitment and dedication which
our employees demonstrated during this transformation phase. We also thank our
business partners and customers for their trust and constructive collaboration and
look forward to continuing to jointly resolve the bottlenecks of nature.

Beat In-Albon Christian Wichert

Chairman Chief Executive Officer

ANNUAL REPORT 2022 7

8 ANNUAL REPORT 2022
EVOLVA AT A GLANCE

Evolva, a white biotech and pioneer

in the field of nature-based LISTED
SIX:EVE
GLOBAL
SCALE AND NETWORK
molecules, has transformed in recent
years from a R&D stage company As Swiss-based biotech, Present in Switzerland and US
to a commercial company with an Evolva is listed on the Swiss with global coverage through
Stock Exchange distributors network and direct
innovative precision-fermentation
sales
platform and a product-based
revenue model.

Evolva has three key businesses

which unfold across industries: 50
EMPLOYEES
6
PRODUCTS
n Flavors and Fragrances
With diverse backgrounds from On the market: Nootkatone by
n Health Ingredients research over marketing and sales Evolva, Valencene by EvolvaTM,
to operations Veri-teTM Resveratrol, L-Arabinose
n Health Protection
by EvolvaTM, EverSweetTM (royalty),
Vanillin (collaboration with IFF)

Evolva’s employees are poised to

design, develop, make and sell the 44%
WOMEN
14
NATIONALITIES
best products that contribute to
health, wellness and sustainability – We are proud of our balanced Our interdisciplinary approach
fully nature-based. female representation in science, is enriched by the diversity of
technology and business experiences and geographies
of our team

We provide nature- We provide nature- We offer nature-based

based flavors and based ingredients for products with high
fragrances ingredients dietary supplements and efficacy to protect
that help resolve nature’s cosmetics that contribute humans and pets
supply chain & resource to health and wellness. against insects and
limitations. corresponding illnesses.

ANNUAL REPORT 2022 9

FINANCIAL REVIEW

Financial key figures1) Period from 1 January to 31 December

2022 2021 2022 2021
CHF million adjusted adjusted reported reported

Revenue from contracts with customers 15.5 9.9 15.5 9.9

Product-related revenue 14.8 9.1 14.8 9.1

Direct production costs (12.5) (14.6) (12.5) (15.1)
Gross contribution 2.4 (5.4) 2.4 (5.9)
in % of product-related revenue 16.0% -59.5% 16.0% -64.7%

Research & development revenue 0.7 0.7 0.7 0.7

Cost of goods sold

(4.6) (4.2) (9.1) (4.2)
(excl. direct production costs)
Gross profit (1.5) (8.9) (6.0) (9.3)

Research & development expenses (9.4) (12.8) (23.6) (22.4)

Commercial, general & administrative
(10.5) (9.5) (10.8) (10.2)
expenses
Operating loss (EBIT) (21.4) (31.2) (40.4) (42.0)

Depreciation and amortization (8.1) (8.7) (8.1) (8.7)

Impairment of intangible assets 0.0 0.0 (17.0) (9.6)
EBITDA (13.3) (22.6) (15.3) (23.6)

Cash position (end of period) 5.1 11.0 5.1 11.0

Extraordinary items (19.0) (10.8)

- impairment (17.0) (9.6)
- inventory write-off (1.6) 0.0
- others (0.4) (1.2)
1) This table includes references to operational indicators and alternative performance measures (APM) that are not
defined or specified by IFRS. These APM should be regarded as complementary information to and not as substitutes to
the Group’s consolidated financial results based on IFRS.

Financial Performance
We are looking back at a very successful year 2022 with continued growth of Evolva’s
product-related revenue (+62%) driven by Flavors and Fragrances with a 265% growth.
Health Ingredients declined by 32% while significantly improving profitability. Total
revenue increased from CHF 9.9m to CHF 15.5m (+57%) in 2022.

Evolva’s product demand continued to grow in 2022, driven by the launch of Vanillin
and continued strong demand for our Flavors and Fragrances products. Health
Ingredients went through a year of change, managing for profitability, setting the
basis for boosting top-line growth with the recruitment of a new commercial team
and managing distributors for performance.

10 ANNUAL REPORT 2022

Gross contribution significantly increased from CHF –5.4m in 2021 to CHF 2.4 m in
2022. Key contributors for this improvement have been reduced manufacturing costs
and value pricing initiatives. Resulting Gross profit also increased significantly from
CHF -8.9m in 2021 to CHF -1.5m in 2022.

Following a strategic review in 2Q 2022, an extraordinary non-cash impairment charge

was recognized relating to patents and patent applications (CHF 2.0m), royalty and
licenses (CHF 12.1m EVERSWEET™) and product and process development (CHF 2.9m).
In addition, extraordinary inventory write-off (CHF -1.6m) and other non-recurring
items (CHF -0.4m) were recognized.

Excluding the non-recurring items, the operating expenses decreased by CHF 2.5m
(11.2%) as a result of cost efficiency initiatives.

Adjusted for the extraordinary items, EBIT improved by 31.8% from CHF -31.2m to
CHF -21.4m. Reported EBIT came in at a loss of CHF -40.4m.
Adjusted EBITDA was CHF -13.3m, an improvement of 41% vs. CHF -22.6m. Reported
EBITDA resulted in a loss of CHF -15.3m which is driven by reduced cost of goods sold
and operating expenses.

The change in the financial result represents mainly unrealized foreign exchange
losses and gains from outstanding balances with subsidiaries which have been
revaluated at current exchange rate. There was no change in income taxes in 2022.

Balance sheet and cash flow

Intangible assets decreased by CHF 20.6m. This results from the regular amortization in
the amount of CHF 6.9m, a non-recurring impairment charge of CHF 17.0m on patents
and patent applications, royalty and licenses and product and process development,
additions from capitalized product and development costs in the amount of CHF 1.8m
and positive translation effects amounting to CHF 1.5m in 2022. Evolva is continuously
improving the efficiency of production processes for its own products with the aim to
reduce manufacturing costs.

The cash position was CHF 5.1m at year-end 2022. The change over prior year results
from CHF -18.9m operating cash flow, CHF -1.8m cash flow from investing activities
and CHF 14.8m cash flow from financing activities. Available financing lines amounted
to CHF 16m at year-end 2022.

2023 Outlook
Evolva expects ongoing growing demand for Flavors and Fragrances as well as Health
Ingredients with total revenues of more than CHF 20m in 2023.

Gross contribution margin is expected to be above 20% for the full year 2023,
contributing to an improved EBITDA and Operating Cash Flow in 2023.

ANNUAL REPORT 2022 11

STOCK REVIEW

Evolva has only registered shares outstanding. Registration is not compulsory, but only
shares entered in the register have voting rights at shareholder meetings.

During the financial year 2022, the number of shares outstanding increased from
1,030.6 million to 1,121.3 million. Evolva created a total of 90.7 million shares from
conditional and authorized capital.

Key Data
Symbol EVE
Nominal value per share CHF 0.05
ISIN CH0021218067

End-of-year 2022 2021

Number of shares (m) 1,121.3 1,030.6
Number of registered shareholders 9,877 10,280
Shares in share register as % of total 68% 64%
Free float (official definition SIX,
shares not held by strategic investors ≥ 5%) 100% 100%
Share price (CHF) 0.082 0.134
Market capitalization 1) (mCHF) 91.9 138.1

1) based on total shares outstanding

Over the course of 2022, an average of 978,236 Evolva shares were traded per day,
representing an average daily value of CHF 787,380. Over the year, a total of 286 million
shares were traded, meaning 22.1% of the outstanding shares changed hands.

February, May and December were the months with the distinctively highest average
daily trading volumes (1,402,453, 1,336,043 and 1,476,250 shares, respectively). In
February, this was in connection with the appointment of Christian Wichert as new CEO
as of 8 February 2022. In May, this reflected the successful private placement of shares
with several long-term oriented institutional investors on 24 May which resulted in net
proceeds of CHF 6.3 million to strengthen the capital base. Selected Board members
and management personally participated with CHF 1.0 million, demonstrating both
commitment and confidence in realizing Evolva’s value potential. The month of
December also saw good volumes and an increase in the share price of 4.6% towards
the end of the year 2022. On a daily basis, the by far highest turnover of over 10.4 million
shares was recorded on 20 December 2022.

12 ANNUAL REPORT 2022

 At year-end of 2022, the number of registered shareholders decreased slightly to
9,877 (31 December 2021: 10,280) and the proportion of outstanding shares entered
in Evolva’s register increased to 68% (4 percentage points higher than compared to
the end of 2021).

The free float (shares not held by any strategic investors with a threshold holding level
of at least 5%) amounted to 100%.

32% 68%

non registered 9,877 registered shareholders

0.20 2

Number of shares (millions)

CHF

0.10 1

0.00 0
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
Share price (end of month, LH scale) Average daily volume (RH scale)

The Evolva share ended the financial year 2022 at a price level of CHF 0.08, compared
with CHF 0.13 at year-end 2021, which is 22% below the performance of the benchmark
of the domestic Swiss Performance Index.

Evolva continues to strive for an active dialogue with its shareholders, not only at
the Annual General Meeting but throughout the year. Interest from the financial
community remained lively, with most meetings taking place in the context of investor
conferences, site visits and roadshows.

The contact details of the research analysts covering Evolva can be found on the
investor section of the Evolva website evolva.com.

ANNUAL REPORT 2022 13

TECHNOLOGY PLATFORM

14 ANNUAL REPORT 2022

ANNUAL REPORT 2022 15
TECHNOLOGY PLATFORM

Our Precision Fermentation Technology Platform

At Evolva, the production of any innovative new ingredient always departs from the
same basic starting materials. Our researchers use sugar, water, salts, vitamins, and
minerals to grow our proprietary yeast and to enable the “production” of our nature-
based ingredients.
Sugar

Baker’s yeast serves as the main production host for this technology process. Via
metabolic engineering, our research team at Evolva transforms the yeast into the
“production factory” that we use to facilitate the conversion of sugar into innovative
ingredients. Applying the principle of fermentation, we can grow these little factories
gradually, scale them up and increase the amount of the envisaged output product.
The targeted nature-based ingredients produced in this environment, such as
Baker‘s Yeast Resveratrol, Nootkatone, L-Arabinose or Vanillin, are subsequently recovered and
purified, resulting in products with a purity level of above 98%. Even at large scale
production – together with our contract manufacturing partners – we ensure that all
processes are performed to the highest quality standards.

This results in our nature-based ingredients that are highly pure, affordable and ready
to be produced in high quantities. These are key properties as we strive to provide
Resveratrol
L‘Arabinose products that are expected to contribute to health, wellness and sustainability.
Vanillin
…

Insight into our Technology: The “Yeast Metro” as a Basis for Strain Engineering

All ingredients that we make are, ultimately, derived from the yeast’s central carbon
metabolisms. Yeast provides all the building blocks required for the biosynthesis of
these ingredients. These building blocks are then further modified via enzymes that
have been introduced into the yeast via metabolic engineering.

Following on any of these specific pathways, or “roots,” allows our strain engineers
to generate multiple compounds along that same pathway, relying on the platform
knowledge acquired up to this point. This substantially shortens development times
for subsequent products.

The overall number of ingredients that we can develop with our “yeast metro” is quite
extensive, as highlighted by the following illustrative mapping.

16 ANNUAL REPORT 2022

 THE YEAST METRO

“Yeast Metro”

Having IP-protected selected key switches of the yeast metro allows us to “own” entire
branches of it. We can, therefore, fully exploit our platform and base our development of
any new ingredients on the knowledge and expertise built up during the development
of related ingredients on the same pathway.

The proximity of Valencene and Nootkatone on the same pathway is an excellent

example highlighting these synergies in research and development.

Even with Evolva’s pipeline of six molecules on the market, available in different
application formats, plus additional products already in our development pipeline,
we have so far only tackled a minority of “stops” on the yeast metro map.

In the following, we highlight key elements on the way from a “go” decision to the final
product in our customers’ warehouses.

olva Confidential Material

ANNUAL REPORT 2022 17

TECHNOLOGY PLATFORM

Fermentation (“Upstream Processing” / USP)

Fermentation is a process well known to most of us. It has been applied for thousands
of years in the making of various products, fermented foods, alcoholic beverages,
metabolite products, and pharmaceuticals. It involves the growth and propagation
of metabolically engineered yeasts under controlled conditions. These conditions
include the nutrients used, the temperature, the pH value, or the aeration. The result
of the fermentation process is the conversion of sugar into the targeted ingredient.

The fermentation process involves the exact definition of the requirements of the
metabolically engineered strain to ensure its optimal growth. Key parameters include
the setup of proper cultivation conditions as well as the composition of the appropriate
media consisting of salt, minerals, and vitamins, including successive feeding.

This process is continuously optimized with the objective of identifying the best
process parameters, resulting in optimized titers, yields and productivities. To achieve
this crucial outcome, our experts need to determine the optimal concentration of
nutrients, feeding rates and the fermenter settings that promote fast growth and high
production of the desired molecule with least amounts of unwanted by-products.

Purification (“Downstream Processing” / DSP)

Downstream processing, or DSP, involves multi-step procedures for the recovery

and purification of the targeted ingredient. The purity of the product is incrementally
increased by exploiting physical and chemical properties that separate the product
from potential impurities. DSP comprises all the essential steps required to separate
and purify the desired molecule from the fermentation broth, resulting in the maximum
purity of the compound, in crystallin or liquid form.

Key outcomes of a continuous process optimization of upstream and downstream

processing are increased yields, productivity, reduced processing times, and,
ultimately, reduced product costs.

18 ANNUAL REPORT 2022

 The Evolva Supply Chain: From Lab to Final Distribution

Moving a process from the lab scale into production requires a stepwise increase in
scale. When scaling up our produced ingredients from our own laboratories in Reinach
to mass production at our contract manufacturing partners, we distinguish three
main stages and scale levels: lab scale, piloting and production.

Lab scale: All our fermentation and purification processes are already set up in
our labs with a focus on their scalability and suitability for manufacturing. They are
designed to ensure efficient and cost-effective production.

Piloting: Another crucial step in the upscaling process is the piloting phase, which
Lab scale equipment
bridges the lab scale and commercial production.

Production: In the production phase, processes are scaled-up into fermenter sizes
of 100-250 m3, allowing for produced volumes in the range of metric tons, depending
on the respective product. The most important and demanding part of this process
is the DSP part. Subject to the equipment fit, DSP determines production yields and,
ultimately, the pricing and gross margins.

Piloting

LABSCALE DEMO BATCH COMMERCIAL

Development of strain First production at BATCHES
and fermentation/ commercial scale Material provided
purification processes to customers and
market
PILOTING ENGINEERING
Closes gap between lab BATCHES
and commercial scale Validation of
production process

Key steps and outcomes from lab

to manufacturing scale

ANNUAL REPORT 2022 19

TECHNOLOGY PLATFORM

Technology Transfer: Interface and Collaboration with CMOs

Evolva performs all strain engineering and process development activities on-
site in Reinach. Once the team has defined a production strain and established
the production processes, the processes are transferred to the selected contract
manufacturing organization (CMO). The main criteria for selecting any CMO are:

n Existing USP / DSP capabilities

CMO NETWORK
n Availability of reasonable production capacities
Broad CMO network with sites in Europe and US

Broad CMO network with

sites in Europe and US Chemistry Distillation

Fermentation Purification Derivatisation

Upscaling production from the lab scale production (up to a few kilograms) to full
production on a manufacturing scale (several tons per year) is challenging for
many companies today. At Evolva, we have acquired deep expertise in upscaling
technologies from lab to manufacturing, addressing key challenges:

n Selecting the optimal production setup and partner

n Transferring the lab-based strain to the production facility using smart piloting to
reduce errors and delays

n Implementation of the raw material supply chain

n Adapting the process (USP/DSP) to efficiently produce large scale batches and
implementing analytics

n Ensuring legal protection of process know-how

n Documentation of product and process specifications

This expertise expands Evolva’s value proposition and provides a competitive

advantage.

20 ANNUAL REPORT 2022

 Summary

The journey of any new product begins with feasibility studies carried out in Evolva’s
laboratories, followed by the engineering of the product strain.

Until a product finally reaches the global distribution warehouses to be shipped to

our customers and, ultimately, to the end consumer, it passes multiple development,
manufacturing, and logistics steps, accompanied by a continuous scale-up of
production quantities in the growing facilities and fermenters.

Summary of the Evolva value Large Commercial-scale

chain: From initial feasibility 3
Manufacturing
analysis to global supply of any
produced ingredient

Commercial-scale Tons
2
Manufacturing

Dedicated
Lab-scale Kilograms feedback loops
1
Development drive continuous
optimization

Grams

Milligrams

Assess Generate Transfer strain Commercial- Dedicated Dedicated

Strain Process Pilot Manufac- Global
feasibility production and process scale production plant
engineering development turing trial distribution
strain + into manufacturing line
process Manufacturing

Development Scale-up Manufacturing and Supply

ANNUAL REPORT 2022 21

PRODUCT PIPELINE

Examples of finished products including Veri-teTM Resveratrol

22 ANNUAL REPORT 2022

 From Idea to Ingredient

Evolva is continuously innovating and expanding its portfolio of ingredients based on

nature to supply its customers in health, nutrition, flavors, fragrances, and cosmetics
markets or adjacent application fields such as pet food.

The starting point is our so called “yeast metro” as presented in the previous chapter.
Based on the technological approach of our precision fermentation, we can derive a
multitude of nature-based products from our proprietary platform.

Turmeric
Truffles Vanilla

Cocoa Caffeine

Stevia
Dopamine

Saffron

Mint Human Milk

Carmine Taxol

Opiates
Musk

Capsiate

Sandalwood Ginseng

Resveratrol
Ambergris
Frankincense Pyrethrin

The “Yeast Metro” enables many potential products

ANNUAL REPORT 2022 23

PRODUCT PIPELINE

When our team at Evolva screens the individual pathways emerging from our precision
fermentation platform for any new innovative ingredient candidates, it specifically
asks the following key questions:

n Does such ingredient satisfy a secular growth driver (megatrend)?

n Does our precision fermentation approach offer the potential to ensure sufficient
differentiation, respectively an innovative edge for the targeted ingredient?

n Can we leverage our proprietary platform, customer base, or existing expertise

(ideally even stemming from the same yeast pathway)?

Investment trigger Proof points

Weight Management;
Blood glucose control;
 Megatrend?
Longevity;
Sustainability

 Differentiation? White biotechnology

Proprietary platform;
 Platform / Knowhow base? IP-protected pathways;
Global customer base

Checking the “Reasons to Invest” team and financial resources

The journey of each innovative ingredient starts with associated feasibility studies in
Evolva’s laboratories, followed by the engineering of the product strain.

At this stage, in terms of quantities, the researchers still operate at a milligram level.

24 ANNUAL REPORT 2022

 The following illustration highlights the full set of organizational capabilities required
on Evolva’s side for a product to reach commercial scale. We rely on a multidisciplinary
team of applications and product development experts who ensure the know-how in
analytical chemistry process development, physical chemistry, formulation, as well
as quality and regulatory affairs.

Strain Engineering Analytical Chemistry Fermentation DSP

Fast integration methods Capacities continuously 2L, 5L, 20L fermenters; Pilot units TF Filtration, DS centrifuges,
Screening capacities increased 300L fermenter distillation (continuous and fractional)

Manufacturing Quality Regulatory Applications Commercial

Upscaling, tech transfer, Assurance, Management Compliance, EFSA, Formulations, Sales, marketing,
Managing of CMOs Control - QA, QM, QC Dossiers, Approvals customer support supply chain

Product portfolio

Evolva offers a portfolio of seven differentiated molecules in multiple product

applications. Six of the molecules are already on the market. With several innovative
candidates in our pipeline, we are targeting further launches in the coming years.

ANNUAL REPORT 2022 25

PRODUCT PIPELINE

The following table describes key marketed products across Evolva’s three business
segments.

Proof-of-
Ingredient Market sector Concept Development Piloting Market

Resveratrol Health Ingredients

Health Ingredients;
L-Arabinose
Flavors & Fragrances

Valencene Flavors & Fragrances

Nootkatone Flavors & Fragrances

Vanillin Flavors & Fragrances

NootkaSHIELDTM Health Protection

Stevia (Reb D/M) Health Ingredients outlicensed

Evolva’s product pipeline

For Vanillin, Evolva entered into a collaboration agreement with IFF in March 2020 to
further develop and expand its commercialization.

In March 2018, Evolva and Cargill entered into a new agreement for EVERSWEET™ under
which Evolva is entitled to royalty payments on all global EVERSWEET™ sales. In 2019,
Cargill established a joint venture named Avansya together with DSM to market the
Stevia sweetener products under the EVERSWEET™ brand.

26 ANNUAL REPORT 2022

 Innovation pipeline
Evolva continuously screens for new differentiated ideas to fill the pipeline of ingredient
product candidates. The evaluation and selection criteria for new compounds are
following a dedicated screening approach. It includes several key elements:

n Stage of R&D development and feasibility

n Competitive cost and pricing position

n Pull from market, next big ingredients theme

n Complementarity to existing products and fit into our three defined commercial
areas

n Regulatory status

n Envisaged go-to-market approach

In terms of R&D resources and required capabilities to develop such product

innovation, Evolva can rely on all key required knowledge blocks such as strain
engineering, fermentation, downstream processing (DSP) and analytical chemistry.

Evolva’s pipeline of future candidates

Not only do our R&D experts at Evolva permanently screen the yeast universe (“metro”)
for any new attractive future candidates to expand the product pipeline of the
company; equally important to them is the continuous optimization of the existing
product portfolio with a focus on cost reduction. Such analysis comprises ongoing
strain and process refinements, respectively improvements.

Identification of Proof of Scale-up/

development Market launch Full Commercialization
new candidates concept Formulation

Valencene

Market trends

 Nootkatone
Market demand   L-Arabinose

   NootkaSHIELD™ Natural Nootkatone

Revenue potential
    NKTOOt/002/003 Resveratrol
Profitability      Resveratrol RSV004/002/003
    
Synergies to
     RSV004/005/006
existing products
   NootkaSHIELD™ Vanillin
Technical   NKS001/002

feasibility  EVERSWEET™
(royalties)

Number or candidates currently under evaluation:

>25 19 9 9 9 9

Mid-term plan 2023 – 2025

Spotlight 1: Evolva’s innovation pipeline provides exciting potential for future growth

ANNUAL REPORT 2022 27

CORPORATE
FLAVORS ANDGOVERNANCE
FRAGRANCES

28 ANNUAL REPORT 2022

ANNUAL REPORT 2022 29
FLAVORS AND FRAGRANCES

Evolva designs, produces and sells nature-based flavors and fragrances ingredients
such as Nootkatone, Valencene and Vanillin.

Our Products

Proof-of- Market
Ingredient Description Concept Development Piloting presence

Nature-made polyphenol with

Resveratrol
demonstrated health benefits
Unique bio-active sugar with
L-Arabinose
sugar blocker properties;
Flavoring agent used in
L-Arabinose Maillard reaction
Aroma component of citrus
Valencene
fruitand citrus-derived odorants

Aroma ingredient of Grapefruit

Nootkatone obtained via biochemical
oxidation of valencene

Primary component of vanilla

Vanillin
bean extract

Nature-identical ingredient
NootkaSHIELDTM
for health protection

Stevia outlicensed
High intensity sweetener
(Reb D/M)

Evolva’s Portfolio in Flavors & Fragrances

Nootkatone
Nootkatone is found in minor quantities in the peel of grapefruit as well as in the wood
of the Alaska yellow cedar, the “Nootka” cypress. It is known as a highly “substantive”
citrus ingredient that persists on the skin or clothing for an extended period of time.
Perfumers use nootkatone to impart a fresh clean woody scent that lasts. Flavorists
use it to add a citrus, woody, grapefruit profile to any fruit-flavored products such as
carbonated beverages or confectionery products.

Extracted from grapefruit peel oil, nootkatone is prohibitively expensive, initially limiting
its use to fine fragrance products and premium food and beverage products. In recent
years, declining grapefruit harvests have increased the price of grapefruit-derived
nootkatone. Over the same period, the doubling of the price of oranges drove up the
price of orange-derived nootkatone, produced by oxidating valencene extracted from

30 ANNUAL REPORT 2022

orange-peels. With our Nootkatone produced using precision fermentation, Evolva
offers the most affordable solution in addition to providing a high sensory quality with
no batch-to-batch or seasonal variations.

By producing our Nootkatone via fermentation, we guarantee a predictable and

reliable supply chain that is not influenced by weather or crop cycles. This enables
a broader use in high volume markets such as food and beverages, cosmetics and
perfumery.

Evolva markets Nootkatone for the flavor and fragrances industry and for selected
applications in fast-moving consumer goods. The focus areas are food and beverages,
cosmetics and perfumery. We continue to expand our Nootkatone product portfolio,
most recently with a new variant that meets requirements to qualify as natural in the
EU. This variant substitutes the chemical oxidation process used to produce US-natural
nootkatone from valencene with a natural enzymatic process, qualifying it for use in
natural products in the EU.

Valencene
Valencene is an aroma ingredient found in the peel of oranges and other plants. It
is responsible for the characteristic smell and taste of fresh oranges. To date its use
has been limited by its high cost, supply constraints and inconsistent product quality.
Valencene is a key ingredient in a broad range of food and beverages, fragrances,
cosmetics and home care products.

Traditional methods of producing valencene are inefficient, requiring thousands of

kilograms of oranges to obtain a single kilogram of valencene. Moreover, supply is
dependent on the outcome of the respective season of the orange harvest.

By producing valencene via fermentation rather than extracting it from orange peel
oil, Evolva’s process can reliably produce large amounts of valencene in a highly
reproducible, sustainable and cost-effective manner.

With very consistent purities and sensory profiles, the range of Valencene by Evolva™
products are well suited for a broad array of products. And by undercutting the
cost of production from fruit peel oil, our Valencene opens new applications for the
compound, contributing to growing market demand.

ANNUAL REPORT 2022 31

FLAVORS AND FRAGRANCES

Vanillin
Vanilla is one of the most popular flavors among consumers and is used in many food
and beverage products, from ice cream and cakes to beverages including coffee
and tea.

Vanilla can be extracted from the seed pods of the vanilla orchid and comprises
a complex set of taste components. One of these is vanillin, which is found in small
quantities in vanilla beans. Vanilla beans grown in nature face challenges in terms of
availability, weather conditions, and fluctuating costs.

Supply difficulties of vanilla beans contributed to the growth of the synthetic vanillin
market, which today represents around 85% of the global vanillin supply. Synthetic
vanillin is typically produced using petrochemicals or chemically derived from lignin,
found in wood pulp. As a result, synthetic vanillin fails to meet consumer demand for
natural ingredients and products.

Evolva’s Vanillin is a nature-based ingredient produced using precision fermentation

in a stable supply chain environment.

2022 Update
In 2022, Evolva’s flavor and fragrances business developed well thanks to a strong
contribution especially from Vanillin. Also, sales with Valencene and Nootkatone were
ahead of expectations. Several factors contributed to this such as declining grapefruit
harvests and the rising price of oranges drove up the price of citrus-derived valencene
and nootkatone. Considerable price increases by competitors led customers to
transition the supply to our more cost-effective and climate-resilient offering.

In December 2022, we broadened our offering with the launch of EU-qualified Natural
Nootkatone. By enabling customers across the EU to meet rising expectations for
natural ingredients with a favorable environmental footprint, this new product variant
will significantly expand the addressable market. Full market introduction is slated for
the first half of 2023.

In 2022, we expanded the production capacity for Vanillin by successfully upscaling

production to a third-party contract manufacturing organization. The company’s
pipeline in the F&F segment remains solid and we expect to introduce additional new
candidates in the near future.

32 ANNUAL REPORT 2022

ANNUAL REPORT 2022 33
CORPORATE
HEALTH INGREDIENTS
GOVERNANCE

34 ANNUAL REPORT 2022

ANNUAL REPORT 2022 35
HEALTH INGREDIENTS

The Health Ingredients market remains an extremely dynamic market, stimulated by

growing consumer inclination towards healthy nutrition supported by the pandemic.
The necessity to pay greater attention to physical health (not only to prevent health
problems) but also other age-related concerns, especially through nutrition, were
already present before COVID-19. In many ways, it seems that the pandemic has been
an accelerator of already emerging trends rather than its generator.

The perception of health has evolved and has become more holistic. Consumers
remain extremely attentive to their physical health, but they are also increasingly alert
to their mental and emotional wellbeing. Consumers now consider all aspects of their
health as strongly connected and interdependent. At the same time, sustainability is
becoming more and more important. Consumers not only want to care for themselves,
but also for the planet.

Looking at the resveratrol market, historic applications on heart health, blood glucose
control as well as joint and bone health remain blockbusters. But in 2022 we also saw
a substantial increase of new product development focusing on women’s health,
menopause relief, brain function, mental performance and beauty from within.

Proof-of- Market
Ingredient Description Concept Development Piloting presence

Nature-made polyphenol with

Resveratrol
demonstrated health benefits
Unique bio-active sugar with
L-Arabinose
sugar blocker properties;
Flavoring agent used in
L-Arabinose Maillard reaction
Aroma component of citrus
Valencene
fruitand citrus-derived odorants

Aroma ingredient of Grapefruit

Nootkatone obtained via biochemical
oxidation of valencene

Primary component of vanilla

Vanillin
bean extract

Nature-identical ingredient for

NootkaSHIELDTM
health protection

Stevia outlicensed
High intensity sweetener
(Reb D/M)

Evolva’s Portfolio in Health Ingredients

36 ANNUAL REPORT 2022

As consumers are broadening their perception of their health, they are now also
looking for science-backed functional ingredients that allow them to address a variety
of health concerns quickly and simultaneously. As a result, resveratrol – which is by
nature a holistic functional ingredient with a broad spectrum of benefits – has seen
a substantial increase in demand over the past years.

Building the scientific evidence to support such expected benefits undoubtedly adds
substantially to the credibility of such innovative ingredients. The execution of clinical
studies by Evolva and our partners continues to be a key differentiation versus our
competitors.

Veri-te™ Resveratrol
Resveratrol is a polyphenolic compound that occurs naturally in many plant sources
such as grapes, peanuts cranberries and other berries, albeit at low concentrations.

Evolva’s resveratrol is a high-purity ingredient, made via precision fermentation, which

ensures a stable, traceable and reliable supply chain. The collaboration with external
partners and technology companies allows us to offer our resveratrol ingredient in
various formats such as cold-water dispersible or oil- and water-soluble resveratrol.

Our team continuously screens for complementary offerings that meet growing
consumer demands for new resveratrol product applications, as resveratrol is
poised to remain a key ingredient in the strategies of manufacturers and formulators.
Moreover, for existing applications, we continuously improve the effectiveness of the
various formulations of Veri-te™ Resveratrol. Innovative applications allow for its use in
a continuously broadening range of market segments, including dietary supplements,
personal care and cosmetics, functional beverages, and pharma with API applications
(Active Pharmaceutical Ingredients).

Due to its large spectrum of applications, resveratrol remains key in the strategies of
ingredient manufacturers and formulators and continues to be the focus of many
human and animal studies, with more than 1,600 published studies in 2022. A total of
265 human clinical studies reported the benefits of resveratrol supplementation on
immune health, cardiovascular conditions, cognitive health, bone health, skin health,
eye health and oral health.

The launch of Veri-te™ Cosmetics, announced in 2022, is one example of how Veri-te™
Resveratrol’s broad spectrum of applications makes it possible to enlarge the addressable
market. Backed by science and fully in line with evolving consumer expectations, Veri-te™
Cosmetics, which has been shown to activate six skin pathways and 14 genetic targets,
offers an exciting outlook for the coming year, with new products already in the pipeline.

ANNUAL REPORT 2022 37

HEALTH INGREDIENTS

L-Arabinose
L-Arabinose is a pentose, rare sugar with a similar taste profile to sucrose. It is used in
a wide range of applications in diverse industries. This versatile ingredient has recently
gained attention with numerous studies reporting health benefits, including blood
glucose control, weight management, and as a prebiotic. As a “bioactive sugar”,
L-Arabinose combines the functionality of a reducing sugar with potential health
benefits. Human clinical studies indicate great potential for the use of L-Arabinose
particularly for blood glucose management, although additional carefully designed
studies will still be needed. Evolva’s investment in scientific research to develop its
ingredients has taken a step further in terms of determining L-Arabinose ’s potential
health benefits. In addition to providing our customers with a sustainably produced
ingredient, Evolva is currently investing in ongoing studies that aim to provide science-
based evidence on the use of L-Arabinose as a health ingredient and in cosmetic
applications.

L-Arabinose is a versatile ingredient with several applications in a diverse range of

industries around the globe. Some selected applications are:

n Flavor: L-Arabinose is currently used in the food and flavor industry as a flavoring
agent. Due to its sugar-reducing properties, it can be used in the Maillard reaction,
resulting in appealing flavors in the bakery, confectionary, and pet-food industries;

n Dietary supplements: Research, including human clinical studies, indicates that,

due to its sugar-blocker properties, L-Arabinose is effective when combined with
sucrose in lowering blood glucose levels;

n Cosmetics: L-Arabinose is currently used as an excipient in topical applications. In

addition, some products list it as an active ingredient in anti-aging formulations;

n Pharma: L-Arabinose can be used as a precursor as part of the biotechnological

production of L-nucleoside analogs as well as in medical weight-loss devices.

The launch of L-Arabinose in January 2021 added further evidence to Evolva’s ability to
generate additional innovative solutions to address customer and consumer needs
from its diversified unique fermentation technology.

38 ANNUAL REPORT 2022

Differentiation through clinical studies
Over the course of the past two years, more than 3,000 studies on resveratrol alone
have underlined the benefits of supplementing resveratrol on immune health,
cardiovascular conditions, cognitive health, bone health, skin health, eye health, and
oral health, for human consumers and patients, and for our companion animals.

As an illustration, the RESHAW study results (Clinical Nutrition Research Centre,

University of Newcastle, Australia), recognized with the Nutra Ingredient Asia Award
in 2020, provided tangible, science-based evidence to the benefits of using Veri-te™
Resveratrol to support post-menopausal women’s health. Similar clinical studies are
performed in the dynamic research areas of Gut Health and Mental Health, which
continue to represent key market opportunities for our Veri-te™ Resveratrol.

Throughout the past business year, Evolva continued to invest in and provide scientific
support for clinical studies. By bringing high-level science to customers generated
through well designed studies by recognized research institutions, we provide tangible
evidence of the differentiated benefits of our patented Health Ingredients to our
customers.

We consider this to be a differentiating element versus our competitors as Evolva

provides expert scientific and technical support to global customers and distribution
partners. We are firmly convinced that the continued investment in clinical studies
gradually underlines the positive properties of our two key ingredients, and, ultimately,
the reasons for our customers to invest in our Resveratrol and L-Arabinose products.

2022 update
Veri-te™ Resveratrol by Evolva brings to the resveratrol market a distinctive value
proposition as a unique source of resveratrol produced from a patented fermentation
process. It is in perfect match with today’s consumer expectations for functional,
reliable, and sustainable ingredients that effectively contribute to their overall health
and wellbeing.

Veri-te™ Resveratrol is the flagship of Evolva’s Health Ingredient segment with the clear
ambition to build a robust platform, supporting Veri-te™ Resveratrol’s proven benefits.
This platform consists of a high-performing back-end infrastructure including:

n Commercial excellence, with a team of in-house experts, offering customers end-

to-end advice from new product concept to product launch

n Increased manufacturing capabilities to face growing worldwide demand

ANNUAL REPORT 2022 39

HEALTH INGREDIENTS

In the first half of 2022, we successfully stabilized and optimized the production of
resveratrol, eliminating production issues that limited production in 2021. Throughout
2022, Evolva’s Resveratrol business continued its geographical market penetration
into the core US and EU markets, a reflection of ongoing new product developments,
incubating partnerships with key accounts on strategic projects, and the efficiency of
the diversified distribution partners in these regions. A distribution agreement signed
in the first half of 2022 with Tovani Benzaquen Ingredients in Brazil gave us access
to an attractive segment of the Brazilian market for dietary supplements. The same
distribution partner will market Veri-te™ Resveratrol for animal nutrition and health,
which Brazilian regulators approved in late 2022. And in Asia, Veri-te™ Resveratrol
considerably broadened its customer base with a clear upward trend in sales and a
stronger interest in using the Veri-te™ Resveratrol brand.

In alignment with our efforts to develop various product formats and applications, Veri-
te™ Resveratrol is now used in a wide range of market segments, including women’s
health, dietary supplements, functional beverages, animal health, and pharma.
With proven benefits in cosmetics applications, such as detoxifying, protecting,
rejuvenating, and repairing damaged cells, we are addressing new application
fields in the areas of oxidative stress, skin aging and collagen fibers. We are currently
finalizing a proprietary clinical study assessing the effects of Veri-te™ Resveratrol in
beauty from within and topical applications, which will bring further developments
in this space. Following the publication of the outcomes from the RESHAW study, led
by Professor Peter Howe and Dr. Rachel Wong at the University of Newcastle’s Clinical
Nutrition Research Centre – Australia, 2021 has seen many new product launches in
the dietary supplement space, focusing on Women’s Health with many concepts,
supporting more specifically post-menopausal women.

As a leading player in that space, Evolva supported the 2022 edition of the World
Menopause Day on 18 October. For this occasion, we organized webinars demonstrating
the benefits of daily supplementation with Veri-te™ Resveratrol in post-menopausal
women, this year with a special focus on cognitive health.

We continue to invest in clinical, in vivo and ex vivo studies to support product

innovation for our customers, focusing in particular on cosmetics applications.
Additionally, we are finalizing a skin health study, the first clinical study looking at
the effects of both oral resveratrol supplementation and topical application on skin
ageing. Combined with a pending efficacy patent, we expect these results to secure
resveratrol as a key ingredient in both the beauty-from-within and the cosmetics and
personal care markets.

40 ANNUAL REPORT 2022

 Stevia
EVERSWEET™
Evolva initiated an agreement with Cargill in 2013, resulting in the out-licensing of our
Stevia product to Cargill, an international blue-chip company in the food sector. In
2019, Cargill established the Avansya joint venture together with Dutch DSM, another
global player in Health, Nutrition & Bioscience solutions, in order to market the Stevia
sweetener products under the EVERSWEET™ brand.

Proof-of-
Product Description Concept Development Piloting Market

Stevia (Reb D/M) High intensity sweetener outlicensed

Evolva’s outlicensed
Stevia product

2022 update
Commercial-scale production of EVERSWEET™ started in November 2019 at Cargill’s
fermentation production facility in Blair, Nebraska (USA).

The royalty stream collected by Evolva in 2022 was disappointing primarily due to
project delays caused by the COVID-19 pandemic. With the easing of the COVID-19
pandemic, and since EVERSWEET™ is GRAS and FEMA GRAS approved for use in food
and beverage products in the U.S. and Mexico and additional regulatory approvals for
use in other countries are underway, we anticipate royalty income to grow in line with
its full potential post pandemic times. Focus of such growth is based on geographic
expansion and increased focus on sugar replacement.

ANNUAL REPORT 2022 41

CORPORATE
HEALTH PROTECTION
GOVERNANCE

42 ANNUAL REPORT 2022

ANNUAL REPORT 2022 43
HEALTH PROTECTION

Evolva designs, manufactures and supplies nature-based products with high efficacy
that can protect health-conscious consumers globally.

Proof-of- Market
Ingredient Description Concept Development Piloting presence

Nature-made polyphenol with

Resveratrol
demonstrated health benefits
Unique bio-active sugar with
sugar blocker properties;
L-Arabinose
Flavoring agent used in
Maillard reaction
Aroma component of citrus
Valencene
fruitand citrus-derived odorants

Aroma ingredient of Grapefruit

Nootkatone obtained via biochemical
oxidation of valencene

Primary component of vanilla

Vanillin
bean extract

Nature-identical ingredient
NootkaSHIELDTM
for health protection

Stevia outlicensed
High intensity sweetener
(Reb D/M)

Evolva’s Portfolio in Health Protection

NootkaSHIELD™
NootkaSHIELD™ is Evolva’s 100% nature-identical, high purity version of the active
ingredient Nootkatone for insect repellent uses.

Nootkatone is naturally found in minute quantities in the heart wood of the Alaska
yellow cedar, the Nootka cypress, as well as in the skin of grapefruit. Nootkatone has
been tested against a variety of biting pests, including ticks that are responsible for
transmitting Lyme disease, and against mosquitoes that act as vectors for severe
diseases like the Zika, Chikungunya, Dengue and West Nile viruses.

44 ANNUAL REPORT 2022

In addition to its use as an insect repellent, NootkaSHIELD™ can be used to protect pets
and large animals as well as outdoor spaces, clothing and materials against pests.

The global insect repellent market in consumer and animal segments is currently
worth about USD 10 billion, with continued growth driven by strong fundamentals like
global warming and climate change, leading to new invasive pests spreading into
areas where they were previously unknown.

2022 update
Over the course of 2022, we have seen continued strong interest and momentum with
our development and registration partners, as well as approvals in various markets.
Evolva also invested in the development of proprietary formulations of NootkaSHIELD™
to support our leading customers in their activities to commercialize first end-user
applications and continue to strive for the registration of consumer products. As we
aim to expand beyond the US into countries that are based on the US regulatory
approval or have fast-track regulatory processes, we brought prototyping and test
sales to selected international marketing partners in late 2022.

In the commercialization of NootkaSHIELD™, our initial priority remains unchanged on

personal repellents, pet care and home protection uses, based on the NootkaSHIELD™
nature-identical technology. In October 2022, Evolva’s NootkaSHIELD™ insect repellent
was approved for use in Hong Kong, following the approval as active ingredient in the
United States, which Evolva received from the US Environmental Protection Agency
(EPA) in August 2020, as well as initial launch activities during 2022 in Singapore which
led to first sales in 3Q 2022. This represents an important milestone in preparation
of further launches across South-East Asia, where insect prevalence is high due to
tropical climate conditions.

Additionally, Evolva was awarded a grant of USD 0.5 million from the US Centers for
Disease Control and Prevention (CDC) for the further development of NootkaSHIELD™.
The grant, distributed in several payments over a period of 18 months since 30
September 2022, will support the development of new formulations and applications
of NootkaSHIELD™ for tick bite prevention.

ANNUAL REPORT 2022 45

CORPORATE SUSTAINABILITY

46 ANNUAL REPORT 2022

ANNUAL REPORT 2022 47
CORPORATE SUSTAINABILITY

Evolva’s purpose as the foundation of sustainable performance

Consumers are increasingly paying attention to their health and the environment. This
again is driving the global demand for more natural ingredients in food and beverage
products. The corresponding increase in demand for more natural products cannot
always be met by accessing ingredients from traditional agricultural sources.

Innovative suppliers are pursuing alternative science-based solutions which are leading
to new ingredients being developed to meet these supply limitations.
At Evolva, we contribute to resolving resource and supply chain bottlenecks in nature
through our proprietary technology. Our white biotech platform differentiates us to
design and produce ingredients that contribute to people’s health, wellness, and
sustainability, while favorably impacting global resources and supply.

In terms of innovation, it is in our DNA and, hence, our corporate purpose to research,
develop, grow, and bring to market high quality, affordable, ready-to-formulate
products that are all based on nature and make them available to the world despite of
any natural sourcing constraints.

RESOLVING THE BOTTLENECKS OF NATURE

48 ANNUAL REPORT 2022

 The innovative edge to sustainability
Evolva applies a sustainable approach, using fermentation to produce ingredients
with less water, less land, and a smaller carbon footprint. The respective biochemical
pathways of nature – a series of conversion steps – enable a plant to convert water and
sunlight or specific nutrients into a targeted ingredient. Through white biotechnology,
these pathways allow us to produce the desired ingredient in our facilities. Compared to
other production avenues, the reduced exploitation of resources results in meaningful
Spotlight valencene: environmental benefits.

FIRST CHALLENGE: Focus on material drivers of sustainable performance

Traditional methods of With our 50 employees, Evolva continues to be a small industrial biotech that is still on
producing nootkatone its journey towards profitability and cash generation. During this phase we focus our
are inefficient, as it takes resources on those drivers that really matter for sustainable long-term performance.
thousands of kilograms As a consequence, we have defined the following material drivers for our journey
of grapefruits to obtain towards sustainable performance:
one single kilogram of
nootkatone.

SECOND CHALLENGE:
Supply can be adversely
affected by the unpre-
dictable outcome of
the seasonal grapefruit Resolving the
Resolving the
natural
harvest. supply chain
resources
limitations of
limitations of
 OUR SOLUTION:
nature
nature
Evolva offers a cost-
effective, nature-based
nootkatone with a more
Innovation:
stable supply chain and
Advance high quality,
reduced CO2 emissions
affordable, ready-to-
resulting from mostly
formulate products,
heavy, long transports. nature-based

Evolva’s material drivers of sustainable performance

ANNUAL REPORT 2022 49

CORPORATE SUSTAINABILITY

Fermentation of nature-based ingredients

Our innovation helps eliminate resource bottlenecks of nature...

Microorganisms are everywhere and sustain life in all forms, from humans to plants.
The Evolva biologists apply the latest advances in biotechnology and science to
transform microbial fermentation into a process that can produce a variety of nature-
based ingredients.

A targeted ingredient such as a flavor compound is often only present in trace

amounts, less than 0.001% in a plant. Growing these plants may require substantial
amounts of land, water, and labor. With our proprietary biotechnology, we can
significantly increase the yield and the efficiency of the production of multiple nature-
based ingredients - without exploiting natural resources. And this innovation is purely
based on the biochemical pathways of nature, hence fully sustainable.

...but also eliminating supply chain constraints

Developing nature-based ingredients by fermentation also means being able to
make them to order. Consumers or our customers do not need to worry about any
unpredictable weather, seasonality, political instability, supply chain interruptions,
or long transportation distances. Fermentation allows to manufacture high purity
products, free of environmental contaminants and in consistent batches.

Our proprietary, precision-fermentation technology platform allows us to continuously

innovate and fill our pipeline of nature-based ingredients that all contribute to
overcome sourcing bottlenecks in nature.

The sustainability edge

of Evolva’s nature-based
ingredients enables our
customers to leverage
the environmental
credentials of our
products. We are proud
to be part of this global
sustainability journey.

50 ANNUAL REPORT 2022

Looking ahead
Beyond continuous innovation, our commitment implies investments into our team
as well as into additional manufacturing capacity to support the megatrend of a
growing demand for nature-based ingredients. This does not only hold true for food
and beverages applications, but also for other applications such as for our nature-
based Nootkatone pest control offering or our nature-based Resveratrol offering for
our companion animals.

ANNUAL REPORT 2022 51

CORPORATE GOVERNANCE

52 ANNUAL REPORT 2022

ANNUAL REPORT 2022 53
CORPORATE GOVERNANCE

Evolva Holding SA is a stock corporation established under the laws of Switzerland, with its
registered office in Reinach (Canton Basel-Landschaft). Its business purpose is to engage
in the research, development and commercialization of products and processes with
applications in food, nutritional, pharmaceutical, pest control and other areas.

Evolva is subject to the disclosure requirements of the Directive on Information Relating

to Corporate Governance Directive issued by SIX Exchange Regulation (the “Corporate
Governance Directive”), which stipulates disclosure of key information regarding
corporate governance by listed companies on a comply-or-explain basis. As part of
this regime, Evolva is furthermore required to disclose basic principles and elements
of its compensation programs (incl. share-based compensation) for members of the
Board of Directors (“BoD” or “Board”) and the Group Management Team (“GMT”).

Evolva’s governance system and related reporting complies with Swiss law, including
the Ordinance against Excessive Compensation in Listed Companies (as incorporated
into the Swiss Code of Obligations (“CO”) as of 1 January 2023) and the Corporate
Governance Directive and follows best practice standards and aims to comply with
the Swiss Code of Best Practice for Corporate Governance.

Operative Group structure

Board of
Directors

CEO
Christian Wichert*

CFO Legal & Investor Regulatory

R&D Operations Commercial
Carsten Däweritz* Compliance Relations Affairs

Flavor and
Frangrances

Health
Ingredients

Health
* Member of the Group Management Team Protection

54 ANNUAL REPORT 2022

 Legal Group structure
On 31 December 2022, the Evolva Group (“Evolva”) consisted of Evolva Holding SA
(“the Company”) as the listed parent company:

Company name: Evolva Holding SA

Domicile: Duggingerstr. 23, CH-4153 Reinach
Register number: CHE-108.641.858
Listing: SIX Swiss Exchange, symbol “EVE”
ISIN: CH0021218067
Swiss security ID: 2121806
Market capitalization 1) 31.12.2022: CHF 91.9 million
Share price at 31.12.2022: CHF 0.0820
Duration of the company: unlimited

1) based on total shares outstanding

and the following non-listed direct or indirect subsidiaries:

Name Domicile Ownership1) Shareholder Share capital

31.12.2022 31.12.2021
Evolva AG Reinach, CH 100% 100% Evolva Holding SA CHF 6,369,540
Evolva Inc. Lexington, USA 100% 100% Evolva AG USD 7,835

Non-operational entities
Evolva Bio UK Ltd. 2) Cambridge, UK 100% 100% Evolva AG GBP 14.62
Evolva Singapore PTE. Singapore 100% 100% Evolva AG SGD 100
Evolva Biotech A/S 3)
Copenhagen, DK n/a 100% Evolva AG DKK 4,311,583
Evolva Biotech Private
Limited 2) Chennai, India 100% 100% Evolva AG INR 169,930

1) Capital ownership is equal to voting ownership

2) Company in liquidation
3) Company liquidated in 2022

Cross-shareholdings
On 31 December 2022, no cross-shareholdings exceeding 5% existed.

ANNUAL REPORT 2022 55

CORPORATE GOVERNANCE

Capital structure and shareholders

Description of the shares

On 31 December 2022, the Company had only registered shares outstanding. All shares
have a nominal value of CHF 0.05. Each share carries one vote at the shareholders’
meetings of the Company – subject to limitations as described below.
In February 2014, Evolva launched an ADR program (American Depositary Receipt),
supported by Bank of New York Mellon. Each Evolva ADR represents ten ordinary
shares and trades on the OTC (over-the-counter) market in the US. The ADR program
does not result in an increase in the number of outstanding Evolva shares. Additional
information is available on https://www.adrbnymellon.com/?cusip=30050L109.

Issued share capital

At year-end 2022, the Company had 1,121,280,367 registered shares issued and
outstanding with a nominal value of CHF 0.05 each, representing a nominal share
capital of CHF 56,064,018.35. All shares are fully paid up.

Shareholder structure and significant shareholders

The section “Stock Review” on page 12 of this Annual Report contains information on
the company’s shareholder structure.

During 2022, shareholders of Evolva submitted a number of filings regarding their

crossing of reportable thresholds as percentage of shares issued and outstanding
under Swiss disclosure rules. The detailed shareholder notifications are available
on the SIX website at https://www.ser-ag.com/en/resources/notifications-market-
participants/significant-shareholders.html

Apart from the shareholdings listed in the Stock Review section, Nice & Green SA as of
31 December 2022 had a derivative purchase position of 560,000,000 shares, equating
49.94% of the Company’s capital (theoretical number based on a nominal value of
0.05 CHF per share and not on market value; the no. of shares and the percentage
are updated figures and differ from the figures notified pursuant to Art 120 FinMIA),
related to an agreement for the issuance and subscription of convertible notes further
described under “Convertible bonds and equity-based incentive plans” below.

Treasury shares
On 31 December 2022, Evolva held 4.4 million shares in treasury (the no. of shares in
treasury is an updated figure and differs from the figure notified pursuant to Art 120
FinMIA). These shares may be used for financing purposes at a later point in time. For
more details see the Consolidated Financial Statements.

Conditional Capital for incentive equity plans

At 31 December 2022, conditional capital of maximum CHF 1,985,038.05 was available for
the issuance of up to 39,700,761 shares under the incentive equity plans to employees
of the Company and its subsidiaries, Board members and other key persons (article

56 ANNUAL REPORT 2022

 3c Articles of Association of the Company, Statuten; “Articles” (available under https://
evolva.com/app/uploads/2022/05/8-Statuten-Evolva-Holding-AG-220525d.pdf)),
which equates to 3.5% of the existing share capital.

For details regarding the terms and conditions of equity-based instruments, please
refer to the Notes on page 114 to the Consolidated Financial Statements.

Conditional Capital for financing purposes

On 31 December 2022, conditional capital of maximum CHF 8,906,094.10 was available
for issuance of up to 178,121,882 shares from conditional capital for financing purposes
(article 3a Articles), which equates to 15.9% of the existing share capital. These are
reserved for the voluntary or compulsory exercise of conversion rights and/or warrants
granted in connection with bonds or other financial market instruments or loans.

Authorized Capital for financing purposes

The Board’s proposal to create additional authorized capital in the maximum amount
of CHF 5,153,146.75, was approved at the Company’s annual general meeting (“AGM”)
on 5 May 2022.

On 31 December 2022, authorised capital of the maximum amount of CHF 2,020,795.45

was available to the BoD to issue at any time until 12 April 2024 a maximum of 40,415,909
fully paid-up registered shares (article 3abis Articles), which equates to 3.6% of the
existing share capital.

For more information regarding the capital structure, including on the terms and
conditions for the issuance of shares and the limitation/exclusion of pre-emptive and/
or advance subscription rights, reference is made to the Articles, which are available
at https://evolva.com/shareholder-info/annual-general-meeting-of-shareholders/.

Changes in capital
The development of the issued shares capital over the past three years is as follows:

Total number of registered shares

Evolva Holding SA CHF 1,000

31 December 2019 796,878,237 159,375.6

Shares from conditional capital 25,000,000 5,000.0
Nominal value reduction - (123,281.7)
31 December 2020 821,878,237 41,093.9
Shares from authorized capital 208,751,116 10,437.6
31 December 2021 1,030,629,353 51,531.5
Shares from authorized capital 62,647,026 3,132.3
Shares from conditional capital 28,003,988 1,400.2
31 December 2022 1,121,280,367 56,064.0

ANNUAL REPORT 2022 57

CORPORATE GOVERNANCE

Shares and participation certificates

The Company has not issued any participation certificates.

Dividend-right certificates
The Company has not issued any dividend-right certificates.

Limitations on transferability and nominee registration

A purchaser of shares will be recorded in the Company’s share register as a shareholder
with voting rights if the purchaser discloses its name, citizenship or registered office
and address, and gives a declaration that it has acquired the shares in its own name
and for its own account. Failing such registration, a shareholder may not vote at or
participate in a shareholders’ meeting.
The Articles (article 5) provide that a person or entity not explicitly stating in its
registration request that it will hold the shares for its own account (“Nominee”)
may only be entered as a shareholder in the share register with voting rights for
shares up to a maximum of 5% of the outstanding nominal share capital. Shares
held by a Nominee that exceed this limit are only registered in the share register with
voting rights if such Nominee declares in writing to disclose the name, address and
shareholding of any person or legal entity for whose account it is holding 1% or more of
the outstanding nominal share capital. The limit of 5% shall apply correspondingly to
Nominees who are related to one another through capital ownership or voting rights
or have a common management or are otherwise interrelated.
A share being indivisible, the Company will only recognize one representative for each
share. Furthermore, shares may only be pledged to the bank that administers the bank
entries of such shares for the account of the pledging shareholders; in such case, the
Company must be notified.

The Company is authorized to delete entries in the share register as shareholder with
voting rights, after granting a hearing to the person concerned, if they were effected
on the basis of false information. The person concerned has to be immediately
informed about the deletion. The limitation on transferability may be removed by a
shareholders’ resolution with a quorum in accordance with Swiss law.

Convertible bonds and equity-based incentive plans

Convertible Notes Agreement with Nice & Green
For a description of the agreement with Nice & Green, please refer to Note 26 of the
Consolidated Financial Statements on page 132.

Equity Based Incentive Plans

The Company has established several equity-based incentive plans in order to
attract, motivate and retain key staff, and thus enhance the value of the Company
by giving key people an opportunity to become shareholders of the Company. The
terms of the incentive equity plans are determined by the Board. More information on
the equity-based incentive plans, including the share option plans, can be found in
the Note 11 to the Consolidated Financial Statements at page 114 et seqq.

58 ANNUAL REPORT 2022

The Company’s maximum share delivery obligation related to awards granted
pursuant to equity-based incentive plans is 62,564,649 shares, which corresponds to
5.6% of the existing share capital as of 31 December 2022.

Board of Directors

The Articles provide that the Board of Directors (Verwaltungsrat; “BoD” or “Board”) of
the Company may consist of a minimum of three directors and a maximum of eleven
directors. At the end of 2022, the BoD consisted of five directors.

The term of office for a member of the BoD is one year. A year means, in this context, the
period running from one AGM until completion of the next. Re-election is allowed. The
AGM elects the members and the Chairman of the BoD, as well as the members of the
Compensation Committee. Apart from these appointments, the BoD constitutes itself.
It elects from among its members one or several Vice-Chairmen, the chairperson
of the Compensation Committee and the Audit Committee as well as the other
members of the Audit Committee. It further appoints a secretary who need not be a
member of the BoD. If the office of the Chairperson of the BoD is vacant, the BoD shall
appoint a new Chairperson from among its members for a term of office extending
until completion of the next AGM.

Evolva’s Articles (article 32) restrict the number of other board mandates for members
of the BoD to:

n four in listed companies; and

n eight in non-listed companies.

The BoD is entrusted with the ultimate direction of the Company’s business and the
supervision of the persons entrusted with the Company’s management. It represents
the Company towards third parties and manages all matters which have not been
delegated to another body of the Company by law, the Articles or by other regulations.
The BoD’s non-transferable and irrevocable duties, based on the CO (art 716a) include:

1. the overall management of the Company and the issuing of all necessary
directives;
2. the determination of the organization of the Company;
3. the organization of the accounting, financial control and financial planning
systems;
4. the appointment and removal of persons entrusted with managing and
representing the Company;
5. the ultimate supervision of the persons entrusted with the management of the
Company, in particular with respect to their compliance with the law, the Articles,
regulations and directives;
6. the preparation of the Annual Report, the Compensation Report and the
shareholders’ meeting, including the execution of its resolutions;
7. the filing of an application for a debt restructuring moratorium and the notification
of the court in case the Company is overindebted or insolvent.

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CORPORATE GOVERNANCE

In accordance with Swiss law, the Articles and the Organizational Regulations, the BoD
has delegated Evolva’s executive management to the Chief Executive Officer (the
“CEO”) who is supported by the Group Management Team.

According to the Organizational Regulations (Organisationsreglement) enacted by

the BoD, the BoD meets at the invitation of the Chairman as often as required, but in
any event at least four times per year. The Organizational Regulations are available
on Evolva’s website: https://evolva.com/shareholder-info/annual-general-meeting-
of-shareholders/. In 2022 the BoD met four times in person, with the average duration
of the meetings of several hours and held several phone calls. The members of the
management of the Company may be invited to attend the meeting or part thereof
and to report on specific items. The CEO is entitled to attend all Board meetings.
Furthermore, external consultants may be invited to attend, depending on the subject
of the meeting. In 2022 the General Management Team attended all Board meetings.
No external consultants attended Board meetings in 2022.
The agenda for the BoD meetings is prepared by the Chairman and the CEO. In
general, the main agenda items comprise updates in regard to sales and production,
the progress of the product portfolio, existing and future partnerships, the financial
situation, key risks and strategic opportunities.

Resolutions of the BoD are passed by way of simple majority of the votes cast. In the
case of a tie, the Chairman has the casting vote. To validly pass a resolution, a majority
of the members of the BoD must attend the meeting. Absent members cannot be
represented. No quorum is required for confirmation of resolutions and amendments
of the Articles in connection with capital increases pursuant to articles 652g and 653g
of the CO as well as approvals pursuant to articles 23 and 70 of the Swiss Federal
Merger Act in case that the transferred assets do not exceed 10% of the total assets
of the Company.

Information and control instruments

Evolva’s management information system consists of the financial reporting and key
performance indicator system. Each month, the financial statements and additional
information of the companies belonging to the group are entered in the financial
reporting system, consolidated, and compared against the different financial plan
dimensions. The GMT and the Extended Leadership Team (ELT) discuss the results
on monthly basis in detail and the GMT decides on actions to be taken. The Board
receives every month a financial and business update with a variance analysis and
an explanation of the business progress and information about the cash situation of
the group. For each board meeting a detailed analysis of the financial development
as well as an outlook for the year is presented to the Board. Ad hoc Information is
submitted immediately to the Board on topics such as legal issues, changes in the
risk environment (risk management) and other issues with extraordinary character.
Furthermore, a specific risk heat map which presents the results of a risk assessment
process visually and in a meaningful and concise way is prepared once a year.
During an Extended Leadership Meeting the evaluation of the likelihood and potential
impact of the identified risks is evaluated. Functional Leaders are part of the Extended

60 ANNUAL REPORT 2022

Leadership Team meeting. Each functional leader is entitled to request and receive
information on all matters of the Company and the Group.

Board Committees
In accordance with good corporate governance, the BoD has established an Audit
Committee (the “AC”) and a Compensation Committee (the “CC”).

Audit Committee
At year-end 2022, the AC consisted of Stephan Schindler (Chairman) and Andreas
Weigelt.

The AC assists the BoD in the supervision of the financial management of the Company.
It is responsible for the guidelines for the Company’s risk management and internal
control system, the review of the compliance system, the review of the auditors’ audit
plans, the review of annual and interim financial statements, the monitoring of the
performance and independence of external auditors (including the authorization
of non-audit services by the auditors and their compliance with applicable rules),
the review of the audit results and the monitoring of the implementation of the
findings by management. After examination by the AC, the (interim) accounts are
recommended for approval to the BoD. In 2022, the AC convened three times by way
of video conference with an average duration of 1 hour per conference. No external
persons attended these meetings.

Compensation Committee
At year-end 2022, the CC consisted of the following non-executive members:
Christoph Breucker (Chairman);
Stephan Schindler;
Andreas Pfluger.

The CC supports the BoD in establishing and reviewing the compensation strategy
and guidelines and the performance objectives as well as in preparing the proposals
to the AGM regarding the compensation of the BoD and of the GMT, and may submit
proposals to the BoD in other compensation-related issues. In particular, the CC
provides the BoD with recommendations on the compensation of members of
the BoD and the CEO, policies for the compensation of the GMT and the Group’s
other employees, and the basic principles for the establishment, amendment and
implementation of incentive plans.

The members of the CC are elected by the shareholders at the AGM. If there are
vacancies on the Compensation Committee, the BoD shall appoint substitute
members from among its members for a term of office extending until completion
of the next AGM. The chairperson is elected by the BoD. The BoD draws up regulations
establishing the organization and decision-making process of the Compensation
Committee.
In 2022 the CC formally met two times, with an average duration of the meeting
of 1 hours. In addition, the CC held several telephone conversations. No external

ANNUAL REPORT 2022 61

CORPORATE GOVERNANCE

persons attended these meetings (except for external legal advisors in one telephone
conversation). The persons concerned are not permitted to attend meetings where
their compensation is discussed.
Additional information is available in the Compensation Report at page 73.

Composition of the Board of Directors at year-end 2022

The following table sets forth the name, function and committee membership of
each member of the BoD at year-end 2022, followed by a short description of each
member’s nationality, business experience, education and activities.

Name Function Committee membership First elected

Beat In-Albon Chairman - 2020

Stephan Schindler Member AC (Chair), CC 2020
Christoph Breucker Member CC (Chair) 2021
Andreas Pfluger Member CC 2022
Andreas Weigelt Member AC 2022

At year-end 2022, all members of the BoD were non-executive. No member of the
Board was a member of the management in the three preceding financial years.

None of the non-executive directors have any significant business connections with
the Company or its subsidiaries.
Board members are (re-)elected for a one-year period. The current period ends at the
AGM in 2023. The business address for each member of the BoD is Duggingerstrasse
23, 4153 Reinach, Switzerland.

Beat In-Albon
Swiss national, born in 1952.
Beat In-Albon has been elected as Chairman of the Board of Evolva in April 2020.

Mr. In-Albon has spent a major part of his career in the Lonza Group from 1983 -2007
and 2012 -2015. In his last role, he served as Senior Vice President, Chief Operations
Officer Specialty Ingredients and was responsible for the worldwide operational
activities. Sales and manufacturing as well as the overall results of the division fell
under the umbrella of his responsibilities, among many others. During this time Beat
In-Albon has been a member of the Lonza’s Group Executive Committee. After his
retirement from Lonza in 2015, Mr. In-Albon continued to work part-time as consultant
for Lonza Group until 2018.

Mr. In-Albon serves as a non-executive board member at PolyPeptide Group AG (since

2021), a CDMO company in the field of peptides. He also serves as a member of the

62 ANNUAL REPORT 2022

Beat In-Albon Stephan Schindler

board of Deccan Fine Chemicals Pvt. Ltd.,India (since 2019), a CMO company mainly
active in the field of agro chemicals as well as the chairman of the board of directors
of Hans Kalbermatten Thermalbad AG, Brigerbad (since 2021) and Vice Chairman of
Lonza Arena AG, Visp (since 2021).

Mr. In-Albon holds a Ph.D. degree in economics from the University of Fribourg.

Stephan Schindler
Swiss national, born in 1964.
Stephan Schindler has been elected as Member of the Board of Evolva in April 2020.

Mr. Schindler is an experienced leader in science-based companies. From 2009 to

2021, he was Chief Financial Officer (CFO) and member of the Corporate Executive
Committee of the Bachem Group. His professional career started in the informatics
at Patria/Helvetia Insurances in Basel where he assumed first management positions.
In parallel, he pursued his extra occupational studies in business economics, finance
and control. After his graduation, he joined F. Hoffmann-La Roche Ltd in Basel where he
assumed various positions in Corporate Finance. With the unbundling of the Vitamins
Division in 2001, he took over the accounting & reporting department of Roche Vitamins
Ltd. Until 2009, he was Head Finance & Control Switzerland at DSM Nutritional Products
Ltd, Kaiseraugst.

Stephan Schindler was a board member of Columna Collective Foundation – Client

Invest, Winterthur, a pension fund provider, from 2017 until 2021. Currently, he serves as
member of the board of directors of Arcondis (Holding) AG, a consulting firm in the
field of life sciences, since 2016 and the University Children’s Hospital Basel UKBB since
2021 and INFORS HT, Switzerland, a supplier for the biotechnology industry since 2022.

Mr. Schindler holds a degree of International Executive MBA Zurich/Boston and is a

certified board member.

ANNUAL REPORT 2022 63

CORPORATE GOVERNANCE

Christoph Breucker Andreas Pfluger

Christoph Breucker
German national, born in 1958.
Christoph Breucker has been elected as Member of the Board of Evolva in April 2021.

Mr. Breucker served for more than 30 years in global organizations such as Henkel
(1986-1999), Cognis (1999-2010) and BASF (2011-2013). In his last role from 2013 to 2018,
Mr. Breucker was Vice President of Synthomer plc/London where he was responsible
for regional operational activities, including sales and manufacturing. Since 2019 Mr.
Breucker works as an independent management consultant. He has strong expertise
in process manufacturing and technology.

Christoph Breucker is currently the Head of the Advisory Board of Taros Chemicals,
Germany (since 2019). He holds a Ph.D. in Chemical Engineering from the University of
Dortmund, Germany.

Andreas Pfluger
Swiss national, born in 1960.
Andreas Pfluger has been elected as Member of the Board of Evolva in April 2022.

Mr. Pfluger is a Consultant and Private Equity investor in various international companies
such as Verlinvest (Belgium), Jumi Enterprises, PiM (all US), as well as Ditsch/Valora
and APC Invest (all Switzerland).

Previously, Mr. Pfluger worked during 25 years for the Lindt & Sprüngli Group, Switzerland,
in various executive positions. He started his career in marketing, before becoming
CEO of L&S Australia as well as CEO of France. Subsequently, Andreas Pfluger was
appointed President and CEO of the Ghirardelli Chocolate Company as well as
President of Lindt North America. As SVP for L&S International, he became responsible
for Asia, Australia, Italy and North America. His last executive position in the L&S Group
was as the CEO of North America and Member of Lindt Group Management team.

64 ANNUAL REPORT 2022

Andreas Weigelt

Prior to that, Mr. Pfluger held several executive functions for the Unilever Group, both
in Switzerland and Germany.

Andreas Pfluger is a member of the Board of Directors at Mutti (Italy), Tony’s Chocolate
(Netherlands), Galerie (US), as well as Laederach Chocolates, Shinsen and Invenda
(all Switzerland).

Andreas Pfluger holds an MBA of the University of Fribourg, Switzerland, and completed
the IMD Executive Leadership Course.

Andreas Weigelt
Swiss national, born in 1981.
Andreas Weigelt has been elected as Member of the Board of Evolva in April 2022.

Mr. Weigelt is CEO and Senior Partner of Veraison Capital, an independent Swiss asset
Manager. Veraison acquires significant ownership stakes in publicly listed small and
mid-cap companies, where long-term value can be enhanced through constructive
shareholder engagement.

Previously, Mr. Weigelt worked for the listed Arbonia Group. Initially he served as Head
of Strategic Planning and M&A on a group level, before being promoted to General
Manager of EgoKiefer and Head Marketing and Business Development of the Windows
Division.
Prior to that, Andreas Weigelt was a Manager (Principal) at the Boston Consulting
Group in Zurich.

Andreas Weigelt holds a masters degree in Strategy and International Management

from the University of St. Gallen, Switzerland, and an MBA from the Nanyang
Technological University in Singapore.

ANNUAL REPORT 2022 65

CORPORATE GOVERNANCE

Christian Wichert

Executive management

In accordance with Swiss law, the Articles and the Organizational Regulations, the
BoD has delegated the executive management of the Company to the CEO. The CEO
heads the executive management team of Evolva (the “Group Management Team”
or “GMT”). Under the supervision of the BoD, the Group Management Team conducts
the operational management and reports to the BoD on a regular basis. Additional
information on the duties of the GMT can be found in the Organizational Regulations,
which are available on Evolva’s website under https://evolva.com/shareholder-
info/annual-general-meeting-of-shareholders/. The Articles (article 32) restrict the
number of external mandates for members of the GMT to two in listed companies and
four in non-listed companies. None of the GMT members have previously held other
positions within the Company or its subsidiaries.

Composition of the Group Management Team

The following table sets forth the name and principal position of each member of the
GMT at year-end 2022, followed by a short description of each member.

Christian Wichert
German national, born in 1974.
Christian Wichert was appointed CEO of Evolva in February 2022.

Christian Wichert is a results-oriented leader with broad international experience

in Europe as well as North and South America across the Specialty Chemicals/Life
Sciences, Water and Consumer Packaged Goods industries, among others.

Before joining Evolva, Christian Wichert was Chief Commercial Officer at Johnson
Matthey’s largest sector “Clean Air” where he was globally responsible for sales,
product management, marketing, technology and the APAC region.

Prior to that Christian Wichert held various senior leadership positions at Lonza where
he led the carve-out and divestment process of Lonza’s Water Care business unit
resulting in the successful sale to Private Equity.

66 ANNUAL REPORT 2022

Carsten Däweritz

He also worked previously for Nobel Biocare, Cognis and Gemini Consulting in
commercial leadership positions.

Christian Wichert holds a degree in Business Administration from the University of

Bayreuth, Germany.

Carsten Däweritz
Swiss and German national, born in 1973.
Carsten Däweritz joined Evolva in April 2021 and took over the Chief Financial Officer
position. In his role, he is responsible for Finance, Information Technology and Human
Resources.

Carsten Däweritz has broad financial experience in the pharma and biotech industry.
Before joining Evolva, Mr. Däweritz spent 21 years, from 2000 until 2021, at Lonza in
a variety of leadership positions. Most recently he was Global Head Finance and
Controlling of the Consumer Health and Nutrition Business and, prior to that, Head of
Business Services EMEA at Lonza.

Carsten Däweritz holds a pre-diploma in Mathematics and a Master in Business

Administration from the University of Münster, Germany.

Composition of the Group Management Team at year-end 2022

Name Position In GMT since

Christian Wichert Chief Executive Officer 2022

Carsten Däweritz Chief Financial Officer 2021

Christian Wichert joined the Company as the CEO in February 2022, replacing
Oliver Walker, who departed from the Company in February 2022.

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CORPORATE GOVERNANCE

Compensation, shareholdings and loans

An extensive description of the compensation system and the amounts paid to

members of the BoD and the GMT is available in the separate chapter “Compensation
Report” on pages 73 through 83. The general framework of the system is provided in
the Articles (articles 28 – 30). An overview of equity holdings of BoD and GMT members
is available in Note 11 on page 155 of this report.

Evolva’s Articles (article 33) state that loans to a member of the BoD or of the GMT
may only be granted at market conditions and to the extent the total amount of
loans outstanding to the person involved does not exceed twice the total annual
compensation last paid to that person.
The Company has not issued any guarantees for any shareholder, member of the BoD
or GMT. No shareholder and no member of the BoD or GMT has received any loans
from the Company.

Shareholders’ participation

Voting rights
Each share in Evolva carries one vote. The execution of voting rights is limited only if a
shareholder is not properly registered in relation to a share transfer (see further under
“Limitations on transferability and nominee registration”). Shareholders may have
their right to vote exercised by a representative of their choice, including a specially
designated independent shareholder representative (the “independent proxy”).
Shareholders can submit their voting instructions to the independent proxy by post
or electronically.
The independent proxy is elected by the AGM for a term of one year, i.e. until the next
AGM. The AGM may elect a substitute. In exceptional circumstances, the BoD may
determine the independent proxy. Re-election is possible. The dismissal is effective
as of the shareholders’ meeting at which it took place. In 2022, Dr. Oscar Olano was
re-elected as independent proxy for one year. A shareholder wishing to vote at a
shareholders’ meeting has to be entered in the register no later than seven days
before the meeting takes place.

Quorum
The Articles do not prescribe a quorum for shareholders’ meetings. Unless the law
requires otherwise, the General Meeting passes resolutions and elections with the
relative majority of the votes cast (whereby abstentions, blank or invalid ballots shall
be disregarded for purposes of establishing the majority). Swiss law requires a two-
thirds majority of the votes represented for resolutions concerning, inter alia (see
article 704 CO):

1. changes to the Company’s business purpose

2. the creation of shares with privileged voting rights

68 ANNUAL REPORT 2022

3. restrictions on the transferability of registered shares
4. the introduction of conditional capital or of the capital band
5. an increase in the share capital by way of capitalization of reserves, against contribution
in kind for the acquisition of assets or involving the grant of special privileges
6. the restriction or elimination of pre-emptive rights of shareholders
7. a relocation of the registered office
8. the de-listing of the equity securities of the Company
9. the dissolution of the Company other than by liquidation (for example, by way of
merger)

The introduction or abolition of any provision in the Articles introducing a majority

greater than that required by law must be resolved in accordance with such greater
majority.

Convocation
Under Swiss law, an annual ordinary shareholders’ meeting must be held within six
months after the end of the Company’s financial year. Shareholders’ meetings may
be convened by the BoD or, if necessary, by the Company’s auditors. Upon entry into
force of Swiss corporate law reform effective 1 January 2023, the BoD is further required
to convene an extraordinary shareholders’ meeting if so resolved by a shareholders’
meeting or if so requested by shareholders that together hold at least 5% of the
nominal share capital.
A shareholders’ meeting is convened by publishing a notice in the Swiss Official
Gazette of Commerce (Schweizerisches Handelsamtsblatt) at least 20 days prior to
such a meeting. In addition, holders of registered shares may be informed by a letter
sent to the address indicated in the share register.

Agenda
Upon entry into force of Swiss corporate law reform effective 1 January 2023,
shareholders that together hold shares representing 0,5% of the share capital have
the right to request that a specific agenda item be discussed and voted upon at the
next shareholders’ meeting, setting forth the item and proposal. According to the
Articles, the request to put an item on the agenda has to be made in writing at least
35 days prior to the meeting.

There are no special rules in the Articles concerning a deadline for entry of
shareholders in the share register in view of their participation in the shareholder’s
meeting. The relevant date is set by the Board in the invitation to the general meeting
of shareholders.

Changes of control and defense measures

Duty to make an offer
A shareholder that, either directly, indirectly or acting in concert with third parties,
controls 33 1/3% of the voting rights (whether exercisable or not) is obliged to make

ANNUAL REPORT 2022 69

CORPORATE GOVERNANCE

an offer to acquire all listed shares. Swiss law allows a corporation to deviate from this
rule in its Articles of Association. The Company has opted not to use this possibility.

Clauses on changes of control

The Company has no special arrangements benefiting members of the Board of
Directors or the General Management Team, or other members of management in
the event of a change of control, other than the customary clauses concerning the
exercise of equity-based incentive instruments.

Auditors
Mazars Ltd. Zurich, Switzerland was appointed as the external auditors of the Company
at the AGM held on 8 April 2021 for the business year 2021 with effect from 8 April 2021
and was re-appointed at the AGM held on 5 May 2022 with effect from 5 May 2022
for the term of one year until the end of the AGM 2023. The lead auditor is Mr. Cyprian
Bumann, who took office from the effective date of Mazars’ appointment in 2021. The
maximum term of office of the lead auditor is 7 years.
During 2022, Mazars charged CHF 139,000 in total audit fees and audit related fees
and CHF 5,000 for capital increase related services performed. In 2022, the external
auditors met 3 times with the Audit Committee.
The Audit Committee is responsible for evaluating the performance and independence
of the external auditors on behalf of the Board. This evaluation occurs at least once
a year. The criteria applied for the assessment include professional competence,
sufficiency of resources, the ability to provide effective and practical recommendations
and coordination of the external auditors with the Audit Committee. During the
meetings, Mazars among others, presented their audit strategy and their 2022 results.
The Comprehensive Auditor’s Report to the Board prepared by Mazars summarizes
the reports presented to the Audit Committee throughout the year. Within the annual
approved budget, there is an amount permissible for non-audit services that the
external auditors may perform. Within the scope of the approved and budgeted
amount, the Chief Financial Officer can delegate non-audit-related mandates to
the external auditors, subject to all applicable auditor independence regulations.
The Audit Committee reviews Evolva’s financial reporting process on behalf of the
Board. Evolva’s GMT is responsible for preparing the financial statements and the
reporting process, including the internal controls system. The Audit Committee is
also responsible for overseeing the conduct of the activities by Evolva’s GMT and the
external auditors.

Information policy

The company as a listed company is committed to communicate to its shareholders,

potential investors, financial analysts, customers, suppliers, the media, its internal
stakeholders and other interested parties in a timely and consistent way. The company
is required to disseminate information pertaining to its businesses in a manner that
complies with its obligations under the rules of the SIX Swiss Exchange.

The company publishes an annual report that provides audited financial statements
in accordance with the International Financial Reporting Standards (IFRS), Swiss

70 ANNUAL REPORT 2022

law and its Articles of Association. Moreover, the company publishes information
on its business activities, strategy, products, corporate governance and executive
remuneration.
The company also publishes its results on a semi-annual basis in the form of press
releases, distributed pursuant to the rules and regulations of the SIX Swiss Exchange.
The press releases on semi-annual results and the half-year reports contain unaudited
financial information prepared in accordance with IFRS.
The company regularly provides an analyst & media presentation as part of the
publication of annual and semi-annual financial results. Such presentation is made
available together with the earnings release on the investors section of the corporate
website. Throughout the year investor presentations are shared with individual
investors or at investor conferences.

An archive containing Annual Reports or semi-annual results releases, and related

presentations can be found in the investors’ section at https://evolva.com/financial-
data/.

For the financial calendar and events, please refer to: https://evolva.com/investors/
event-calendar/

To subscribe to important press releases (including ad hoc announcements), interested

parties can register for email news releases at https://evolva.com/investors/.

Ad hoc notifications can also be found in ad-hoc news section on https://evolva.com/

press-releases/.

The Company’s official means of communication is the Swiss Official Gazette of

Commerce (www.shab.ch). The invitation to a general meeting of shareholders may
also be sent by mail to registered shareholders.

For investor relations or media related information or questions, the company may be
contacted via:
Mail: [email protected]
Phone: +41 61 485 2000
Evolva AG, Duggingerstrasse 23, 4153 Reinach, Switzerland

Additional shareholder information is publicly available on the company website under

https://evolva.com/shareholder-info/ and contact information under https://evolva.
com/contact/.

Quiet periods

The Company instated blackout periods during which all employees are prohibited
from transacting in Evolva stock (including capital market instruments and any
derivatives). In 2022, the blackout periods were in effect between 1 January 2022 -
6 June 2022 and 22 June - 31 December 2022, during which all employees were strictly
prohibited from transacting in Evolva stock.

ANNUAL REPORT 2022 71

COMPENSATION REPORT

72 ANNUAL REPORT 2022

Summary
n Board of Directors and Group Management Team compensation in 2022
remained within shareholders’ authorization limit

n Unchanged compensation structure to prior year:

 Restricted Stock Units to members of the Board of Directors

 Performance Stock Unit scheme for Group Management Team

 Clear split between short and long-term incentives, with focus on long term
incentive

 No variable cash incentive for members of the Board of Directors and Group
Management Team

1. Introduction

This Compensation Report contains:

n A description of the compensation framework

n An overview and explanation of the compensation amounts paid to the members

of the Board of Directors (BoD) and Group Management Team (GMT) in the
calendar year 2022

n A summary of the amounts paid to the members of the BoD and GMT in the
2022/2023 authorization period and the proposed maximum amounts for BoD
and GMT compensation for the 2023/2024 authorization period

The AGM on 5 May 2022 approved the BoD’s proposals for the maximum prospective
amounts for the 2022/2023 period. The shareholders also approved the 2021 Compensation
Report in a consultative vote.

2. Rules and regulations for compensation

Evolva’s compensation system and reporting comply with Swiss law (incl. the former
“Compensation Ordinance” 1), the Swiss Code of Best Practice for Corporate Governance
as well as the SIX Directive on Information Relating to Corporate Governance. Mazars has
audited the tables in section 6 regarding BoD and GMT compensation for 2022. The Audit
Report is presented on page 83.

The CO’s provisions regarding remuneration in listed companies require that shareholders
vote on the compensation of the BoD and the GMT on an annual basis. In accordance
therewith, article 28 of Evolva’s Articles of Association provide that the AGM must vote

1 Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften,

VegüV, as incorporated into the Swiss Code of Obligations (“CO”) as of 1 January 2023.

ANNUAL REPORT 2022 73

COMPENSATION REPORT

separately on the proposals of the BoD regarding the maximum aggregate amounts of:

n the fixed and (if applicable) the variable compensation of the BoD until the next
AGM; and

n the fixed and the variable compensation of the GMT for the period from 1 July of
the current year until 30 June of the following year.

Evolva’s Articles of Association 2 also incorporate other requirements of the CO’s provisions
regarding remuneration in listed companies such as the determination of compensation
of the members of the BoD and the GMT, the AGM voting procedures, the reserve for
appointments taking place after the AGM as well as regulations around loans, credits
and post-retirement benefits for members of the BoD and GMT.

3. Overall compensation principles

Evolva’s compensation philosophy aims to attract, retain and motivate employees,

management and Board members with relevant managerial, scientific, technical,
commercial, and other essential skills. Group Management Team and staff shall be
rewarded for contributing to the achievement of the Company targets and creation of
long-term value.

The below outlined compensation principles apply to all of Evolva’s employees:

Business ethics n Commitment to treat all employees fairly and equally

n Compliance with international labor law

n Gender equal compensation

Pay for performance n Variable compensation is tied directly to the achievement
of personal and/or Company goals

Balanced & competitive n Fixed and variable compensation structure

compensation
n Balanced and competitive compensation to attract,
retain and motivate employees

2 https://evolva.com/app/uploads/2022/05/8-Statuten-Evolva-Holding-AG-220525d.pdf

74 ANNUAL REPORT 2022

 4. Process for determination of compensation

The Board of Directors (BoD) is responsible for the preparation and implementation of the
overall compensation system, as well as the preparation of the Compensation Report.
The Compensation Committee (CC) assists the BoD in the detailed preparation and
implementation of the compensation policy. It provides the BoD with recommendations
on the compensation of members of the BoD and Group Management Team (GMT).
In addition, the compensation Committee reviews and approves the principles for the
establishment, amendment and implementation of incentive plans on an annual basis.
No external advisors are consulted on the determination of the compensation.

Variable compensation for GMT follows the process illustrated below:

Award criteria Performance Compensation

setting measurement determination

n Award criteria setting n Individual annual n Determination of

by CC and approved performance variable compensation
by BoD assessment under plan by the CC and
regulations and award approved by the BoD
criteria by CC and BoD

On 31 December 2022, the CC consisted of three non-executive Board members:

Christoph Breucker (Chair of the CC), Stephan Schindler and Andreas Pfluger. In
2022, the CC formally met two times. In addition, the CC held several telephone
conversations. Compensation is usually discussed in the January BoD meeting.
The persons concerned are not permitted to attend meetings if conflicted, e.g. if
their individual compensation is discussed. Further information on the CC and its
responsibilities can be found in the Corporate Governance section of the annual
report on page 54 and in the Company’s Organizational Regulations available on
Evolva’s website: https://evolva.com/shareholder-info/annual-general-meeting-
of-shareholders/.

ANNUAL REPORT 2022 75

COMPENSATION REPORT

5. Compensation structure

Elements of total compensation for members of the Board of Directors:

Element Description
Cash consideration n Fixed cash compensation for BoD and
committee activities
Restricted Stock Units (RSU) n Fixed RSU grant (not performance related)

The compensation system for the Board of Directors remained unchanged.

Elements of total compensation for Group Management Team:

Element Payment Type Description

Annual base salary (ABS) Cash consideration n Competitive, based on responsibilities, experience and
required skill sets of the role
Pension & other benefits Cash consideration n Tailored to local market practices and regulations

Variable pay STI 1) PSU 1) n Grant value: 20% of ABS

n Performance measured based on Company targets

(Revenue, EBITDA and Operating Cash Flow )

n Payout range depending on target achievement:

< 50%: no pay-out
> 50%: pay-out on achievement level, however max. 200%

n Vesting: 12 months after grant

LTI PSU n Grant value: 75% of ABS

n Payout range depending on target achievement,

however max. 200%

n Performance criteria: EBITDA, Operating Cash-Flow,

minimum share price appreciation

n Vesting: only upon completion of performance period

and performance criteria

1) Instead of cash incentives, a short-term equity-based incentive program (STI) is granted to GMT to preserve the Company’s
cash position and to link variable compensation to metrics and drivers that we believe contribute to shareholder value.
2) PSU = Performance share unit

76 ANNUAL REPORT 2022

Evolva’s Compensation Committee continuously monitors the compensation
structure in the light of changes in legislation, Evolva’s corporate development and
changes in market practices.

The compensation system for the Group Management Team remained unchanged.

5.1 Fixed compensation items for the Group Management Team and the Board of
Directors

Fixed compensation items for the GMT comprise annual base salary (ABS), pension
plans and other benefits. Annual base salary is predominantly driven by the
responsibility, experience, skill sets, place of work and external benchmarks. Pension
plan contributions are tailored to meet local market practices and are set-up
countrywide equally for management and staff. More information on the Group’s
pension plans is provided in note 12 of the audited consolidated financial statements.
Evolva does not offer any substantial fringe benefits to the GMT or other employees.
No member of the GMT has a notice period longer than 12 months.

Compensation to members of the Board of Directors comprises an annual cash

consideration and RSUs. Both elements are fixed, i.e. not related to the performance
of the Company. Regular BoD members and the Chairman receive fixed annual cash
consideration of CHF 40,000 and CHF 80,000, respectively. The fee for membership
of a committee is CHF 5,000 and the fee for a committee Chairman is CHF 10,000. In
addition, BoD members are entitled to an annual grant of equity instruments (RSU)
with a fixed fair value at grant of CHF 40,000 (CHF 80,000 for the Chairman) per period
they serve on the BoD. Each RSU corresponds to one share in the Company. The RSUs
vest one year after grant date.

5.2 Variable compensation items for the Group Management Team

Variable compensation comprises in 2022 the following elements:

n Short-term incentive plan (STI)

n Long-term incentive plan (LTI)

Regulations and award criteria of both plans were approved by the BoD.

Short-term incentive plan (STI)

As stated in section 5 of this report, instead of a cash incentive, the Company issued
an STI plan under which GMT members were granted PSUs in the amount of 20% of
the annual base salary (measured in Swiss Francs) in the year 2022. Vesting of the
PSUs was dependent upon achievement of specific company performance criteria

ANNUAL REPORT 2022 77

COMPENSATION REPORT

at the end of the calendar year. Target performance criteria of the STI plan were to
include revenue 30% (2021: 20%), EBITDA 40% (2021: 60%), Operating Cash Flow 30%
(2021: 20%). Regarding Revenue, EBITDA and Operating Cash Flow, if the performance
of any of the financial measure is below 0.5, the portion of the equity awards relating
to the respective financial measure expires unconditionally and does consequently
not vest (“Cliff”). The maximum multiplier of shares that can be delivered to any plan
participant in aggregate is limited to 2.0 (2020: 1.2). In 2022, the combined target
achievement of total Revenue, EBITDA and Operating Cash Flow was 144.9% (2021: 0%),
consequently, the PSU granted in the year 2022 will vest on 31 March 2023.

Long-term incentive plan (LTI)

The Company issued an LTI plan in 2022. Under the LTI plan, GMT members were
granted PSUs in the amount of 75% of their annual base salary on 30 June 2022. The
performance period refers to the financial year 2024. Performance targets under
the LTI plan include EBITDA (50%) and Operating Cash Flow (50%) 3. Provided that the
performance targets are met, and a minimum share price appreciation is achieved,
all awarded PSUs shall vest on 1 April 2025.

If the minimum performance for a financial measure as defined in the performance

range is not met, the portion of the equity awards relating to the financial measure
expires unconditionally and does consequently not vest. If the minimum share
price appreciation is not met, all PSUs awarded shall expire unconditionally and do
consequently not vest. The maximum multiplier of shares that can be delivered to
any of the two GMT members in aggregate over the three vesting years is limited to
a factor of 2.0.

The BoD receives quarterly reports on progress towards short- and long-term goals.

3 Performance Targets in 2022 are unchanged to 2021.

78 ANNUAL REPORT 2022

 6. Compensation amounts for financial year 2022

Board of Directors
In accordance with the compensation structure described in section 5, in addition
to the cash consideration, each member of the BoD received RSUs for a value of CHF
40,000 resp. CHF 80,000 as Chairman of the BoD for the compensation period. The
shares were created from Evolva’s conditional capital (Article 3C).

Total compensation to members of the Board of Directors at grant value

Table 1: Compensation by Board member for the 2022 calendar year - Audited

2022 2021
Amounts in CHF 1,000 Cash Equity 1)
Total 2)
Cash Equity 1) Total 2)

Beat In-Albon, Chairman 80.0 80.0 160.0 80.0 80.0 160.0

Stephan Schindler 55.0 40.0 95.0 55.0 40.0 95.0
Christoph Breucker 50.0 40.0 90.0 33.8 40.0 73.8
Andreas Pfluger 33.8 40.0 73.8 - - -
Andreas Weigelt 33.8 40.0 73.8 - - -
Total active Board members 252.5 240.0 492.5 168.8 160.0 328.8

Richard Ridinger 13.8 - 13.8 55.0 40.0 95.0

Total former Board members 13.8 - 13.8 55.0 40.0 95.0

Total 266.3 240.0 506.3 223.8 200.0 423.8

1) based on the grant date fair value of RSU in 2022

2) excludes the Company’s mandatory contribution to Social security schemes (AHV/IV/ALV) of CHF 13,000 (2021: CHF 16,000)

At the AGM 2022, Richard Ridinger did not stand for re-election as non-executive board
member. All other active members of the board were re-elected. In addition, Andreas
Pfluger and Andreas Weigelt were elected as non-executive board members.
The change in compensation between 2022 and 2021 is due to the election of one
additional non-executive board member. No remuneration was paid to the former
board members in the year under review. No compensation was paid to the parties
closely associated with the current or former board members.

ANNUAL REPORT 2022 79

COMPENSATION REPORT

Restricted share units grant overview for members of the Board of Directors

Compensation period 2022/2023 2021/2022 2020/2021

Grant date 5 May 2022 9 April 2021 16 April 2020

Vesting date 4 May 2023 8 April 2022 15 April 2021
Share price at grant CHF 0.11 CHF 0.20 CHF 0.22
No. of RSUs granted 2,253,522 990,146 725,909
Value at grant CHF 240,000 CHF 200,000 CHF 160,000

Group Management Team

The following tables show the GMT compensation for the past calendar year. The
“variable compensation” column refers to short and long-term incentive programs.

Total compensation to GMT at grant value

Table 2: GMT compensation for the period 1 January 2022 – 31 December 2022 – Audited
Total
Fixed compensation Variable compensation compensation1)
Amounts in Base Short Long
CHF 1,000 salary Other1) Total2) term term Total2)

Christian Wichert, CEO 423.8 91.3 515.0 84.8 347.7 432.5 947.5
Other GMT members 3)
424.6 67.7 492.3 54.0 202.5 256.5 748.8
Total 848.4 158.9 1,007.4 138.8 550.2 689.0 1,696.4
of which:
active members 693.8 146.2 839.9 138.8 550.2 689.0 1,528.9
former members 4)
154.6 12.8 167.4 - - - 167.4

1) includes pension contributions (CHF 85,600) and compensation for additional work/contributions (CHF 73,400)
2) excludes the company’s mandatory contribution to social security schemes of CHF 75,000 (2020: CHF 116,000)
3) Other GMT members include Mr. Walker who left the company with effect as per end of March 2022
4) Mr. Walker who left the company with effect as per end of March 2022

Variable compensation comprises the fair value at grant date of STI (short term) and
LTI (long-term) performance share units granted in 2022. The fair value is based on
100% target achievement. No compensation was paid to the parties closely associated
with current or former GMT members.

80 ANNUAL REPORT 2022

 Long-term performance share units grant overview GMT

LTI 5 LTI 4 LTI 3

Grant date 1 July 2022 1 July 2021 1 July 2020

Vesting date 1) 1 April 2025 30 June 2024 1 April 2023
Share price at grant CHF 0.09 CHF 0.18 CHF 0.20
No. of PSU granted 6,145,564 3,040,252 2,808,941

1.1.2024 - 1.1.2023 - 1.1.2022 -

Performance Period 31.12.2024 31.12.2023 31.12.2022

1) See par. 5.2 of this Compensation report

Table 3: GMT compensation for the period 1 January 2021 – 31 December 2021 – Audited

Total
Fixed compensation Variable compensation compensation1)
Base Short Long Special
Amounts in CHF 1,000 salary Other1) Total2) term term Award Total2)

Oliver Walker 463.6 47.3 510.9 98.3 347.7 427.0 873.0 1,383.9
Other GMT members 463.2 46.3 509.5 88.7 202.5 - 291.2 800.7
Total 926.8 93.6 1,020.4 187.0 550.2 427.0 1,164.2 2,184.6
of which:
active members 3) 907.4 93.0 1,000.4 187.0 550.2 427.0 1,164.2 2,164.6
former members 4)
19.4 0.6 20.0 - - - 20.0

1) includes pension contributions

2) excludes the Company’s mandatory contribution to Social security schemes of CHF 116,000 (2020: CHF 72,000)
3) active members include Mr. André Pennartz who left the company in March 2021 and Mr. Carsten Däweritz, who joined Evolva
in April 2021; there is an overlap in compensation of 7 months.
4) former members include Mr. Fabro who resigned in January 2020 with effect as per end of January 2021

The fixed, variable and total compensation decreased between 2022 and 2021 due
to the change of GMT members and due to a special award granted to the CEO in
2021 as part of a recognition and retention scheme for key personnel. The variable
compensation paid to the GMT in 2022 and 2021 ranged from 0 to 170 percent of the
fixed pay compensation.

In 2022 and 2021, the Company did not issue or assume any guarantees for
shareholders, member of the board or GMT. No shareholder and no current or former
member of the BoD or GMT have received any loans or have any loans outstanding
from the Company. The same applies to persons related to the current or former
members of the board and General Management Team.

Shareholdings and equity instruments - audited

An overview of holdings of shares and equity instruments of the BoD and GMT can be
found in the Notes to the Statutory Financial Statements on page 155.

Functions in other Undertakings

The functions of the BoD and GMT members in other undertakings can be found on
page 62 of the Corporate Governance Report.

ANNUAL REPORT 2022 81

COMPENSATION REPORT

7. Compensation in 2022/2023 Authorization period

All figures in this Compensation Report so far cover the business year, as required
by Swiss law. These differ from those for the twelve-month period authorized by the
AGM. For the BoD this period runs from AGM to AGM and for the GMT from 1 July of the
current year until 30 June of the following year - the so-called “Authorization period”.
The differences between the Authorization period and the calendar year for GMT
are shown in the following tables. The maximum compensation amounts approved
by the AGM for the Authorization period 2022/2023 remained unchanged from the
Authorization period 2021/2022.
The tables show the maximum amounts authorized by the AGM as of 5 May 2022 as well
as the part that was actually used. The total compensation in the 2022/2023 period for the
members of board and GMT remains within the authorization given by the shareholders.

Table 4: Calendar year versus Authorization period compensation for BoD

Calendar year 2022 Authorization period 2021/2022

Amounts in CHF 1,000 Includes Amount Includes 1) Amount Approved Max.

Fixed compensation January 2022 - AGM 2022 -

266.3 275.0
(cash) December 2022 AGM 2023
Fixed equity Grant 2022 240.0 Grant 2022 240.0

Total 506.3 515.0 700.0

1) including an estimate of the remaining months of the 2022/2023 authorization period.

Table 5: Calendar year versus Authorization period compensation for GMT

Calendar year 2021 Authorization period 2021/2022

Amounts in CHF 1,000 Includes Amount Includes 1) Amount Approved Max.

January 2022 - July 2022 -

Fixed compensation 1,007.4 1,078.0
December 2022 June 2023

Variable equity STI 138.8 156.9

Variable equity LTI 550.2 550.2
Total 1,696.4 1,785.2 2,500.0

1) including an estimate of the remaining months of the 2022/2023 authorization period.

8. Proposal for the AGM of 18 April 2023

The proposed maximum compensation amounts for the 2023/2024 Authorization

period for BoD and GMT are expected to remain at CHF 0.7 million and CHF 2.5 million,
respectively.

82 ANNUAL REPORT 2022

 Mazars AG
Herostrasse 12
CH-8048 Zurich

Tel: +41 44 384 84 44

www.mazars.ch

Report of the statutory auditor to the General Meeting of Evolva Holding SA,
Reinach (BL)

Report on the audit of the Compensation Report

Opinion

We have audited the Compensation Report of Evolva Holding SA (the Company) for the year ended 31
December 2022. The audit was limited to the information on remuneration, loans and advances pursuant
to Art. 14-16 of the Ordinance against Excessive Remuneration in Listed Companies Limited by Shares
(Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften, VegüV) in the
tables marked “audited” on pages 79 to 81 of the Compensation Report.

In our opinion, the information on remuneration, loans and advances in the accompanying
Compensation Report complies with Swiss law and Art. 14-16 VegüV.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our
responsibilities under those provisions and standards are further described in the “Auditor’s
Responsibilities for the Audit of the Compensation Report” section of our report. We are independent of
the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Other information

The Board of Directors is responsible for the other information. The other information comprises the
information included in the annual report, but does not include the tables marked “audited” in the
Compensation Report, the consolidated financial statements, the stand-alone financial statements and
our auditor’s reports thereon.

Our opinion on the Compensation Report does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the Compensation Report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
audited financial information in the Compensation Report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.

ANNUAL REPORT 2022 83

 Mazars AG
Herostrasse 12
CH-8048 Zurich

Tel: +41 44 384 84 44

www.mazars.ch

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Board of Directors' Responsibilities for the Compensation Report

The Board of Directors is responsible for the preparation of a Compensation Report in accordance with
the provisions of Swiss law and the Company's articles of incorporation, and for such internal control as
the Board of Directors determines is necessary to enable the preparation of a Compensation Report
that is free from material misstatement, whether due to fraud or error. The Board of Directors is also
responsible for designing the compensation system and defining individual compensation packages.

Auditor’s Responsibilities for the Audit of the Compensation Report

Our objectives are to obtain reasonable assurance about whether the information on compensation,
loans and advances pursuant to Art. 14-16 VegüV is free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and
SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this Compensation Report.

As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement in the Compensation Report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made.

We communicate with the Board of Directors or its relevant committee regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

84 ANNUAL REPORT 2022

We also provide the Board of Directors or its relevant committee with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.

Zurich, 8 March 2023

Mazars AG

Cyprian Bumann Roger Leu

Licensed audit expert Licensed audit expert
(Auditor in Charge)

ANNUAL REPORT 2022 85

CONSOLIDATED FINANCIAL
STATEMENTS

86 ANNUAL REPORT 2022

Consolidated Statement of Financial Performance

Period from 1 January to 31 December

CHF 1,000 Note 2022 2021
Revenue from contracts with customers 4 15,539.4 9,877.6
Cost of goods sold 5 (21,548.1) (19,183.5)
Gross profit (6,008.7) (9,305.9)

Research & development expenses 6 (23,596.8) (22,439.6)

Commercial, general & administrative expenses 7 (10,786.6) (10,284.0)
Total operating expenses (34,383.4) (32,723.6)

Operating loss (40,392.1) (42,029.5)

Financial income 8 2,684.7 4,012.8

Financial expense 8 (5,658.9) (3,390.8)

Net loss before tax (43,366.4) (41,407.5)

Income tax 9 - 141.1

Net loss for the period (43,366.4) (41,266.4)

Basic and diluted loss per share (in CHF) 24 (0.04) (0.05)

Consolidated Statement of other Comprehensive Income

Period from 1 January to 31 December

CHF 1,000 Note 2022 2021
Net loss for the period (43,366.4) (41,266.4)

Items to be reclassified to the statement of

financial performance (net of tax)

- Translation differences 4,321.6 1,531.5

Items not to be reclassified to the statement of

financial performance (net of tax)
-Remeasurement gain/(loss) on defined benefit
1,110.8 1,145.4
plans

Other comprehensive income / (loss) -

5,432.4 2,677.0
(net of tax)

Total comprehensive loss (37,934.0) (38,589.4)

ANNUAL REPORT 2022 87

CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated Statement of Financial Position

CHF 1,000 Note 31 December 2022 31 December 2021

ASSETS
Non-current assets
Intangible assets 14 92,648.3 113,301.9
Property, plant and equipment 15 5,258.0 5,952.7
Financial assets 16 2,971.2 3,364.5
Total non-current assets 100,877.5 122,619.2

Current assets
Inventories 17 18,392.0 16,268.9
Compound embedded derivative 26 70.6 -
Prepayments & accrued income 18 2,485.2 1,782.3
Trade and other receivables 19 4,039.3 4,502.3
Cash and Cash equivalents 20 5,142.7 11,000.7
Total Current assets 30,129.8 33,554.2
Total Assets 131,007.3 156,173.4

EQUITY AND LIABILITITES

Equity
Share capital 21 56,064.0 51,531.5
Share premium 372,969.8 367,602.8
Treasury shares 23 (218.9) (1,718.4)
Other reserves 40,555.6 39,552.0
Accumulated loss (371,024.3) (327,658.0)
Other components of equity 7,892.8 2,460.4
Total equity 106,238.9 131,770.3

Non-current liabilities
Pension liabilities 12 459.2 1,689.3
Lease liabilities 28 2,906.8 3,574.0
Other payables 1,670.8 2,862.8
Provisions 25 1,065.6 1,056.5
Total non-current liabilities 6,102.4 9,182.6

Current liabilities
Trade and other payables 4,222.4 4,876.9
Accrued liabilities 25 2,292.8 2,731.5
Convertible loan 26 11,487.6 6,430.9
Compound embedded derivative 26 - 346.8
Lease liabilities 28 663.1 834.4
Total current liabilities 18,665.9 15,220.5
Total Equity and Liabilities 131,007.3 156,173.4

88 ANNUAL REPORT 2022

Consolidated Statement of Cash Flows Period from 1 January to 31 December

CHF 1,000 Note 2022 2021

Operating activities
Net loss for the period (43,366.4) (41,266.4)

Non-cash adjustments to reconcile net loss for

the period to net cash flows
- Depreciation of tangible assets 15 1,174.1 1,298.7
- Impairment of intangible assets 14 17,033.3 9,628.4
- Amortization of intangible assets 14 6,914.6 7,306.0
- Interest income 8 (76.8) (50.8)
- Financial income and expenses 8 100.0 1,060.7
- Net foreign exchange differences 2,621.9 (1,722.1)
- Share-based compensation 11 1,222.2 1,116.3
- Change in deferred tax liability 10 - (141.1)
- Change in current assets (1,868.5) (8,130.6)
- Change in current liability (2,244.5) 650.7
- Change in provisions - 393.9
- Change in pension liability 12 (119.3) 484.0
- Change in non-current financial assets 16 - 17.6
- Interest payments received 8 76.8 (26.9)
- Interest expenses paid 8 (348.0) (404.0)
Net cash flow from operating activities (18,880.7) (29,789.2)

Investing activities
Purchase of property, plant and equipment 15 (492.3) (335.3)
Disposal of property, plant and equipment 9.9 (0.0)
Capitalized development expenses 14 (1,760.5) (3,449.0)
Issuance of financial loans - (1,946.3)
Reduction of financial deposits 16 479.4 1,090.5
Cash flow from investing activities (1,763.5) (4,640.1)

Financing activities
Proceeds from convertible loan 26 9,560.0 19,200.0
Proceeds from private placement 21 6,327.4 7,500.0
Cost of capital change (281.9) (148.1)
Payment of principal portion of lease liabilities 28 (839.5) (830.2)
Cash Flow from financing activities 14,765.9 25,721.7

Net increase / (decrease) in cash and

(5,878.3) (8,707.6)
cash equivalents
Exchange gain on cash and cash equivalents 20.2 38.9
Cash and cash equivalents at the beginning of period 11,000.7 19,669.4
Cash and cash equivalents at end of the period 5,142.7 11,000.7

ANNUAL REPORT 2022 89

90
Consolidated Statement of changes in Equity

Total Employee
Share Share capital Treasury Other benefit Accumulated Total
CHF 1,000 Note Capital premium paid in shares Reserves reserve CTA loss Equity

Balance at 1 January 2022 51,531.5 367,602.8 419,134.3 (1,718.4) 39,552.0 204.9 2,255.4 (327,657.9) 131,770.3
Loss of the period - - - - - - - (43,366.4) (43,366.4)

ANNUAL REPORT 2022

Other comprehensive income - - - - - 1,110.8 4,321.6 - 5,432.4
Total comprehensive loss - - - - - 1,110.8 4,321.6 (43,366.4) (37,934.0)
Capital increase from private place- 21 3,132.4 3,195.0 6,327.4 - - - - - 6,327.4
ment
Capital increase from conditional capital 1,400.2 899.8 2,300.0 - - - - - 2,300.0
Cost of capital charge - (246.9) (246.9) - - - - - (246.9)

Effects of share-based compensation 11 - - - 218.6 1,003.6 - - - 1,222.2

Conversion of convertible loan 26 - 1,519.1 1,519.1 1,280.9 - - - - 2,800.0

Balance at 31 December 2022 56,064.0 372,969.8 429,033.8 (218.9) 40,555.6 1,315.8 6,577.0 (371,024.3) 106,238.9

Balance at 1 January 2021 41,093.9 355,082.6 396,176.5 (3,709.2) 39,233.0 (940.5) 723.8 (286,391.6) 145,092.1
Loss of the period - - - - - - - (41,266.4) (41,266.4)
Other comprehensive income - - - - - 1,145.4 1,531.5 - 2,677.0
Total comprehensive loss - - - - - 1,145.4 1,531.5 (41,266.4) (38,589.4)
Capital increase from private place- 21 3,187.6 4,312.4 7,500.0 - - - - - 7,500.0
ment
Capital increase from issuance of 21 7,250.0 - 7,250.0 (7,250.0) - - - - -
treasury shares
Cost of capital charge - (648.7) (648.7) - - - - - (648.7)
Effects of share-based compensation 11 - - - 797.3 319.0 - - - 1,116.3
Conversion of convertible loan 26 - 8,856.5 8,856.5 8,443.5 - - - - 17,300.0
Balance at 31 December 2021 51,531.5 367,602.8 419,134.3 (1,718.4) 39,552.0 204.9 2,255.3 (327,657.9) 131,770.3

The accompanying notes form an integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

1. Corporate information

Evolva Holding SA (the “Company”) together with its subsidiaries (collectively

“Evolva”, the “Group” or “we”) is an international group that researches, develops and
commercializes high quality ingredients with applications in flavor & fragrancies, health
ingredients, health protection and other sectors. Evolva Holding SA is incorporated in
Switzerland and has been the parent company of the Group since 11 December 2009.
The shares of the Company are listed on the SIX Swiss Exchange (SIX: EVE) with a
nominal value of CHF 0.05 per share.

The legal domicile of the Company is: Evolva Holding SA, Duggingerstrasse 23, 4153
Reinach, Switzerland. The group comprises the following subsidiaries:

Ownership 1) Shareholder Share capital

Name Domicile 31.12.2022 31.12.2021

Evolva AG Reinach, CH 100% 100% Evolva Holding SA CHF 6,369,540

Evolva Inc. Lexington, USA 100% 100% Evolva AG USD 7,835

Non-operational entities

Evolva Bio UK Ltd. 2) Cambridge, UK 100% 100% Evolva AG GBP 14.62

Evolva Singapore
PTE. Ltd. Singapore 100% 100% Evolva AG SGD 100
Evolva Biotech A/S 3)
Copenhagen, DK n/a 100% Evolva AG DKK 4,311,583
Evolva Biotech
Private Limited 2) Chennai, India 100% 100% Evolva AG INR 169,930

1) Capital ownership is equal to voting ownership

2) Company in liquidation
3) Company liquidated in 2022

On 31 December 2022, Evolva employed 50 employees (2021: 73), of which 21 (2021: 31)
were directly involved in research, development and manufacturing activities while
the remaining staff was employed with managerial, commercial and administrative
tasks.

These consolidated financial statements were authorized for public disclosure in

accordance with a resolution of the Board of Directors of the Company dated 8 March
2023 and are subject to approval by the Annual General Meeting on 18 April 2023.

ANNUAL REPORT 2022 91

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

2. Summary of significant accounting policies

2.1. Basis of preparation

The financial statements of Evolva are prepared in accordance with the historical
cost convention. Evolva’s financial statements comply with the International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB). The financial statements are presented in Swiss francs (CHF) and all values are
rounded to the nearest CHF 1,000 except where otherwise stated.

2.2. Critical accounting estimates and judgements

The preparation of the consolidated financial statements requires management to

apply certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Company’s accounting policies. Such
estimates and assumptions affect the reported amounts and disclosures in the
consolidated financial statements and accompanying notes. Management evaluates
on an ongoing basis its estimates and assumptions for the critical accounting
estimates and judgements as listed below. Management bases its estimates and
assumptions on historical experience, input from advisors and on various market and
non-market specific assumptions that management believes to be reasonable under
the circumstances. Based on the result of these estimates, management makes its
judgements about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual outcomes could differ from those estimates.

The following areas involve assumptions and estimates that can have a significant
impact on the consolidated financial statements:

Product and process development costs

The Group capitalizes costs for product and process development. Initial capitalization
of costs is based on management’s judgement that technological and economic
feasibility is confirmed. In determining the amounts to be capitalized, management
makes assumptions regarding the expected future cash generation of the project,
discount rates to be applied and the expected period of benefits (refer to note 14).

Royalty and licenses

Royalty and licenses valuation is based on future royalty income from EverSweetTM.
Royalty income from this asset depends on the sale of the underlying product by a
third party. The assumptions made by management to assess the valuation of the
royalty and license asset are based on future product sales (revenue) by the third
party in a mid-term commercial model. Evolva extrapolates revenue until the end of
the contractual period with a reduced average growth rate of the relevant market and
discounts future revenue with a WACC. Changes in the ability to generate revenue by
the third party and/or changes in the WACC may have an impact on Evolva’s royalty
income and may subsequently lead to change in the valuation of the royalty and
license asset (refer to note 14).

92 ANNUAL REPORT 2022

Impairment of Goodwill
Goodwill is tested on Group level for possible impairment annually or when an
impairment indicator is identified (refer to note 14).

Income taxes
Evolva is subject to income taxes in several jurisdictions. Judgement is required in
determining the current and deferred assets and liabilities for income taxes. The
assessment as to whether deferred tax assets relating to tax loss carry-forwards and
temporary differences must be recognized requires significant judgement (refer to
note 10).

Governmental contracts
Contracts with governmental organizations require in some instances adherence with
governmental accounting policies. Such accounting policies involve predefined rates
for fringes and overhead. In determining these rates, the Group applies calculation
models which are established on past records and budgets. Such calculation models
involve a certain degree of assumptions. Based on actual numbers, predetermined
rates are reassessed, which could result in a refund or additional coverage of cost
for the Group.

Revenue recognition
Revenue recognition involves a higher degree of judgment or complexity and can
have a significant impact on the consolidated financial statements. A good or service
is transferred when the customer obtains control. For certain transactions, recognition
of revenue is based on the performance of the conditions agreed in corresponding
contracts, the verification of which requires special evaluation and judgments by
management (refer to note 4).

2.3. Principles of consolidation

Subsidiaries
Subsidiaries in which the Group has a controlling interest are consolidated. Control
is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and can affect those returns through its power over
the investee. Specifically, the Group controls an investee if, and only if, the Group has:

n power over the investee (i.e. existing rights that give it the current ability to direct
the relevant activities of the investee)

n exposure, or rights, to variable returns from its involvement with the investee and

n the ability to use its power over the investee to affect its returns.

ANNUAL REPORT 2022 93

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Intra-Group transactions
Intercompany balances and transactions are eliminated in the consolidation process.
Intercompany transactions result from one Group company providing services to
another Group company or the transfer of assets within the Group.

Business combinations
Business combinations are accounted for using the acquisition method. The cost of an
acquisition is measured as the aggregate of the consideration transferred, measured
at acquisition date fair value and the amount of any non-controlling interests in the
acquiree. For each business combination, the Group measures the non-controlling
interest in the acquiree either at fair value or at the proportionate share of the
acquiree’s identifiable net assets. Acquisition costs incurred are expensed.
When the Group acquires a business, it assesses the assets, liabilities and
contingencies assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as at
the acquisition date. If the business combination is achieved in stages, the acquisition
date fair value of the acquirer’s previously held equity interest in the acquiree is
remeasured to fair value through the statement of financial performance as of the
acquisition date.
Any contingent consideration to be transferred by the Group will be recognized
at fair value at the acquisition date. Subsequent changes to the fair value of the
contingent consideration, which is deemed a financial asset, or a financial liability will
be recognized in the statement of financial performance.

Goodwill
Goodwill represents the future economic benefits arising from other assets acquired in
a business combination that are not individually identified and separately recognized.
Goodwill is initially measured at cost, being the excess of the aggregate of
consideration transferred, non-controlling interests and the acquirer’s previously held
equity interests in the acquiree over the net identifiable assets acquired and liabilities
assumed. If the aggregated amount is lower than the fair value of the net assets of
the subsidiary acquired, the difference is recognized as a gain in the statement of
financial performance (negative goodwill).
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in a
business combination is, from the acquisition date, allocated to each of the Group’s
cash-generating units that are expected to benefit from the combination, irrespective
of whether other assets or liabilities of the acquiree are assigned to those units. The
carrying amount of goodwill is tested for impairment annually or when events or
changes in circumstances indicate that the carrying amount is not recoverable.
Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. Impairment is determined for goodwill by assessing the
recoverable amount of the cash-generating unit to which the goodwill relates. Where
the recoverable amount of the cash-generating unit is less than its carrying amount,
an impairment loss is recognized. Impairment losses relating to goodwill cannot be
reversed in future periods.

94 ANNUAL REPORT 2022

 Foreign currency translation
The consolidated financial statements are expressed in Swiss francs (CHF), which is
the Group’s presentation currency.
Transactions in foreign currencies are initially recorded by the Group’s entities at their
respective functional currency spot rates at the date the transaction first qualifies for
recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at
the functional currency spot rates at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates at the dates of the initial transactions.
All resulting foreign exchange gains and losses are recognized in the individual
company’s statement of financial performance.
For consolidation purposes, the statements of financial position of foreign consolidated
companies are translated into CHF at the spot rate at the reporting date. Income
and expenses of the foreign consolidated companies are translated into CHF using
the monthly average exchange rates during the year (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated using the
exchange rate at the dates of the transactions).
Foreign currency differences arising from the translation of intercompany loans from
a foreign currency into the functional currency of Evolva are recorded as gains or
losses in the consolidated statement of financial performance.
On disposal of a foreign operation, the cumulative currency translation difference
recognized within equity relating to that particular foreign operation is reclassified
in the Statement of Financial Performance as gain or loss on sale of that foreign
operation.

The exchange rates (in CHF) for the Group’s significant foreign currencies were as
follows:

2022 2021
Currency Unit Closing rate Average rate Closing rate Average rate

USD 1 0.93 0.96 0.92 0.92

EUR 1 0.99 1.02 1.05 1.10
DKK 100 13.42 13.76 14.15 14.78
INR 100 1.13 1.24 1.24 1.25
GBP 1 1.12 1.20 1.25 1.27

ANNUAL REPORT 2022 95

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Revenue recognition
Evolva recognizes revenue from the sale of innovative ingredients (“products”) and
from the delivery of collaborative research and development services. In addition, the
Group may occasionally have other revenues, e.g. from the sale of compounds and
other assets. Revenue is measured at the fair value of the consideration received or
of the receivable, considering contractually defined terms of payment and excluding
taxes and duties. In the following, the revenue recognition criteria applied for the
different sources of revenue are further explained:

Product related revenue

Product related revenue comprises the sale of products by Evolva and revenue from
sales-based royalty, license and similar sources that derive from Evolva originally
developed and/or Evolva co-developed products. Revenue from sale of products
by Evolva is recognized at the point in time when control of the asset is transferred
to the customer, generally on delivery of the product if no other agreement has
been made. Revenue from sales-based royalty or license is recognized when the
performance criteria of the sales are met or when the performance obligation of
the sales-based revenue is satisfied (in whole or in part).
The normal credit term is 30 to 90 days upon invoicing. The Group considers
whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated. In
determining the transaction price for the sale of products, the Group considers the
effects of variable consideration, the existence of significant financing components,
noncash consideration, and consideration payable to the customer (if any).

Research & development revenue

Revenue from research and development arrangements is recognized in the
accounting period in which the services are rendered, using a basis, which reflects
the nature and scope of the services rendered. Up-front payments for access
to Evolva’s technology are recognized and deferred in the period during which
the technology is being applied. Where agreements include milestones that
are determined to be substantive and at risk at the inception of the agreement,
revenue is recognized upon confirmation by the counterparty that the milestone
has been achieved.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks
and other short-term highly liquid investments, which are readily convertible to
known amounts of cash and have a maturity of three months or less from the date of
acquisition. This definition is also applicable for cash and cash equivalents presented
in the consolidated statement of cash flow.

96 ANNUAL REPORT 2022

Financial assets and liabilities
Financial instruments carried on the statement of financial position include cash and
cash equivalents, receivables, financial deposits, payables, selected accrued and
other current liabilities and loans.

The classification of financial assets at initial recognition depends on the financial

asset’s contractual cash flow characteristics and the Group’s business model for
managing them. Trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient are measured
at the transaction price determined under IFRS 15.
Cash and cash equivalents, trade and other receivables and financial deposits
represent financial assets classified as Financial Assets at amortized cost. For a
financial asset to be classified and measured at amortized cost, it needs to give rise
to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.

Non-current financial assets/liabilities are measured at amortized cost, i.e. the amount
at which the financial asset or liability is measured at initial recognition less principal
repayments, plus or minus the cumulative amortization using the effective interest
method of any difference between that initial amount and the maturity amount.

Trade and other payables, accrued liabilities, loans and financial liabilities are
recorded at amortized cost. A financial liability is derecognized when the obligation
under the liability is discharged, cancelled or expired.

Financial assets and liabilities are included in current assets or current liabilities,
except for maturities longer than twelve months after the reporting date, in which
case they are classified as non-current assets or non-current liabilities and shown
separately in the statement of financial position.

The Group applies the expected credit loss model. Resulting allowances for financial
assets, if material, are recognized in the statement of financial performance.

Convertible note
At initial recognition convertible notes are measured at fair value less transaction costs
that are directly attributable to the issue of the financial liability. The convertible note
does not qualify as an equity instrument, since it is a) neither a non-derivate instrument
without contractual obligations for the issuer to deliver a variable number of own
shares, nor b) will it be settled by the issuer exchanging a fixed amount of cash for a
fixed amount of own equity instrument. The conversion feature is a derivative financial
instrument to deliver a variable number of shares based on a volume-weighted
average share price prior to the conversion date. It is consequently a financial liability.

ANNUAL REPORT 2022 97

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

The fair value of the convertible notes is determined by the difference of consideration
received and the fair value of the embedded derivatives. The convertible loans must
be subsequently measured at amortized cost using the effective interest method.

The embedded derivative is a component of a hybrid contract that also includes a

non-derivative host - with the effect that some of the cash flows of the combined
instrument vary in a way similar to a stand-alone derivative.

Derivatives embedded in hybrid contracts with hosts that are not financial assets
within the scope of IFRS 9 (e.g. financial liabilities) are treated as separate derivatives
when they meet the definition of a derivative, their risks and characteristics are not
closely related to those of the host contracts and the host contracts are not measured
at FVTPL.

An embedded derivative is presented as a current asset or current liability if the

remaining maturity of the hybrid instrument to which the embedded derivative relates
is less than 12 months and is expected to be realized or settled within 12 months.

In estimating the fair value of an asset or a liability, the Group uses market-observable
data to the extent it is available.

Property, plant and equipment

Property, plant and equipment is recognized at historical cost less accumulated
depreciation and impairment. Depreciation expense is recognized using the straight-
line method over the estimated useful life of respective assets. Assets are depreciated
to their expected residual value, which is usually determined to be zero. The useful
lives are estimated as follows:

n Buildings 50 years,

n Leasehold improvements 5-20 years,

n Furniture & fixture 5-8 years,

n Laboratory equipment 4-6 years,

n Office and IT equipment 3-6 years,

n Manufacturing equipment 5-15 years,

n Right-of-use assets 3-8 years

Property, plant and equipment held-for-sale is not depreciated and reported at the
lower of the carrying amount or fair value less cost to sell. Subsequent costs are
included in the relevant assets’ carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognized. Repair and maintenance
costs are expensed as incurred.

98 ANNUAL REPORT 2022

Leases
At inception of a contract, the Group assesses whether a contract is, or contains a
lease. A contract is or contains a lease if the contract conveys the right to control the
use of an identified asset for a period in exchange for a consideration.
To assess whether a contract conveys the right to control the use of an identified asset,
the Group assesses whether

n the contract involves the use of an identified asset - this may be specified explicitly
or implicitly and should be physically distinct or represent substantially all the
capacity of a physically distinct asset. If the supplier has a substantive substitution
right, then the asset is not identified;

n the right to obtain substantially all the economic benefits from use of the asset
throughout the period of use; and

n the right to direct the use of the asset. The Group has this right when it has the
decision-making rights that are most relevant to changing how and for what
purpose the asset is used. In rare cases where the decision about how and for
what purpose the asset is used is predetermined, the Group has the right to direct
the use of the asset if either;

n the right to operate the asset; or

n the Group designed the asset in a way that predetermines how and for what
purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the

Group allocates the consideration in the contract to each lease component based
on their relative stand-alone prices.
The Group recognizes a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method
from the commencement date to the earlier of the end of the useful life of the right-
of-use asset or the end of the lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of property and equipment. In
addition, the right-of-use asset is periodically reduced by impairment losses if any
and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that
are not paid at the commencement date, discounted using the Group’s incremental
borrowing rate.

ANNUAL REPORT 2022 99

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Lease payments included in the measurement of the lease liability comprise the
following:

n fixed payments, including in-substance fixed payments;

n variable lease payments that depend on an index or a rate, initially measured using
the index or rate as at the commencement date;

n amounts expected to be payable under a residual value guarantee; and

n the exercise price under a purchase option that the Group is reasonably certain to
exercise, lease payments in an optional renewal period if the Group is reasonably
certain to exercise an extension option, and penalties for early termination of a
lease unless the Group is reasonably certain not to terminate early.

When the lease liability is remeasured, a corresponding adjustment is made to the

carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.
The Group has elected not to recognize right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12 months or less and leases of low-value
assets. Lease payments on short-term leases and leases of low-value assets are
recognized as expense on a straight-line basis over the lease term.

Intangible assets other than Goodwill

Costs of purchasing intellectual property rights (i.e. patents and patent applications)
are capitalized as intangible assets when it is probable that future economic benefits
will be generated. Acquired intangible assets (other than goodwill) are initially valued
at cost or, if acquired within the context of a business combination, recorded at fair
value. Generally, the Group amortizes patents and patent applications over 20 years
or according to their expected useful lives on a straight-line basis.

Capitalized product development include compensation to staff, consultants and

contract research organizations involved in R&D activities, process development
(scale-up, fermentation, downstream processing), consumables for laboratory work,
intellectual property expenses, including potential impairment and depreciation
of corresponding property, plant and equipment. Capitalized development cost is
amortized over the useful live of the technology deployed, which is in the range of
three to five years.

Royalty & licences are amortized over their contractual lives of 20 years on a straight-
line basis.

Costs are capitalized only if they satisfy the criteria as defined by IAS 38 as below:

n the intangible asset is clearly identified, and the related costs are itemized and
reliably monitored;

n the technical and industrial feasibility of completing the intangible asset is

demonstrated;

100 ANNUAL REPORT 2022

n there is a clear intention to complete the intangible asset and use or sell it;

n the Group has the ability to use or sell the intangible asset arising from the project;

n the Group can demonstrate how the intangible asset will generate probable future
economic benefits;

n the Group has adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.

If these conditions are not satisfied, development costs generated by the Group are
charged to the statement of financial performance as incurred.

Intangible assets are evaluated for potential impairment when facts and circumstances
warrant to do so. Any impairment charge is recorded in the consolidated income
statement.

Impairment of assets
Property, plant and equipment and intangible assets with definite useful life are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets may not be recoverable. If the recoverable
amount (being the higher of its fair value less costs of disposal or its value in use) of
the asset is less than its carrying amount, an impairment is recorded.

Inventories
Inventories are initially recognized at cost and categorized as finished products,
intermediate products or raw material. Costs of purchased inventory are determined
after deducting rebates and discounts. The costs of individual items of inventory are
determined using weighted average costs. Finished products consist of ingredients
for nutrition, healthcare and wellness, and are stated at the lower of the production
cost or net realizable value. We evaluate the recoverability of our inventories based on
assumptions about expected demand and net realizable value. Net realizable value
is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale.

Provisions
Evolva recognizes a provision if it has a present legal or constructive obligation to
transfer economic benefits as a result of past events and if a reasonable estimate
of the obligation can be made and an outflow of resources is probable. If the effect
of discounting is material, provisions are determined by discounting the expected
future cash flows at a rate that reflects current market assessments of the time value
of money and the risks specific to the liability.

ANNUAL REPORT 2022 101

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Share-based compensation
The Group operates various share-based compensation plans comprising the
grant of share options, restricted stock units and performance share units. The
members of the Board of Directors, all employees and selected advisors are eligible
to participate in the Group’s share-based compensation plans. The Group manages
its share-based compensation plans with different vesting conditions. Vesting of
all share-based compensation plans is conditional to service rendered by the plan
participant. This usually comprises that the plan participant is not under notice during
the vesting period. The fair value of the services received in exchange for the award
of share-based compensation is recognized as an expense. The total amount to be
expensed over the vesting period is determined by reference to the fair value of the
awards granted. At each reporting date, Evolva revises its estimates of the number of
awards that are expected to be exercised. It recognizes the impact of such updates
compared with original estimates, in the statement of financial performance and a
corresponding adjustment to equity. Any subsequent cash flows from exercises of
vested awards are recorded as an increase in equity. The proceeds received net of
any directly attributable transaction costs are credited to share capital or treasury
shares (nominal value) and share premium when the award is exercised.

Treasury shares
Own equity instruments are recognized at cost and deducted from equity. Any
difference between the carrying amount and the consideration received is recognized
as share premium in equity.

Post-employment benefits
In accordance with employment contracts, some Evolva companies make monthly
contributions to employee pension plans. Contributions are recognized as employee
benefit expenses when they are due.
Net defined asset/liability of pension plans is recognized in the Group’s statement
of financial position. For defined benefit plans, the pension liability and related
service costs are based on actuarial valuation techniques, using the projected unit
credit method and related assumptions as further detailed in note 12 of the Group’s
consolidated financial statements. The defined benefit obligation is measured as
the present value of the estimated future cash flows using a discount rate based on
the interest rate of high-quality corporate bonds. The charge for such pension plans,
representing the net periodic cost, is included in the salary expenses. Plan assets are
recorded at their fair values. In case of settlement events, related gains and losses
are added to the yearly pension costs when settlement occurs. Past service costs are
added to the annual pension costs when they occur. Actuarial gains and losses on the
defined benefit obligation are recognized in other comprehensive income.

Cost of goods sold

Cost of goods sold include expenses for manufacturing, compensation to staff and
consultants involved in manufacturing, payments to third-party manufacturers, value
adjustment because of lower of production costs and net realizable value assessment and
other expenses related to manufacturing activities, including impairment, amortization
and depreciation of corresponding intangible assets and property, plant and equipment.

102 ANNUAL REPORT 2022

Research and development expenses
Expenses for research and development comprise compensation to staff, consultants
and contract research organizations involved in R&D activities, consumables for
laboratory work, intellectual property expenses and depreciation of corresponding
intangible assets and property, plant and equipment.

Commercial, general & administrative expenses

Commercial expenses consist of compensation to sales staff and consultants,
expenses to distributors, regulatory matters, marketing, advertisement, business
development and other commercial expenses. General and administrative expenses
consist of compensation to group management, Board of Directors and administrative
staff, expenses related to investor relations, legal and financial services, indirect tax
and other expenses related to general and administrative activities. Government
grants related to income are recorded under commercial, general & administrative
expenses. Other income is recorded when contractual milestones are met.

Deferred taxes
Deferred taxes are provided using the balance sheet liability method for all temporary
differences between the tax bases of assets and liabilities and their carrying values
for financial reporting purposes, except for those temporary differences related to
investments in entities where the timing of their reversal can be controlled, and it
is probable that the difference will not reverse in the foreseeable future. Deferred
tax assets relating to the carry-forward of unused tax losses and other deductible
temporary differences are recognized to the extent that future taxable profit is
expected to be available. The recognition and utilization of deferred tax assets is
assessed on an annual basis. Deferred taxes are based on tax rates currently enacted
or substantially enacted and which are expected to apply when the related deferred
tax asset is realized, or the deferred tax liability is settled.
Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when the deferred
income taxes relate to the same tax jurisdiction.

Earnings/ (loss) per share

Basic earnings/(loss) per share is calculated by dividing the net profit/(loss)
attributable to ordinary shareholders of the parent by the weighted average number
of shares outstanding during the period. Diluted earnings per share is calculated by
dividing the net profit attributable to the ordinary shareholders of the parent by the
weighted average number of shares outstanding during the period adjusted for the
conversion of all dilutive potential ordinary shares.

Dividends
The Company may declare dividends upon the recommendation of the Board of
Directors and the approval of shareholders at their Annual General Meeting. The
Company has not paid any dividends since its inception and does not anticipate
paying dividends in the foreseeable future.

ANNUAL REPORT 2022 103

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Segment reporting
Evolva reports the financial performance of its operating segment according to
the “management approach” required by IFRS 8. Generally, the information to be
disclosed is what management uses internally for evaluating segment performance
and deciding how to allocate resources. Evolva operates in one segment, namely
research, development and commercialization of novel nutritional, healthcare and
wellness ingredients. As the chief operating decision-maker, the Board of Directors and
the Group Management Team assess the performance of the operating segments
and allocate resources on a consolidated level.

2.4. Changes in accounting policies

The accounting policies which were adopted are consistent with those of the
previous year.

The following new or revised standards became applicable for the current reporting
period and did not have any material effect on the Group’s financial statements:

n Amendment to IFRS 3 – Reference to the Conceptual Framework

n Amendment to IAS 16 – Property, Plant and Equipment:

Proceeds before intended use

n Amendments to IAS 37 – Onerous Contracts – Cost of fulfilling a Contract

n Annual Improvements to IFRS Standards 2018-2020

Various other new and revised standards and interpretations must be applied with
effect from 1 January 2023 or a later date:

n IFRS 17 Insurance contracts (effective 1 January 2023)

n Amendments IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting

policies (effective 1 January 2023)

n Amendments to IAS 8 – Definition of accounting estimates

(effective 1 January 2023)

n Amendments to IAS 12 – Deferred tax related to assets and liabilities arising

from a single transaction (effective 1 January 2023)

n Amendments to IFRS 16 – Liability in a sale and leaseback

(effective 1 January 2024)

n Amendments to IAS 1 – Classification of liabilities as current or non-current

(effective 1 January 2024)

n Amendments to IAS 1 – Non-current liabilities with covenants

(effective 1 January 2024)

The Group has not early adopted any standard and does not expect and of the new
standards and interpretations to have a significant impact on the Group’s financial
statements.

104 ANNUAL REPORT 2022

 3. Financial risk management

Financial risk factors

Financial risk management is governed by policies and guidelines approved by
management. These policies cover foreign exchange risk, interest rate risk, liquidity risk and
credit risk. Management regularly evaluates the Group’s identified operating and financial
risks regarding their probability and potential impact. With the consent of the Board of
Directors, appropriate measures are taken to reduce or to mitigate the risks identified.

Liquidity risk and capital management

Evolva’s objective when managing its liquidity is to secure sufficient funding for its
operating activities, to ensure the Group’s ability to continue as going concern and to
preserve capital at the required statutory level. Management regularly updates its cash
flow projections to plan the financing of its manufacturing, research, development
and commercialization activities for at least one to two years. To maintain or adjust
the capital structure, the Group may issue new shares, obtain convertible loans or
other debt financing or extend existing loans.

The tables below summarize the maturity profile of the Group’s financial assets and
liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Financial assets
CHF 1,000 Between Between
Valuation Less than 3 months 1 year and Over Carrying
31 December 2022 category 3 months and 1 year 5 years 5 years Total amount

Cash & cash equivalents AC 5,142.7 - - - 5,142.7 5,142.7

Trade and other receivables AC 4,039.3 - - - 4,039.3 4,039.3
Compound embedded FVTPL - 70.6 - - 70.6 70.6
derivative
Investment in non-listed FVTPL - - 285.9 - 285.9 285.9
R&D company
Other financial assets AC - - 2,076.6 608.6 2,685.3 2,685.3
Total financial assets 9,182.0 70.6 2,362.5 608.6 12,223.8 12,223.8

31 December 2021

Cash & cash equivalents AC 11,000.7 - - - 11,000.7 11,000.7

Trade and other receiv-
ables AC 2,942.8 1,559.5 - - 4,502.3 4,502.3
Investment in non-listed
R&D company FVTPL - - 316.1 - 316.1 316.1

Other financial assets AC - 1,581.5 378.8 1,088.1 3,048.4 3,048.4

Total financial assets 13,943.5 3,141.0 695.0 1,088.1 18,867.5 18,867.5

AC = Financial asset or liability measured at amortised costs

FVTPL = Financial asset or liability measured at fair value through profit and loss

ANNUAL REPORT 2022 105

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Financial liabilities
CHF 1,000 Between Between
Valuation Less than 3 months 1 year and Over Carrying
31 December 2022 category 3 months and 1 year 5 years 5 years Total amount

Lease liabilities AC 263.2 789.7 3,022.7 - 4,075.7 3,569.9

Convertible loan AC - 11,487.6 - - 11,487.6 11,487.6
Trade payables AC 2,947.1 - - - 2,947.1 2,947.1
Other payables AC 348.9 926.5 1,670.8 - 2,946.1 2,946.1
Total financial liabilities 3,559.2 12,203.8 4,693.6 - 21,456.5 20,950.7

CHF 1,000 Between Between

Valuation Less than 3 months 1 year and Over Carrying
31 December 2021 category 3 months and 1 year 5 years 5 years Total amount

Lease liabilities AC 270.5 811.7 4,077.4 - 5,159.6 4,408.5

Convertible loan AC - 6,430.9 - - 6,430.9 6,430.9
Compound embedded
FVTPL - 346.8 - - 346.8 346.8
derivative
Trade payables AC 3,624.6 - - - 3,624.6 3,624.6
Other payables AC 311.2 941.1 2,862.8 - 4,115.1 4,115.1
Total financial liabilities 4,206.3 8,530.6 6,940.2 0.0 19,677.0 18,925.9

AC = Financial asset or liability measured at amortised costs

FVTPL = Financial asset or liability measured at fair value through profit and loss

The fair value of financial assets and liabilities at amortized costs are assumed to
approximate their carrying amounts due to the short-term nature of these financial
instruments.

106 ANNUAL REPORT 2022

 Changes in liabilities arising from financing activities

Changes Changes Foreign

1 January New from financing in fair exchange 31 Dec
CHF 1,000 2022 leases cash flows value movement 2022

Current lease liabilities 834.4 - (171.4) - - 663.1

Convertible loan 6,430.9 - 5,056.7 - - 11,487.6
Compound embedded
346.8 - 384.5 (660.7) - (70.6)
derivative
Non-current lease
3,574.0 - (667.3) - - 2,906.8
liabilities
Total liabilites from
financing activities 11,186.2 - 4,602.6 (660.7) - 14,986.9

Changes Changes Foreign

1 January New from financing in fair exchange 31 Dec
CHF 1,000 2021 leases cash flows value movement 2021

Current lease liabilities 1,058.8 - (225.0) - 0.6 834.4

Convertible loan 3,785.8 - 2,645.1 - - 6,430.9

Compound embedded
214.2 - 55.0 77.6 - 346.8
derivative

Non-current lease 4,178.5 - (604.5) - - 3,574.0

liabilities
Total liabilites from
financing activities 9,237.3 - 1,870.6 77.6 0.6 11,186.1

Market risk
The Group sources manufacturing supplies of materials, research and development,
consulting and other services in several countries and manages subsidiaries
worldwide. The Group is therefore exposed to foreign currency movements affecting
its net result and financial position, as expressed in Swiss francs. Evolva monitors its
currency exposures by regularly assessing future spending plans in foreign currencies.

Foreign currency sensitivity analysis

Evolva applies a sensitivity analysis to assess its foreign exchange exposure risks.
Evolva’s sensitivity analysis assumes a simultaneous, parallel foreign exchange
rate shift in which the CHF gains in value against all currencies by 5% (a loss of 5%
would result in the same amounts but with inverted prefixes) and the impact of this
exchange rate shift on the statement of financial performance. In 2022 and 2021, no
hedge accounting has been applied.

ANNUAL REPORT 2022 107

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

The following sensitivity analysis includes financial assets and liabilities related to
third parties.

CHF 1,000 USD EUR GBP other Total

Monetary assets 220.3 132.0 1.8 0.9 355.0
Monetary liabilities (183.7) (53.8) (0.1) (0.4) (238.0)
Net exposure 31 Dec 2022 36.6 78.2 1.7 0.5 117.1

Monetary assets 221.4 158.0 0.1 4.0 383.5

Monetary liabilities (217.8) (132.5) - (0.1) (350.5)
Net exposure 31 Dec 2021 3.6 25.5 0.1 3.9 33.1

Interest-rate risk
Interest rate risk arises from movements in interest rates, which could have adverse
effects on Evolva’s net result or financial position. Other than cash and time deposits,
the Group has no material assets or liabilities subject to interest income or expense.
Evolva deems the interest rate risk in the statement of performance and in the equity
as insignificant.

Credit risk
Credit risk results mainly from a counterparty’s failure to meet its obligation towards
Evolva. For product sales, Evolva may conduct selective analysis of the creditworthiness
of distributors and other customers. Cash and cash equivalents are held with financial
institutions with A+ ratings (Standard & Poor’s long-term credit rating). Minor positions
in foreign subsidiaries are held with banks with a BBB- or better ratings.

For trade receivables the Group applies a simplified approach in calculating expected
credit losses (ECLs). Therefore, the Group does not track changes in credit risk, but
instead recognized a loss allowance based on lifetime ECLs at each reporting date. The
Group has established a provision matrix that is based on industry averages, adjusted
for forward-looking factors specific to the debtors and the economic environment.
Trade receivables have been grouped based on their credit risk characteristics.

108 ANNUAL REPORT 2022

 4. Segment and geographical information

Evolva researches, develops and commercializes high quality ingredients with

applications in flavor & fragrancies, health ingredients, health protection and other
sectors. The Board of Directors and the Group Management Team (the chief operating
decision-maker) do not base their decisions on geographical, demographical or
sociographical criteria, but rather on strategic and operational factors related to
research, development, manufacturing and commercialization of novel nutritional,
healthcare and wellness ingredients. Therefore, the Group has identified one segment,
which is equivalent to the Group’s CGU, namely research, development, manufacturing
and commercialization of novel nutritional, healthcare and wellness ingredients.

Set out below is the disaggregation of the Group’s revenue from contracts with
customers:

CHF 1,000 2022 2021

Type of goods or services

Product-related revenue 14,847.8 9,149.5
Research & development revenue 691.6 728.1
Total revenue from contracts with customers 15,539.4 9,877.6

Geographical allocation 1)
Switzerland 9,203.1 4,956.2
United States 6,336.3 4,921.4
Total revenue 15,539.4 9,877.6

Timing of revenue recognition

Revenue recognition at a point in time 14,847.8 9,149.5
Revenue recognition over a period of time 691.6 728.1
Total revenue from contracts with customers 15,539.4 9,877.6

1) The geographical allocation of revenue reflects the location where Evolva’s invoices are generated (invoice entity).

ANNUAL REPORT 2022 109

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

The geographical breakdown of non-current assets (excluding financial assets) is

as follows:

CHF 1,000 31 December 2022 31 December 2021

Switzerland 44,366.3 50,098.7

United States 53,183.5 68,666.6
Rest of the world 356.4 489.5
Total non-current assets 97,906.3 119,254.7

Major customers
In 2022, Evolva’s largest customer accounted for 46% (2021: 13%), the second largest
for 7% (2021: 7%) and third largest customer for 6% (2021: 7%) of total Group revenues,
respectively.

5. Cost of goods sold

CHF 1,000 2022 2021

Direct production costs 12,474.1 15,012.2

Write-off of Inventory 1,585.7 -
Staff compensation (incl. share-based compensation) 1,406.5 1,486.7
Other operating expenses 872.6 852.2
Amortization of intangible assets 2,126.9 1,640.1
Depreciation of tangible assets 206.1 192.3
Impairment of intangible assets 2,873.8 -
Total cost of goods sold 21,545.9 19,183.5

Total cost of goods sold increased by 12.3% compared to 2021. However, excluding
the impairment on intangible assets and the write-off on inventory, total cost of
goods sold decreased by 10.9% to CHF 17.1 million despite the increased product-
related revenue. Direct production costs have decreased mainly due to significant
improvements in the production processes. Amortization of intangible assets have
increased because of additionally capitalized product & process development
costs for certain products. The impairment of intangible assets relates to capitalized
product & process development expenses.

110 ANNUAL REPORT 2022

 6. Research & development expenses

CHF 1,000 2022 2021

Other research & development expenses 744.7 1,968.0

Staff compensation (incl. share-based compensation) 3,251.7 4,300.2
Amortization of intangible assets 4,787.7 5,660.7
Depreciation of tangible assets 658.1 882.2
Impairment of intangible assets 14,159.5 9,628.4
Total research & development expenses 23,601.7 22,439.6

Research and development expenses have increased by 5.2% compared to 2021

driven by the impairment of intangible assets. Excluding the impairment in both years,
research and development expenses have decreased by 26.3% to CHF 9.4 million
(2021: CHF 12.8 million). The decline in research and development expenses is due to
one-time costs included in 2021, such as the building up of provisions. In addition, cost
efficiencies were realized in all areas, particularly in the area of intellectual property.

7. Commercial, general & administrative expenses

CHF 1,000 2022 2021

Other commercial, general & administrative expenses 3,110.7 2,575.3

BoD, GMT and staff compensation 7,478.1 7,484.5
Other income (106.4) -
Depreciation of tangible assets 311.6 224.2
Total commercial, general & administrative expenses 10,793.9 10,284.0

Commercial, general and administrative expenses have increased by 5.0% compared

to 2021 mainly due to increased business activities, restructuring and reorganization
expenses. Other income relates to a grant, which the Group obtained from a US
government agency in 2022. Under the contractual agreement, Evolva is entitled to
receive USD 0.5 million in quarterly installments until the end of 2024. The grant was
obtained with the goal of further developing and evaluating application methods for
NootkaSHIELD™.

ANNUAL REPORT 2022 111

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

8. Financial result

CHF 1,000 2022 2021

Interest & bank expense (104.7) (109.8)

Effective interest on convertible note (412.7) (579.0)
Fair value loss on embedded derivative - (77.6)
Lease expenses (243.3) (294.1)
Foreign exchange loss (4,898.2) (2,330.2)
Total financial expenses (5,658.9) (3,390.8)

Interest income 76.8 50.7

Foreign exchange gain 1,947.1 3,962.1
Fair value gain on embedded derivative 660.7 -
Total financial income 2,684.7 4,012.8

Net financial result (2,974.2) 622.0

Foreign exchange losses and gains results mainly from outstanding balances with
subsidiaries which are revalued at the current exchange rate.

9. Income taxes

The consolidated income tax statement is presented as follows:

CHF 1,000 2022 2021

Income taxes related to the current period - -

Deferred income taxes related to the reversal of temporary
- 141.1
differences

Total deferred tax liabilities - 141.1

112 ANNUAL REPORT 2022

 The main elements contributing to the difference between the Group’s overall
expected tax rate (as a weighted average of the tax rates in the tax jurisdictions in
which Evolva operates) and the effective income tax expense are:

CHF 1,000 2022 2021

Net loss before tax (43,366.4) (41,407.5)

Expected tax rate 17.4% 16.3%
Expected tax income at group level 7,553.1 6,756.1
Effect of expenses not entitled for deduction for tax purposes 8,464.5 3,557.8
Effect of current losses, for which no deferred tax is recognized (16,017.5) (10,313.9)
Other effects - 141.1
Effective income tax (expense) - 141.1
Effective income tax rate 0.0% 0.3%

Expected group tax rate has increased from 16.3% in 2021 to 17.4% in 2022 because of
increased tax losses in tax jurisdictions with a higher expected tax rate (United States
of America) compared to the average tax rate of the group.

10. Deferred tax assets and liabilities

Evolva has tax loss carryforwards, which are available to offset future taxable income.
The tax loss carryforwards with their expiry dates are as follows:

CHF 1,000 2022 2021

Within one year 24,640 23,617

Later than one year and no later than five years 181,591 160,168
More than five years 234,830 139,900
Total tax loss carry-forwards 441,060 323,684

Unrecognized tax loss carry-forward and deductible temporary differences would

give rise to potential deferred tax assets of CHF 61.5 million in 2022 resp. CHF 42.2
million in 2021.

CHF 1,000 2022 2021

Temporary differences 38,324.8 11,126.5

intangible assets 37,766.9 9,438.1
others 557.9 1,688.4
Tax loss carry-forwards set-off against temporary differences (38,324.8) (11,126.5)
Total deferred tax liabilities - -

ANNUAL REPORT 2022 113

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

If temporary differences had not been set-off against tax loss carry-forwards, a
potential deferred tax asset of CHF 67.1 million would result (2021: CHF 53.3 million).

11. Share-based compensation

The Board of Directors administers the Group’s incentive share-based compensation

plans. Equity instruments are granted according to the Group’s plan regulations.
Members of the Board of Directors, Group Management Team, staff and some
selected advisors are eligible for receiving share-based compensation instruments.

Total share-based compensation summarizes as following:

CHF 1,000 2022 2021

Research & development 180.4 304.1

Operations & manufacturing 148.3 34.7
Commercial, general & administrative expenses 893.5 777.5
Total share-based compensation 1,222.2 1,116.3

Evolva currently uses following compensation plans involving share-based

compensation components

n Restricted stock unit plans (RSU)

n Performance stock unit plans (PSU)

n Incentive share option plans

n Restricted stock plans

11.1. New share grants

In 2022, and in line with the financial year 2021, Evolva granted a short-term plan to
Group Management and Senior Management members with a one-year vesting
period (STI). The number of shares to vest under the STI plan is subject to the
achievement of agreed Group objectives as well as individual targets of the current
the financial year. In addition, the Group has granted a long-term plan (LTI) to Group
Management and Senior Management members. The number of shares to vest under
the LTI plan is subject to the achievement of agreed Company objectives. Agreed
Group objectives are product-related revenue, EBITDA, operating cash-flow and
individual operational targets.

114 ANNUAL REPORT 2022

 The following input criteria are used for the LTI model:

CHF 1,000 2022 2021

Dividend yield 0% 0%
Volatility 56.3% 56.8%
Risk-free interest rate 0.00% -0.75%
Share price (WVAP) at grant CHF 0.09 CHF 0.18

11.2. Key parameters of outstanding RSUs and PSUs

The key parameters and the number of outstanding RSUs & PSUs are as follows:

Plan name Grant date Vesting date Fair value at grant Number of units
LTI 3 PSU 01.07.2020 01.04.2023 CHF 0.20 7,760,983
LTI 4 PSU 01.07.2021 30.06.2024 CHF 0.11 9,473,545
STI 5 PSU 28.06.2022 01.04.2023 CHF 0.12 4,438,945
LTI 5 PSU 01.07.2022 30.06.2025 CHF 0.09 14,318,189
EVE 10 RSU 10.02.2017 Several 1)
CHF 0.55 3,369,029
EVE 20 RSU 05.05.2022 04.05.2023 CHF 0.11 2,253,522
Total 41,614,213
1) Vesting dates: 1 May 2020, 1 May 2021 and 1 May 2022 each 1/3 of granted RSU. Interest rate at grant: 0%. Settlement of shares
upon request of plan participants.

Reconciliation of outstanding share units:

Number of share units
2022 2021

Outstanding at 1 January 26,507,717 31,373,501

Granted 22,281,246 14,391,079
Vested 4,320,479 7,816,582
Forfeited 2,854,271 11,440,281
Outstanding at end of period 41,614,213 26,507,717

ANNUAL REPORT 2022 115

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

11.3. Share option plans

Incentive share option plans

The fair value of the different share option awards (EVE 5 - EVE 9) was determined by
using a binomial option valuation model. The resulting expenses for the Company are
recognized over the vesting period (in general 4 years). The key parameters in the
valuation model are as follows:

Share price
at grant Exercise Risk-free FV at grant
Plan name Grant date Expiry date in CHF price in CHF Volatility rate in CHF

EVE 9 15.02.2016 14.02.2026 0.77 0.80 42.70% 0.00% 0.30

EVE 8 01.01.2015 31.12.2024 1.32 1.31 45.00% 0.36% 0.62
EVE 7 01.01.2014 31.12.2023 0.99 0.98 52.50% 1.25% 0.51
EVE 6 01.07.2013 30.06.2023 0.67 0.64 52.50% 1.07% 0.35
EVE 5 01.07.2012 31.12.2022 0.40 0.37 52.50% 0.68% 0.23

One share option entitles the option holder to purchase one Evolva share at a fixed
price (“the exercise price”).

The volatility applied reflects Evolva’s share price volatility for the last three years. Risk-
free rate is based on ten-years Swiss government bonds.

The following table illustrates the number-weighted average exercise price in CHF
(WAEP), the number of share options outstanding and the weighted average years
remaining contractual life (WAYCL) as at 31 December 2022.

Number
Plan name Year of grant WAEP of options WAYCL
EVE 9 2016 0.80 7,713,763 4.1
EVE 8 2015 1.31 5,004,208 3.0
EVE 7 2014 0.98 5,293,085 2.0
EVE 6 2013 0.64 2,939,980 1.5
EVE 5 2012 0.37 - 1.0
Total 0.88 20,951,036 2.7

116 ANNUAL REPORT 2022

 A summary of share options granted, exercised, forfeited and outstanding for the
above plans is as follows:

Number of options
31 Dec 2022 31 Dec 2021
Outstanding at 1 January 23,626,232 30,807,007

Forfeited 27,000 -
Expired 2,648,196 7,180,775
Outstanding at end of period 20,951,036 23,626,232
- of which exercisable 20,951,036 23,626,232

In 2022, no share options were exercised (2021: none).

12. Management and employee benefits

The Swiss pension plan is considered a defined benefit plan in accordance with IAS
19. The plan is structured according to the principles of the Swiss Federal Law on
Occupational Retirement, Survivors’ and Disability Pension Plans (BVG), which states
that pension plans are to be managed by independent, legally autonomous entities.
A pension plan’s most senior governing body (Board of Trustees) must be composed
of equal numbers of employee and employer representatives.

The plan is funded by regular employer and employee contributions, which are
determined as a percentage of the employees’ insured salaries, to a collective
foundation operated by an insurance company. Interest is credited to the employees’
accounts at the minimum rate provided in the plan. The plan regulations define some
minimum benefit guarantees. Due to these minimum guarantees, the Swiss plan is
treated as defined benefit plan for the purposes of these IFRS financial statements.
Additionally, the plan provides insurance in case of death or long-term disability of
plan participants.

The fair value of plan assets is the estimated cash surrender value on the respective
reporting date.

ANNUAL REPORT 2022 117

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

The amounts recognized in the statement of financial position for the Swiss plan in
accordance with IAS 19 are determined as follows:

CHF 1,000 2022 2021

Principal actuarial expectations

Discount rate at 1 January 0.35% 0.20%
Discount rate at 31 December 2.25% 0.35%
Interest rate on retirement savings capital at 31.12. 2.25% 0.50%
Rate of future salary increases 31.12. 0.75% 0.75%
Future pension increases at 31.12. 0.00% 0.00%
Inflation expectation 1.00% 0.50%
Mortality decrement BVG 2020 GT BVG 2020 GT

Reconciliation of Financial Position amounts

Benefit obligation at 31 December 10,786.2 17,407.4
Fair value of plan assets at 31 December 10,327.0 15,718.1
Deficit (surplus) at 31 December 459.2 1,689.3
Net defined benefit liability 31 December 459.2 1,689.3
- thereof recognized as separate liability 459.2 1,689.3

Reconciliation of net defined benefit liability

Net defined benefit liability at 1 January 1,689.3 2,350.5
Defined benefit costs recognized in profit and loss 620.6 1,341.6
Defined benefit costs recognized in other comprehensive income (1,110.8) (1,145.4)
Contributions by Evolva (739.8) (857.5)
Net defined benefit liability at 31 December 459.2 1,689.2

Reconciliation of defined benefit obligation

Defined benefit obligation at 1 January 17,407.4 12,279.4
Interest expense on defined benefit obligation 53.7 29.3
Current service cost (Evolva) 1,020.4 1,048.5
Contributions by plan participants 739.8 857.5
Benefits (paid) / deposited (346.1) 2,794.4
Past service cost - 282.1
(Gains) and losses on settlement (5,533.5) -
Administration costs (excl. costs for managing plan assets) 8.7 6.1
Actuarial (gain) / loss on defined benefit obligation (2,564.3) 110.2
Defined benefit obligation at 31 December 10,786.2 17,407.4

118 ANNUAL REPORT 2022

CHF 1,000 2022 2021

Components of defined benefit costs in OCI

Actuarial (gain) / loss on defined benefit obligation (2,564.3) 110.2
Return on plan assets excl. Interest income 1,453.5 (1,255.6)
Defined benefit cost recognized in other comprehensive income (1,110.8) (1,145.4)

Components of actuarial gains / losses on obligations

Actuarial (gain) / loss arising from changes in financial assumptions (2,120.0) (525.5)
Actuarial (gain) / loss arising from changes in demogr. assumptions - (768.0)
Actuarial (gain) / loss arising from experience adjustments (444.3) 1,403.6
Actuarial (gain) / loss on defined benefit obligation (2,564.3) 110.2

Components of defined benefit cost in profit or loss

Current service cost (employer) 1,020.4 1,048.5
Past service cost - 282.1
(Gains) and losses on settlement (414.2) -
Interest expense on defined benefit obligation 53.7 29.3
Interest (income) on plan assets (48.0) (24.4)
Administration cost excl. cost for managing plan assets 8.7 6.1
Defined benefit cost recognized in profit or loss 620.6 1,341.6
- therefor service cost and administration cost 614.9 1,336.7

- therefor net interest on the net defined benefit liability (asset) 5.7 4.9

Plan assets
Fair value of plan assets at 1 January 15,718.1 9,928.9
Interest income on plan assets 48.0 24.4
Contributions by Evolva 739.8 857.5
Contributions by Evolva's plan particpants 739.8 857.5
Benefits (paid) / deposited (346.1) 2,794.4
Gains and (losses) on settlement (5,119.3) 0.0
Return on plan assets excluding interest income (1,453.5) 1,255.6
Fair value of plan assets at 31 December 10,327.0 15,718.1

Maturity profile of defined benefit obligation

Weighted average duration of defined obligation in years 14.6 16.4
Weighted average duration of defined obligation in years
14.7 16.5
for active members

Weighted average duration of defined obligation in years for pensioners 13.3 12.5

The Company expects to contribute approximately CHF 0.7 million to the plan in 2023.

ANNUAL REPORT 2022 119

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

The fair values of each major class of plan assets are as follows:

CHF 1,000 2022 2021

Cash and cash equivalents 248.9 573.7

Equity instruments 3,523.6 5,471.5
Debt instruments (e.g. bonds) 3,382.1 5,589.4
Real estate 2,805.8 3,637.2
Others 366.6 446.4
Total plan assets at fair value (quoted market price) 10,327.0 15,718.1

Sensitivity analyses
The sensitivity analyses were performed by re-calculating the defined
benefit obligation (DBO) with the same method as in the comparison
period and by changing the following assumptions:

CHF 1,000 2022 2021

DBO at 31.12. with DR -0.25% 11,175.9 18,148.1

DBO at 31.12. with DR +0.25% 10,404.2 16,722.2
DBO at 31.12. with IR -0.25% 10,625.5 17,127.7
DBO at 31.12. with IR +0.25% 10,951.2 17,694.3
DBO at 31.12. with SI -0.25% 10,709.3 17,306.4
DBO at 31.12. with SI +0.25% 10,850.3 17,503.7
DBO at 31.12. with life expectancy +1 year 10,905.1 17,688.4
DBO at 31.12. with life expectancy -1 year 10,665.6 17,127.5
DBO at 31.12. with PI -0.25% 10,600.3 17,025.3
DBO at 31.12. with PI +0.25% 10,981.5 17,810.2

SC of next year with DR +0.25% 647.0 1,318.5

SC of next year with IR +0.25% 713.5 1,452.0

DBO = defined benefit obligation, SC = service cost (employer)

120 ANNUAL REPORT 2022

 13. Employee benefits

Total Group compensation

Period from 1 January to 31 December

CHF 1,000 2022 2021

Short-term benefits 10,388.1 11,663.1

Share-based compensation 1,222.2 1,116.3
Termination benefits 113.8 163.4
Other staff related expenses 402.3 69.7
Total compensation 12,126.3 13,012.5

The table above excludes compensation paid to members of the

board of directors.

Group Management Team compensation

CHF 1,000 2022 2021

Short-term benefits 997.4 907.4

Post employment benefits 85.6 93.0
Share-based compensation - 483.1
Total compensation 1,082.9 1,483.5

ANNUAL REPORT 2022 121

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

14. Intangible assets

Patents & Product &

CHF 1,000 patent Royalty & process
Historical costs applications Licences development Goodwill Total

1 January 2022 38,521.0 79,542.3 10,654.9 40,889.0 169,607.2

Additions - - 1,760.5 - 1,760.5
Translation effects 209.4 482.7 (4.9) 165.7 852.9
Transfers - (2.8) - - (2.8)
31 December 2022 38,730.3 80,022.2 12,410.5 41,054.8 172,217.8

Accumulated amortization
1 January 2022 (24,276.2) (30,041.1) (1,987.9) - (56,305.3)
Amortization of the period (1,513.2) (3,274.5) (2,126.9) - (6,914.6)
Impairment of the period (2,039.6) (12,119.9) (2,873.8) - (17,033.3)
Translation effects 136.5 539.1 5.3 - 680.9
Transfers - 2.8 - - 2.8

31 December 2022 (27,692.5) (44,893.6) (6,983.3) - (79,569.4)

Net book value at
11,037.8 35,128.5 5,427.2 41,054.8 92,648.3
31 December 2022

Historical cost
1 January 2021 37,224.5 77,557.1 7,149.1 40,039.5 161,970.2
Additions - - 3,449.0 - 3,449.0
Translation effects 1,296.6 1,985.1 56.9 849.6 4,188.1
31 December 2021 38,521.0 79,542.3 10,654.9 40,889.0 169,607.2

Accumulated amortization
1 January 2021 (12,473.2) (25,266.9) (336.0) - (38,076.1)
Amortization of the period (1,717.5) (3,948.4) (1,640.1) - (7,306.0)
Impairment of the period (9,628.4) - - - (9,628.4)
Translation effects (457.1) (825.8) (11.9) - (1,294.8)
31 December 2021 (24,276.2) (30,041.1) (1,987.9) - (56,305.3)
Net book value at
31 December 2021 14,244.7 49,501.1 8,667.0 40,889.0 113,301.9

122 ANNUAL REPORT 2022

Amortization of patents, patent applications and royalty & licences (EVERSWEETTM) is
recorded under research and development expenses, while amortization of product
and process development expenses is recorded under cost of goods sold.

Evolva continuously improves the efficacy and efficiency of production processes

for its own products. Related costs that meet the capitalization criteria outlined in
IAS 38 are recognized as Product & process development cost. In 2022, Evolva has
recognised CHF 1.8 million as product & process development cost (2021: CHF 3.4
million) of which the majority is related to manufacturing process improvements and
developments of Evolva’s on-market products.

Impairment test of goodwill and intangible assets

Intangible assets other than goodwill are tested for possible impairment when
an impairment indicator is identified. The Group performs the impairment test by
determining the recoverable amounts based on a value in use model.

In 2022, Group management has conducted a detailed business review and approved
a new mid-term plan. In the course of this review all intangible assets other than
goodwill were strategically reassessed based on new business insights. As a result of
this, a non-cash relevant impairment of CHF 17 million was recognized on patents &
patent applications (CHF 2 million), royalty & licenses (CHF 12.1 million) and product &
process development (CHF 2.9 million). The main product concerned is EVERSWEETTM
due to slower than expected market uptake. The discount rate applied in 2022 to
determine the value in use is 12.5% (2021: 10.8%). The impairment was recorded under
cost of goods sold (CHF 2.9 million) and research and development expenses (CHF
14.1 million).

The Group performs the goodwill impairment test annually or when an impairment
indicator is identified by determining the recoverable amount. The recoverable amount
of an asset or a CGU is the higher of its fair value less cost of disposal and its value in
use. The cash-generating unit’s fair value less costs of disposal is represented by the
market capitalization (fair value level 1) plus a Group specific control premium less
cost of disposal. The Group has identified one CGU, namely research, development,
manufacturing and commercialization of novel food, nutritional and healthcare
ingredients.

ANNUAL REPORT 2022 123

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

CHF 1,000 31 Dec 22 31 Dec 21 31 Dec 20 31 Dec 19

Total number of shares 1,121,280.4 1,030,629.4 821,878.2 796,878.2
Treasury shares 4,378.8 34,367.5 15,148.3 21,539.6

Shares outstanding 1,116,901.5 996,261.8 806,730.0 775,338.6

Share price in CHF 0.082 0.134 0.202 0.219
Market capitalisation 91,585.9 133,499.1 162,959.5 169,799.2
Control premium (25%) 22,896.5 33,374.8 40,739.9 42,449.8
Fair value 114,482.4 166,873.9 203,699.3 212,248.9
Cost of disposal (2.5%) 2,862.1 4,171.8 5,092.5 5,306.2
Fair value less cost of disposal 111,620.3 162,702.0 198,606.8 206,942.7

Carrying amount of equity 106,238.9 131,770.3 145,092.1 172,562.1

Fair value less cost of disposal 111,620.3 162,702.0 198,606.8 206,942.7
Headroom 5,381.4 30,931.7 53,514.7 34,380.6

Sensitivity Analysis

CHF 1,000 31 Dec 22 31 Dec 21 31 Dec 20 31 Dec 19

Market capitalisation 87,170.4 108,119.2 119,050.0 141,589.4
Control premium (25%) 21,792.6 27,029.8 29,762.5 35,397.3

Fair Value 108,963.0 135,149.0 148,812.4 176,986.7

Cost of disposal (2.5%) 2,724.1 3,378.7 3,720.3 4,424.7
Fair value less cost of disposal 106,238.9 131,770.3 145,092.1 172,562.1

Carrying amount of equity 106,238.9 131,770.3 145,092.1 172,562.1

Fair value less cost of disposal 106,238.9 131,770.3 145,092.1 172,562.1
Headroom - - - -
Reduction of market capitalization (4,415.5) (25,379.9) (43,909.5) (28,209.8)
Reduction of share price in CHF -0.0040 -0.0255 -0.0544 -0.0364
Reduction of market capitalization and
(4.8)% (19.0)% (26.9)% (16.6)%
share price in %

124 ANNUAL REPORT 2022

As of 31 December 2022, the market capitalization would need to decrease by CHF 4.4
million (-4.8%) and the share price would need to decrease by CHF 0.0040 (-4.8%) to
be equal to the carrying amount of the CGU.

As of 31 December 2021, the market capitalization would need to decrease by CHF 25.4
million (-19.0%) and the share price would need to decrease by CHF 0.0255 (-19%) to
be equal to the carrying amount of the CGU.

Decision of the Sanctions Commission of SIX Exchange Regulation AG

In September 2022, Evolva was presented with the decision of the Sanctions
Commission concluding that Evolva’s annual financial statements of 2019 and 2020
contained incomplete disclosures and technical mistakes. The incomplete disclosures
and technical mistakes only concern the goodwill impairment test of Evolva’s single
CGU and no other area of the financial statements. Evolva was ordered to pay a fine of
CHF 0.05 million. Evolva accepted the decision and accordingly provides the missing
disclosures for the years 2019 and 2020.

In 2019 Evolva disclosed a discounted cash flow (DCF) valuation model containing
assumptions that did not reflect those of market participants and omitted cost of
disposal. Furthermore, the disclosed model was presented as a fair value less cost
of disposal model (FVLCD) when it was in fact a value in use model (DCF model). The
market capitalization model, on which the recoverable amount was based, was not
adequately disclosed in the 2019 financial statements.

In 2020 Evolva no longer applied the DCF valuation model and instead applied a
market capitalization model to determine the FVLCD. Evolva missed to deduct treasury
shares as well as cost of disposal. If there had been a change in valuation technique
to determine FVLCD, this should have been disclosed accordingly in the 2020 financial
statements. However, there was in fact no change in key assumptions regarding
the FV model as that had already been based on market capitalization plus control
premium in 2019.

A retrospective analysis of both 2019 and 2020 lead to the conclusion that no
restatement was required. Therefore, neither of these incomplete disclosures and
technical mistakes had any impact on the carrying amount of goodwill in 2019 and
2020 or any subsequent periods.

ANNUAL REPORT 2022 125

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

15. Property, plant and equipment

Leasehold Manu- Right-

CHF 1,000
Laboratory Office and IT improve- facturing of-use
Historical cost equipment equipment ments equipment assets Total

1 January 2022 12,410.6 1,806.0 914.6 1,616.1 8,560.7 25,308.0

Additions 37.2 16.6 - 438.4 - 492.3
Disposals (3,190.0) (1,310.8) - (8.4) (58.5) (4,567.7)
Translation effects 28.3 0.1 - (5.2) 3.2 26.5
31 December 2022 9,286.2 511.9 914.6 2,041.0 8,505.4 21,259.1

Accumulated depreciation
1 January 2022 (12,307.3) (1,715.9) (281.9) (292.1) (4,758.1) (19,355.3)
Additions (67.7) (52.1) (91.5) (206.1) (756.7) (1,174.1)
Disposals 3,190.0 1,309.1 - 8.4 50.3 4,557.8
Translation effects (28.3) (0.1) - 1.3 (2.4) (29.5)
31 December 2022 (9,213.3) (459.1) (373.3) (488.5) (5,466.9) (16,001.1)
Net book value at
31 December 2022 72.8 52.9 541.3 1,552.5 3,038.6 5,258.0

Historical cost
1 January 2021 11,687.2 2,478.7 1,066.1 1,575.9 10,118.8 26,926.7
Additions - 20.5 - 312.5 - 333.1
Disposals - (1,499.7) - - (650.9) (2,150.6)
Transfers 591.2 784.1 (155.3) (284.0) (905.9) -
Translation effects 162.2 22.4 3.8 11.7 (1.3) 198.9
31 December 2021 12,410.6 1,806.0 914.6 1,616.1 8,560.7 25,308.0

Accumulated depreciation
1 January 2021 (11,471.4) (2,274.4) (341.9) (372.7) (5,552.1) (20,012.5)
Additions (112.6) (56.9) (91.5) (192.3) (843.2) (1,296.5)
Disposals - 1,499.7 - - 650.9 2,150.6
Transfers (561.2) (862.0) 155.3 284.0 983.8 -
Translation effects (162.2) (22.4) (3.8) (11.1) 2.6 (196.9)

31 December 2021 (12,307.3) (1,715.9) (281.9) (292.1) (4,758.1) (19,355.3)

Net book value at

31 December 2021 103.3 90.1 632.8 1,324.0 3,802.6 5,952.7

126 ANNUAL REPORT 2022

 16. Financial assets

CHF 1,000 31 December 2022 31 December 2021

Financial deposits 608.6 1,088.1

Financial loans 1,787.2 1,581.5
Prepayments to supplier 289.4 378.8
Investment in non-listed R&D company 285.9 316.1
Total financial assets 2,971.2 3,364.5

In 2022, Evolva was able to reduce its rent deposit for the HQ facility by CHF 0.5 million
(2021: CHF 1.1 million). The increase in financial loans is primarily due to a shift from
short-term receivables to long-term financial loans. Financial loans relate to loans
granted to manufacturing partners for manufacturing, supply and CAPEX investments.
Loans are recognized at amortized cost. The loan’s recoverability is reviewed when a
triggering event occurs, such as changes in the business collaboration. Evolva holds
an investment in equity shares in a non-listed R&D company (see note 27).

17. Inventories

CHF 1,000 31 December 2022 31 December 2021

Raw materials 252.0 254.8

Intermediate products 3,403.6 2,499.1
Finished products 14,734.8 13,299.2
Stock in transit 1.6 215.9
Total Inventories 18,392.0 16,268.9

Total inventories are stated at the lower of production cost and net realizable value. As
of the reporting date, finished products consist of nootkatone, valencene, resveratrol,
L-Arabinose and vanillin. In 2022 a write-down of inventory to net realizable value in
the amount of CHF 1.6 million (2021: CHF 1.3 million) was recorded. The overall inventory
increase is mainly for new products to support the targeted growth.

ANNUAL REPORT 2022 127

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

18. Prepayments and accrued income

CHF 1,000 31 December 2022 31 December 2021

Prepayments to suppliers 150.3 696.3

Transitory Assets 1,858.8 1,086.0
Accrued income 476.0 -
Total prepayments and accrued income 2,485.2 1,782.3

The decrease in prepayments to suppliers is mainly due to the capitalization of

previously prepaid manufacturing equipment to one specific CMO. The increase in
transitory assets is mainly due to prepaid rent and other expenses. Accrued income
relates to research and development income.

19. Trade and other receivables

At the reporting date, Evolva deems all receivables as collectable, but constantly
monitors the expected future credit losses and consequently has not recognized any
allowance for bad debt.

CHF 1,000 31 December 2022 31 December 2021

Trade receivables 3,413.2 2,707.9

Other receivables 626.1 1,530.8
Financial loan - 263.6
Total Trade and other receivables 4,039.3 4,502.3

As of 31 December 2022, CHF 2.5 million resp. 71.9% (2021: CHF 1.8 million resp. 67%) of
trade receivables were not due while CHF 0.9 million resp. 28.1% (2021: CHF 0.9 million
resp. 33%) were due. The increase of trade receivables is mainly due to the overall
higher revenue. Other receivables primarily decreased because of a cost-sharing
agreement with a customer in 2021, which was not applicable in 2022. The change in
financial loan results from a shift from short to long-term financial loan.

Based on the expected credit loss (ECL) approach the company has recognized an
ECL provision of CHF 0.2 million (2021: CHF 0.2 million).

128 ANNUAL REPORT 2022

 20. Cash and cash equivalents

Cash and cash equivalents are available immediately or within a notice period of a
maximum of three months. On both 31 December 2022 and 31 December 2021 the full
amount recognized refers to balances on bank accounts.

21. Share capital

The issued share capital over the past two years developed as follows:

Total number of shares

Evolva Holding SA CHF 1,000

1 January 2021 821,878,237 41,093.9

Shares from authorized capital 208,751,116 10,437.6
1 January 2022 1,030,629,353 51,531.5
Shares from authorized capital 62,647,026 3,132.4
Shares from conditional capital 28,003,988 1,400.2
30 June 2022 1,121,280,367 56,064.0

On 25 May 2022, the Group successfully executed a capital increase from authorized
capital in the form of a private placement of 62.6 million shares at a subscription
price of CHF 0.101 per share and CHF 6.3 million in gross proceeds (CHF 3.1 million share
capital and CHF 3.2 million share premium). A total of CHF 0.2 million cost for this
transaction were deducted from the Group’s share premium.

Additionally, 28 million shares were issued from conditional capital at an average

price of CHF 0.081 per share, amounting to a total of CHF 2.3 million to cover bond
conversions (CHF 1.4 million share capital and CHF 0.9 million share premium).

ANNUAL REPORT 2022 129

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

22. Conditional and authorized capital

The development of conditional and authorized capital over the past two years is as
follows:

Conditional shares Authorised shares

share number CHF 1,000 share number CHF 1,000

1 January 2021 74,361,140 3,718.1 164,375,647 8,218.8

Issued in February - - (105,000,000) (5,250.0)
Approved by AGM 2021 - - 92,687,824 4,634.4
Issued in September - - (40,000,000) (2,000.0)
Issued in December - - (63,751,116) (3,187.6)
1 January 2022 74,361,140 3,718.1 48,312,355 2,415.6
Approved by AGM 2022 245,826,631 12,291.3 103,062,935 5,153.1
Issued in May (13,953,488) (697.7) (62,647,026) (3,132.4)
Issued in July (8,974,358) (448.7) - -
Issued in December (5,076,142) (253.8) - -

31 December 2022 217,822,643 10,891.1 40,415,909 2,020.8

-for financing purposes 178,121,882 40,415,909

-for share-based compensation 39,700,761

23. Treasury shares

The amount of treasury shares held by the Group over the past two years developed
as follows:

Treasury shares
Shares CHF 1,000

1 January 2021 15,148,270 3,709.2

Issuance of shares 208,751,116 10,437.6
Use of shares for financing purposes (173,789,793) (11,644.1)
Use of shares for share-based compensation (15,742,089) (784.3)
1 January 2022 34,367,504 1,718.4
Use of shares for financing purposes (25,617,534) (1,280.9)
Use of shares for share-based compensation (4,371,147) (218.6)
31 December 2022 4,378,823 218.9

130 ANNUAL REPORT 2022

 24. Loss per share

Basic loss per share is calculated by dividing the net loss attributable to ordinary
shareholders by the weighted average number of shares outstanding during the
year. For the calculation of diluted loss per share, profit and loss and the weighted
average number of shares are adjusted for the effects of all dilutive potential shares
outstanding during the year.

CHF 1,000 2022 2021

Net loss attributable to shareholders of the parent (43,366.4) (41,266.4)

Weighted average number of shares outstanding 1,070,304.2 879,900.7
Basic and diluted loss per share (in CHF) (0.04) (0.05)

For the years ending 31 December 2022 and 31 December 2021, basic and diluted loss
per share is based on the weighted average number of shares issued and outstanding
and excludes shares to be issued upon the exercise of equity rights as these shares
would be anti-dilutive. If Evolva reports a profit in the future, the shares to be issued
and the options may have a dilutive effect on the net profit per share and will need to
be considered for the purpose of this calculation.

25. Provisions and accrued liabilities

CHF 1,000 31 December 2022 31 December 2021

Provisions for potential repayments contract R&D 1,065.6 1,056.5

Total non-current provisions 1,065.6 1,056.5

Accruals for manufacturing, research & development expenses 523.3 380.8

Accruals for commercial, general & administrative expenses 1,005.3 1,326.8
Accruals for compensation and benefits, including social security 746.4 936.9
Other accrued liabilities 17.8 87.0
Total current accrued liabilities 2,292.8 2,731.5

Accruals include mainly unsettled financial, tax and related consulting items incurred
during the ordinary business course of the Company. The timing of these cash outflows
is reasonably certain.

ANNUAL REPORT 2022 131

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Provisions for potential repayments contract R&D

CHF 1,000 31 December 2022 31 December 2021

Beginning of period 1,056.5 4,777.7

Provisions made during the year - 524.7
Provisions used during the year - (4,425.5)
Provisions reversed during the year - -
Currency translation effect 9.2 179.6
End of period 1,065.6 1,056.5
- of which non-current 1,065.6 1,056.5
- of which current - -

As of 31 December 2022, provisions consisted of CHF 0.5 million (2021: 0.5 million) for
the potential repayment of contractual fees related to work for the US Defense Threat
Reduction Agency (DTRA) and CHF 0.6 million (2021: 0.6 million) for a potential risk
related to another contractual R&D agreement from previous years.

26. Convertible loan

In 2020, Evolva Holding SA entered into an agreement for the issuance and subscription
of convertible notes with Nice & Green SA, a company incorporated and registered
in Switzerland (“investor”). Under the terms of the agreement and the subsequent
amendments in 2020, 2021 and 2022, the investor has committed to invest up to an
amount of CHF 56 million (“maximum commitment”), divided into tranches, until
March 2024 (“the commitment period”).

In the latest amendment dated 29 November 2022, the parties have agreed on
specific terms regarding (i) convertible notes in the value of CHF 8 million that, at
the date of the amendment, have been issued but not yet converted by the investor
(“outstanding convertible notes“) and (ii) the utilization of an additional CHF 8 million
from the maximum commitment.

Regarding change (i), it was agreed that

a) the outstanding convertible notes bear interest of 2.5% p.a., calculated on a daily
basis starting from the date of the amendment until 31 May 2023; thereafter, no
interest shall accrue on the outstanding convertible notes until conversion;
b) the conversion period applicable to the outstanding convertible notes is
extended by 12 months to 24 months; and
c) the investor may not request conversion of the outstanding convertible notes
prior to 31 May 2023.

132 ANNUAL REPORT 2022

Regarding change (ii), from the date of the amendment until 31 May 2023 (“special
investment period“), the issuer may utilize the maximum commitment by up to CHF 8
million in four tranches as follows:

(i) Tranche 1: up to CHF 2 million of new convertible notes by 30 November 2022

(ii) Tranche 2: up to CHF 2 million of new convertible notes by 21 December 2022
(iii) Tranche 3: up to CHF 2 million of new convertible notes by the end of
February 2023
(iv) Tranche 4: up to CHF 2 million of new convertible notes by the end of
March 2023
(v) Tranche 5: up to an amount for which no subscription requests have been
made under tranches 1-4 by the end of May 2023.

The new convertible notes do not bear interest. During the special investment period,
except for the new convertible notes, the investor is not obliged to subscribe for any
additional convertible notes.

Furthermore, it was agreed that

(i) sales of shares by the investor may only be made at a price of at least CHF 0.07
or higher (“Floor Price”), except if the Daily VWAP of the shares falls below the
Floor Price during 10 consecutive trading days (or 20 single Trading Days out of
40), in which case the investor may request that the Floor Price be lowered to
a price that is 10% below the Daily VWAP; in this case the investor may continue
to sell Shares at a price equal to or above such new Floor Price. If the issuer
does not lower the Floor Price following the investor request, the investor may
suspend its obligations under or terminate the latest agreement (in which case
the terms of the existing agreement apply again).
(ii) the daily volume of all shares sold by the investor must not exceed 15% of the
total daily market volume of the shares;
(iii) new convertible notes can only be converted by the investor into shares
tranche by tranche, i.e., a new tranche can only be converted if 80% of the
shares resulting from a previous tranche have been sold (whereby the 15% daily
market volume restriction [see (ii) above] applies).
(iv) The investor does not have the right to terminate the agreement (except as
described in (i) above).

After the end of the special investment period, any further utilization of the maximum
commitment by the issuer (and the subscription of additional convertible notes by the
investor) will be governed exclusively by the existing agreement (i.e., without regard
to the latest amendment), unless the parties agree to apply the terms of the special
investment period/the latest amendment also to further issuance and subscription
of convertible notes available under the maximum commitment.

ANNUAL REPORT 2022 133

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Nice & Green SA is obliged to request conversion of each convertible note no later than
at the expiration of the conversion period. If Nice & Green SA fails to request conversion
prior the date falling 10 business days prior to the expiration of the conversion period,
Evolva Holding SA is entitled to request conversion during the last 10 business days of
the conversion period.

The amount of each convertible note is, at Evolva’s discretion, either repayable by way
of conversion into ordinary shares of Evolva Holding SA or in cash. The nominal value
of one convertible note is CHF 50,000. The conversion price for shares is 95 percent of
the lowest daily volume weighted average price (VWAP) for a share on the SIX Swiss
Exchange during the six trading days immediately preceding the conversion date.
The conversion price for cash redemption is calculated as the nominal value divided
by 0.97 of a convertible note. During the conversion period, Nice & Green may at any
time request full or partial conversion of each convertible note.

Except during the special investment period, the investor has the right to terminate
the agreement by written notice to the issuer if: (i) the share market closing price is
equal to or lower than CHF 0.07 for a period of 20 consecutive trading days during
the commitment period; (ii) an issuer suspension period exceeds three months. The
investor may elect, at its own discretion, to suspend the new subscriptions if the daily
VWAP of any of the ten consecutive trading days immediately preceding the date
of subscription request is equal to or falls below CHF 0.07 until the daily VWAP for a
period of ten consecutive trading days again equals or exceeds CHF 0.07 by written
suspension notice to the issuer.

In the case of early termination, all issued convertible notes shall, at the issuer’s
discretion, be converted into shares or repaid in cash within 30 days.

Evolva Holding SA must pay a commitment fee equal to 4% of the maximum

commitment to Nice & Green SA, based on the convertible notes requested. Nice &
Green SA must pay an incentive fee equal to 10% of the sharing basis to Evolva Holding
SA. The sharing basis shall be the positive difference between the net capital gain and
the net capital loss. The net capital gain is the positive difference between the sale
price of all new shares sold by Nice & Green SA and the conversion price paid for the
respective portion of shares sold minus transaction costs.

134 ANNUAL REPORT 2022

 For the period from 1 January to 31 December 2022:

Convertible notes issued CHF 10.0 million

Transaction costs CHF 0.4 million
Net proceeds from convertible notes CHF 9.6 million

The net proceeds received from the issuance of the convertible notes have been split
between the non-derivative host and the embedded derivative.

No. of tranches Non-derivate Embedded Net

CHF 1,000 at CHF 50,000 host derivate proceeds
Convertible notes 01.01.2021 80 3,785.8 214.2
Notes issued in 2021 400 19,110.4 889.6 19,200.0
Notes converted in 2021 346 (16,465.3) (757.0)
Convertible notes
outstanding 31.12.2021 134 6,430.9 346.8
Notes issued in 2022 200 9,601.4 398.7 9,560.0
Notes converted in 2022 94 (4,544.7) (815.9)
Convertible notes
outstanding 31.12.2022 240 11,487.6 (70.6)

For the conversion of 94 convertible notes (CHF 4.7 million), Evolva has delivered 22.9
million shares created from conditional capital at an average conversion price of
CHF 0.08 and 25.6 million treasury shares at an average conversion price of CHF 0.11
per share.

The impact of the changes in fair value of the embedded derivative amounts to CHF 0.7
million (2021: CHF 0.1 million). This amount is included in the financial result. Directly
related transaction expenses of CHF 0.4 million (commitment fee) are amortized using
the effective interest method.

ANNUAL REPORT 2022 135

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

27. Fair Value of Financial Instruments

Financial assets Valuation

CHF 1,000 category FV Level Fair Value
1 January 2022
Shareholding in non-listed R&D company FVTPL1) Level 3 314.7
Foreign exchange loss -28.8
31 December 2022
Shareholding in non-listed R&D company FVTPL1) Level 3 285.9

Financial Liabilities Valuation

CHF 1,000 category FV Level Fair Value
1 January 2022
Compound embedded derivative FVTPL1) Level 3 346.8
Notes issued in 2022 398.7
Notes converted in 2022 and fair value adjustment -815.9
31 December 2022
Compound embedded derivative FVTPL1) Level 3 -70.6

1) FVTPL = Financial asset or liability measured at fair value through profit and loss

There were no transfers between the different hierarchy levels during the reporting
period, nor in the previous year. The carrying amounts of all other financial assets and
liabilities at amortized cost are reasonable approximations of their fair values.

Evolva holds an investment in equity shares in a non-listed R&D company. The Group
considers the investment to be not strategic in nature. Valuation of the investment
is determined by the share price of the latest financing round of the company. The
investment is categorized as fair value (Level 3).

In 2020, Evolva Holding SA entered into an agreement for the issuance and subscription
of convertible notes with Nice & Green SA. The compound embedded derivate is valued
based on a model, to which the main variable input is the VWAP of Evolva’s share price
of the eight last trading days before valuation date. For detailed information on the
compound embedded derivative see Note 26.

136 ANNUAL REPORT 2022

 28. Lease liabilities

Lease liabilities consists mainly in rental contracts and leasehold improvement for
office and laboratory space. At signing of the contracts, the most extensive rental
period lasts 7 years unless terminated earlier or extended.

Lease commitments 31 December 2022 31 December 2021

Present value of Present value of
Future minimum future minimum Future minimum future minimum
in CHF 1,000 lease payments lease payments lease payments lease payments

Within one year 1,053.0 663.1 1,082.2 834.4

Between one and five years 3,022.7 2,906.8 4,077.4 3,574.0

More than five years - - - -
Total minimum lease pay-
ments 4,075.7 3,569.9 5,159.6 4,408.4
Less amounts representing
financing charges (505.9) (751.1)
Total as of 31 December 3,569.8 4,408.4

Set out below are the carrying amounts of lease liabilities and the movements during
the period:

CHF 1,000 2022 2021

As at 1 January 4,408.5 5,237.3

Additions - -
Disposals (10.0) -
Accretion of interest 244.8 292.7
Payments (1,073.4) (1,122.9)
Translation effects - 1.4
As at 31 December 3,569.8 4,408.5
- of which current 663.1 834.4
- of which non-current 2,906.8 3,574.0

ANNUAL REPORT 2022 137

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

29. Related party transactions

In 2022, Evolva has sold products for CHF 0.04 million to a company where a member
of the board of Evolva is part of the board of the customer (2021: 0.1 million).

All transactions with related parties were conducted at arm’s lengths. As of the
reporting date, Evolva has no outstanding receivable from transactions with related
parties (2021: CHF 0.03 million).

30. Contingent liabilities and commitments

As part of its research activities, the Group is involved in several projects funded by
governmental and other public entities. These contracts include clauses that might
result in reclaims of funding that the Group has received. As of 31 December 2022,
Evolva has recognized CHF 4.0 million as provisions and financial liabilities in its books
(2021: CHF 5.2 million).

The Group has entered into various purchase commitments for manufacturing,
material and services as part of its ordinary business. The total commitment for
manufacturing with manufacturing organizations for the next years amounts to CHF
45.9 million (2021: CHF 57.6 million). These commitments are not in excess of current
market prices and reflect normal business operations.

In its half-year report 2022, Evolva disclosed a contingent liability as a result of

the sanctions proposal by SIX Exchange Regulation AG (SER). The proceeding was
concluded in December 2022 and Evolva was ordered to pay a fine of CHF 0.05 million
and bear the costs of proceeding of CHF 0.05 million. For more details refer to note 14.
No further contingent liabilities remain as a result of this proceeding.

31. Events subsequent to the reporting date

No significant events to be disclosed have occurred after the reporting period up to

the date of the authorisation of these consolidated financial statements.

138 ANNUAL REPORT 2022

ANNUAL REPORT 2022 139
 Mazars AG
Herostrasse 12
CH-8048 Zurich

Tel: +41 44 384 84 44

www.mazars.ch

Report of the statutory auditor to the General Meeting of Evolva Holding SA,
Reinach (BL)

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of Evolva Holding SA and its subsidiaries (the
Group), which comprise the consolidated statement of financial position as at 31 December 2022, the
consolidated statement of financial performance, the consolidated statement of other comprehensive
income, the consolidated statement of cash flows and the consolidated statement of changes in equity
for the year then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies.

In our opinion, the consolidated financial statements (pages 87 to 138) give a true and fair view of the
consolidated financial position of the Group as at 31 December 2022 and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for Opinion

We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISA) and
Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are
further described in the “Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements” section of our report. We are independent of the Group in accordance with the provisions
of Swiss law, together with the requirements of the Swiss audit profession, as well as those of the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our
other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

140 ANNUAL REPORT 2022

Valuation of royalty and licenses asset

Key audit matter How our audit addressed the key audit matter

The royalty and licenses asset amounts to We obtained the Group’s valuation model and in
CHF 35.1 million representing 27% of the particular performed the following audit
Group’s total assets. procedures with the support of our valuation
specialists:
Intangible assets with definite useful life are
tested for impairment whenever events or • We discussed with management the process
changes in circumstances indicate that the for drawing up a value in use calculation and
carrying amount of such assets may not be challenged the assumptions made in relation
recoverable. to royalty income and discount rate.
• We verified the mathematical accuracy of the
Due to the significance of the carrying amount of future cash flows derived from
the royalty and licenses asset and the level of management’s internally developed model
judgement involved in performing an impairment applying the value in use calculation.
test, this matter is considered significant to our • We benchmarked key market related
audit. assumptions against external data, including
assumptions of addressable market, market
Management calculated the recoverable amount growth rate and market share.
using the value in use method. The assessment • In addition, using sensitivity analyses, we
requires judgement in the determination of key tested whether a significant change in the
assumptions in relation to future royalty income, key assumptions (discount rate and the
including the addressable market and the future market share) resulted in the impairment of
market share, as well as the discount rate. the royalty and licenses asset.
• We discussed the results of these tests with
Please refer to page 92 (2.2. Critical accounting management in terms of both the headroom
estimates and judgements), page 100 available and the probability of such a
(2.3. Principles of consolidation) and page 122 change in the assumptions occurring.
(14. Intangible assets).
In performing the audit procedures listed above,
we addressed the risk of an incorrect valuation
of the royalty and licenses asset. The results of
our audit procedures support the assessments
made by management.

ANNUAL REPORT 2022 141

 Valuation of capitalized product and process development costs

Key audit matter How our audit addressed the key audit matter

The carrying amount of capitalized product and We obtained the Group’s calculation of the
process development costs amounts to CHF 5.4 expected future economic benefit and in
million. particular performed the following audit
procedures:
Management must determine the future
economic benefit when capitalizing product and • We discussed with management the process
process development costs. for drawing up the calculation for the future
economic benefit and challenged the key
The assessments required judgement in the assumptions used.
determination of key assumptions such as future • We verified the mathematical accuracy of
sales volumes, future sales prices and management’s calculation.
production costs. • With the support of our valuation specialists
we benchmarked key assumptions including
Due to the level of judgement involved in this sales volumes, sales prices and costs of
assessment, this matter is considered significant production against internal and external
to our audit. data.

Please refer to page 92 (2.2. Critical accounting In performing the audit procedures listed above,
estimates and judgements), page 100 we addressed the risk of an incorrect valuation
( 2.3. Principles of consolidation) and page 122 of capitalized product and process development
(14. Intangible assets). costs. The results of our audit procedures
support the assessments made by
management.

142 ANNUAL REPORT 2022

Revenue recognition

Key audit matter How our audit addressed the key audit matter

In 2022 revenue from contracts with customers We assessed the consistency of the application
amounts to CHF 15.5 million. This includes of the revenue recognition. We placed particular
mainly product-related revenue amounting to emphasis on product sales that occurred shortly
CHF 14.8 million, while research & development before the balance sheet date in order to obtain
revenue amounted to CHF 0.7 million. sufficient evidence to support the existence of
the revenue recognized and the accuracy of the
Revenue from sale of products is recognized at cut-off. For this purpose, we performed in
the point in time when control of the asset has particular the following audit procedures:
been transferred to the customer considering the
applicable International Commercial Terms • On a sample basis, we agreed product-
(Incoterms). related revenue to the supporting
documentation, such as purchase orders,
Revenue is an important performance indicator delivery notes and customer invoices.
for groups in the commercialisation phase. Due • In addition, we requested third party
to the inherent risk that sales could be confirmation from customers on a sample
recognised in the wrong accounting period, we basis to confirm the existence and cut-off of
consider the cut-off in product sales to be a key these revenues.
audit matter.
In performing the audit procedures listed above,
Please refer to page 93 (2.2. Critical accounting we addressed the risk of recognizing the
estimates and judgements), page 96 revenue in the wrong accounting period. The
(2.3. Principles of consolidation) and page 109 results of our audit procedures support the
(4. Segment and geographical information). reported revenue.

ANNUAL REPORT 2022 143

 Valuation of goodwill

Key audit matter How our audit addressed the key audit matter

Goodwill amounts to CHF 41.1 million We obtained the Group’s calculation of the fair
representing 31% of the Group’s total assets. value less costs of disposal and in particular
performed the following audit procedures:
Goodwill is tested for impairment at least
annually or whenever an impairment indicator is • We discussed with management the
identified. The recoverable amount of goodwill is process for determining the fair value
the higher of its fair value less costs of disposal less cost of disposal.
and its value in use. • We verified the mathematical accuracy
of management’s calculation.
Due to the significance of the carrying amount of • We verified the accuracy of the input
goodwill and the level of judgement involved in parameters, such as the closing share
performing an impairment test, this matter is price, the number of shares outstanding
considered significant to our audit. and the number of treasury shares to
external data.
Management calculated the recoverable amount • With the support of our valuation
using the fair value less cost of disposal. Fair specialists we benchmarked the control
value consists of market capitalization plus a premium against comparable
control premium. The assessment requires transactions and the cost of disposal
judgement in the determination of the Group against external data.
specific control premium and the cost of
disposal. In performing the audit procedures listed above,
we addressed the risk of an incorrect valuation
Please refer to page 93 (2.2. Critical accounting of goodwill. The results of our audit procedures
estimates and judgements), page 94 support the assessments and disclosures made
(2.3. Principles of consolidation) and page 122 by management.
(14. Intangible assets).

Other Information

The Board of Directors is responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements,
the stand-alone financial statements, the compensation report and our auditor’s reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

144 ANNUAL REPORT 2022

Board of Directors' Responsibilities for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation of the consolidated financial statements, which
give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern, and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with Swiss law, ISA and SA-CH will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is
located on EXPERTsuisse’s website at: https://www.expertsuisse.ch/en/audit-report. This description
forms an integral part of our report.

Report on Other Legal and Regulatory Requirements

In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control
system exists, which has been designed for the preparation of the consolidated financial statements
according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

Zurich, 8 March 2023

Mazars AG

Cyprian Bumann Roger Leu

Licensed audit expert Licensed audit expert
(Auditor in charge)

ANNUAL REPORT 2022 145

STATUTORY FINANCIAL
STATEMENTS OF EVOLVA
HOLDING SA

146 ANNUAL REPORT 2022

Statement of financial position

CHF 1,000 Note 31 December 2022 31 December 2021

ASSETS
Current Assets
Cash and Cash equivalents 90.5 786.8
Short-term receivables 356.6 161.5

Total Current assets 447.1 948.4

Non-current assets
Investments in subsidiaries 7 - -
Long-term receivables from shareholdings 8 111,034.0 178,226.2

Total non-current assets 111,034.0 178,226.2

Total Assets 111,481.1 179,174.6

LIABILITITES AND EQUITY

Current liabilities
Short-term payables 35.6 25.0
Accrued and other current liabilities 575.3 602.9
Convertible loan 9 12,000.0 6,700.0
Total current liabilities 12,611.0 7,327.9

Total Liabilities 12,611.0 7,327.9

EQUITY
Share capital 4 56,064.0 51,531.5
Statutory contribution reserve 5 282,787.2 275,920.8
Other voluntary reserve 2,974.2 2,974.2
Reserve for treasury shares 6 218.9 1,718.4
Accumulated deficit (243,174.3) (160,298.2)
Total equity 98,870.1 171,846.7

Total Liabilities and Equity 111,481.1 179,174.6

ANNUAL REPORT 2022 147

STATUTORY FINANCIAL STATEMENTS
OF EVOLVA HOLDING SA

Statement of financial performance

CHF 1,000 Note 2022 2021

Income from shareholdings 10 673.1 670.0

Total Revenue 673.1 670.0

General & administrative expenses (1,396.7) (1,805.9)

Financial income 22.6 16.7

Financial expenses 9 (675.0) (820.1)

Value adjustment of long-term receivables

8 (81,500.0) (46,345.7)
from shareholdings and investments

Net loss for the period (82,876.1) (48,285.0)

148 ANNUAL REPORT 2022

NOTES TO THE STATUTORY FINANCIAL
STATEMENTS OF EVOLVA HOLDING SA

1. The Company

Evolva Holding SA (“the Company”) is incorporated in Switzerland. The legal domicile

of the Company is: Evolva Holding SA, Duggingerstrasse 23, 4153 Reinach, Switzerland.
The shares of the Company are listed on the SIX Swiss Exchange (EVE). The Company
has no employees.

2. Basis of preparation

The Company is subject to the provisions of the Articles of Association and to article 620
et seq. of the Swiss Code of Obligations (SCO), which describes the legal requirements
for limited companies (“Aktiengesellschaft”).

These financial statements are prepared in accordance with the provisions of

commercial accounting outlined in art. 957-963b SCO (effective 1 January 2013).
Based on art. 961d sec./ para 1 SCO Evolva has the option not to present additional
information on interest-bearing liabilities and audit fees in the notes as well as a cash
flow statement in accordance with the law. This option is available as Evolva publishes
its consolidated financial statements in accordance with the «International Financial
Reporting Standards» (IFRS) of the International Accounting Standards Board (IASB).
Evolva executes the above described option in accordance with article 961d sec./
para 1 SCO.

3. Principles

3.1. Foreign currency translation

These financial statements are expressed in Swiss francs (CHF).

Transactions in foreign currencies are initially recorded at their respective currency
spot rates at the date the transaction first qualifies for recognition. Monetary assets
and liabilities denominated in foreign currencies are translated using the closing
exchange rate at the reporting date.
Differences arising on settlement or translation of monetary items are recognized in
the statement of financial performance.

The exchange rates (in CHF) for the Company’s significant foreign currencies are as
follows:

2022 2021

Currency Unit Closing rate Average rate Closing rate Average rate
USD 1 0.93 0.96 0.92 0.92
EUR 1 0.99 1.02 1.05 1.10

ANNUAL REPORT 2022 149

NOTES TO THE STATUTORY FINANCIAL
STATEMENTS OF EVOLVA HOLDING SA

3.2. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks
and other short-term highly liquid investments that are readily convertible to known
amounts and have a maturity of three months or less.

3.3. Long-term receivables from shareholdings

Our long-term receivables from shareholdings are tested for impairment annually
and are carried at acquisition cost less adjustments for impairment of value.

3.4. Accrued liabilities

Evolva recognizes accrued and other current liabilities if a present legal or constructive
obligation exists to transfer economic benefits as a result of past events, if a reasonable
estimate of the obligation can be made and if an outflow of assets is likely.

4. Share capital

The development of the issued share capital over the past two years is as follows:

Total number of shares

Evolva Holding SA CHF 1,000

1 January 2021 821,878,237 41,093.9

Shares from authorized capital 208,751,116 10,437.6
1 January 2022 1,030,629,353 51,531.5
Shares from authorized capital 62,647,026 3,132.4
Shares from conditional capital 28,003,988 1,400.2

31 December 2022 1,121,280,367 56,064.0

On 22 February 2021 the Group has subscribed treasury shares of CHF 5.2 million. On
24 September 2021 the Group has subscribed treasury shares of CHF 2.0 million, On
2 December 2021 the Group has subscribed treasury shares of CHF 3.1 million.

On 25 May 2022 the Group successfully executed a capital increase from authorized
capital in the form of a private placement of 62.6 million shares at a subscription price
of CHF 0.101 per share and CHF 6.3 million in gross proceeds. A total of CHF 0.2 million
costs for this transaction were deducted from the Group’s share premium. Additionally,
28 million shares were issued from conditional capital at a nominal value of CHF 0.05
per share, amounting to a total of CHF 1.4 million to cover bond conversions.

The share capital as of 31 December 2022 consists of 1,121,280,367 shares with a nominal
value of CHF 0.05 per share.

150 ANNUAL REPORT 2022

 5. Statutory contribution reserve

As of 31 December 2022 the Federal Tax Authority has recognized CHF 84.2 million
as capital contribution reserves (2021: CHF 84.2 million). The remaining amount is
currently in the approval process.

6. Treasury shares

The development of treasury shares held by the group over the past two years is as
follows:

Treasury shares
Shares CHF 1,000

1 January 2021 15,148,270 3,709.2

Issuance of shares 208,751,116 10,437.6
Use of shares for financing purposes (173,789,793) (11,644.1)
Use of shares for share-based compensation (15,742,089) (784.3)
1 January 2022 34,367,504 1,718.4
Use of shares for financing purposes (25,617,534) (1,280.9)
Use of shares for share-based compensation (4,371,147) (218.6)
31 December 2022 4,378,823 218.9

7. Investments

Ownership 1) Shareholder Share capital

Name Domicile 31.12.2022 31.12.2021
Evolva AG Reinach, CH 100% 100% Evolva CHF 6,369,540
Holding SA
Evolva Inc. Lexington, USA 100% 100% Evolva AG USD 7,835

Non-operational entities

Evolva Bio UK Ltd. 2) Cambridge, UK 100% 100% Evolva AG GBP 14.62

Evolva Singapore PTE. Ltd. Singapore 100% 100% Evolva AG SGD 100
Evolva Biotech A/S 3)
Copenhagen, DK n/a 100% Evolva AG DKK 4,311,583
Evolva Biotech Private
Limited 2) Chennai, India 100% 100% Evolva AG INR 169,930

1 Capital ownership is equal to voting ownership

2 Company in liquidation
3 Company liquidated in 2022

ANNUAL REPORT 2022 151

NOTES TO THE STATUTORY FINANCIAL
STATEMENTS OF EVOLVA HOLDING SA

8. Long-term receivables from shareholdings and investments

Operations in the Group are conducted or managed by Evolva AG and its subsidiaries
whereas Evolva Holding SA has limited operations within the Group. To fund the
Group’s operations, Evolva Holding SA grants loans and holds the investments to its
subsidiaries.

As of 31 December 2022, Evolva has recognized a value adjustment of CHF 81.5 millions
of his long-term receivables from shareholdings. In 2021, Evolva had recognized a
value adjustment on its long-term receivables from shareholdings and investments
of CHF 46.3 millions. The value adjustment recognized in 2022 and 2021 follows the
prudent concept of the Swiss Code of Obligations regarding subordinated loans and
investments.

The fair value and recoverability of long-term receivables depends on the commercial
success of Evolva’s existing and future products. Even though Evolva is making
promising progress, some uncertainties remain as to whether commercial success
can be achieved.

9. Convertible loan

In 2020, Evolva Holding SA entered into an agreement for the issuance and subscription
of convertible notes with Nice & Green SA, a company incorporated and registered
in Switzerland (“investor”). Under the terms of the agreement and the subsequent
amendments in 2020, 2021 and 2022, the investor has committed to invest up to an
amount of CHF 56 million (“maximum commitment”), divided into tranches, until
March 2024 (“the commitment period”).

In the latest amendment dated 29 November 2022, the parties have agreed on
specific terms regarding (i) convertible notes in the value of CHF 8 million that, at
the date of the amendment, have been issued but not yet converted by the investor
(“outstanding convertible notes“) and (ii) the utilization of an additional CHF 8 million
from the maximum commitment.

Regarding change (i), it was agreed that

a) the outstanding convertible notes bear interest of 2.5% p.a., calculated on

a daily basis starting from the date of the amendment until 31 May 2023;
thereafter, no interest shall accrue on the outstanding convertible notes until
conversion;
b) the conversion period applicable to the outstanding convertible notes is
extended by 12 months to 24 months; and
c) the investor may not request conversion of the outstanding convertible notes
prior to 31 May 2023.

152 ANNUAL REPORT 2022

Regarding change (ii), from the date of the amendment until 31 May 2023 (“special
investment period“), the issuer may utilize the maximum commitment by up to CHF 8
million in four tranches as follows:

(i) Tranche 1: up to CHF 2 million of new convertible notes by 30 November 2022

(ii) Tranche 2: up to CHF 2 million of new convertible notes by 21 December 2022
(iii) Tranche 3: up to CHF 2 million of new convertible notes by the end of February 2023
(iv) Tranche 4: up to CHF 2 million of new convertible notes by the end of March 2023
(v) Tranche 5: up to an amount for which no subscription requests have been made
under tranches 1-4 by the end of May 2023.

The new convertible notes do not bear interest. During the special investment period,
except for the new convertible notes, the investor is not obliged to subscribe for any
additional convertible notes.

Furthermore, it was agreed that

(i) sales of shares by the investor may only be made at a price of at least CHF 0.07
or higher (“Floor Price”), except if the Daily VWAP of the shares falls below the Floor
Price during 10 consecutive trading days (or 20 single Trading Days out of 40), in
which case the investor may request that the Floor Price be lowered to a price
that is 10% below the Daily VWAP; in this case the investor may continue to sell
Shares at a price equal to or above such new Floor Price. If the issuer does not
lower the Floor Price following the investor request, the investor may suspend its
obligations under or terminate the latest agreement (in which case the terms of
the existing agreement apply again).
(ii) the daily volume of all shares sold by the investor must not exceed 15% of the total
daily market volume of the shares;
(iii) new convertible notes can only be converted by the investor into shares tranche
by tranche, i.e., a new tranche can only be converted if 80% of the shares resulting
from a previous tranche have been sold (whereby the 15% daily market volume
restriction [see (ii) above] applies).
(iv) The investor does not have the right to terminate the agreement (except as
described in (i) above).

After the end of the special investment period, any further utilization of the maximum
commitment by the issuer (and the subscription of additional convertible notes by the
investor) will be governed exclusively by the existing agreement (i.e., without regard
to the latest amendment), unless the parties agree to apply the terms of the special
investment period/the latest amendment also to further issuance and subscription
of convertible notes available under the maximum commitment.

Nice & Green SA is obliged to request conversion of each convertible note no later than
at the expiration of the conversion period. If Nice & Green SA fails to request conversion
prior the date falling 10 business days prior to the expiration of the conversion period,
Evolva Holding SA is entitled to request conversion during the last 10 business days of
the conversion period.

ANNUAL REPORT 2022 153

NOTES TO THE STATUTORY FINANCIAL
STATEMENTS OF EVOLVA HOLDING SA

The amount of each convertible note is, at Evolva’s discretion, either repayable by way
of conversion into ordinary shares of Evolva Holding SA or in cash. The nominal value
of one convertible note is CHF 50,000. The conversion price for shares is 95 percent of
the lowest daily volume weighted average price (VWAP) for a share on the SIX Swiss
Exchange during the six trading days immediately preceding the conversion date.
The conversion price for cash redemption is calculated as the nominal value divided
by 0.97 of a convertible note. During the conversion period, Nice & Green may at any
time request full or partial conversion of each convertible note.

Except during the special investment period, the investor has the right to terminate
the agreement by written notice to the issuer if: (i) the share market closing price is
equal to or lower than CHF 0.07 for a period of 20 consecutive trading days during
the commitment period; (ii) an issuer suspension period exceeds three months. The
investor may elect, at its own discretion, to suspend the new subscriptions if the daily
VWAP of any of the ten consecutive trading days immediately preceding the date
of subscription request is equal to or falls below CHF 0.07 until the daily VWAP for a
period of ten consecutive trading days again equals or exceeds CHF 0.07 by written
suspension notice to the issuer.

In the case of early termination, all issued convertible notes shall, at the issuer’s
discretion, be converted into shares or repaid in cash within 30 days.

Evolva Holding SA must pay a commitment fee equal to 4% of the maximum

commitment to Nice & Green SA, based on the convertible notes requested. Nice &
Green SA must pay an incentive fee equal to 10% of the sharing basis to Evolva Holding
SA. The sharing basis shall be the positive difference between the net capital gain and
the net capital loss. The net capital gain is the positive difference between the sale
price of all new shares sold by Nice & Green SA and the conversion price paid for the
respective portion of shares sold minus transaction costs.

For the period from 1 January to 31 December 2022:

Convertible notes issued CHF 10.0 million
Transaction costs CHF 0.4 million
Net proceeds from convertible notes CHF 9.6 million

For the conversion of 94 convertible notes (CHF 4.7 million), Evolva has delivered 22.9
million shares created from conditional capital at an average conversion price of
CHF 0.08 and 25.6 million treasury shares at an average conversion price of CHF 0.11
per share.

154 ANNUAL REPORT 2022

 Transaction costs of the convertible note are recorded as financial expenses in the
statement of financial performance, which represent the major part of financial
expenses in 2022 and in 2021.

10. Income from shareholdings

Evolva Holding SA grants loans to its subsidiaries to fund the Group’s research and
development activities. The interest rates applied to these loans are determined
following legal and tax requirements applicable to interests on intercompany loans.

11. Holdings of shares and share options

The number of Evolva Holding SA shares and equity rights held by members of the
Board of Directors and the Group Management Team presents as follows:

31 December 2022 31 December 2021

Shares Equity rights Shares Equity rights
Board of Directors
Beat In-Albon (Chairman) 2,537,161 751,174 655,955 396,058
Christoph Breucker 1,188,128 375,587 - 198,029
Richard Ridinger 1) 2,134,654 - 451,477 198,029
Stephan Schindler 1,173,565 375,587 381,477 198,029

Andreas Pfluger 2)
- 375,587 - -
Andreas Weigelt 2)
- 375,587 - -
Total members of the Board 7,033,508 2,253,522 1,488,909 990,145

Group Management Team

Oliver Walker (CEO) 3) 4,559,512 - 4,559,512 4,476,611
Christian Wichert (CEO) 4) 2,524,752 4,578,502 - -
Carsten Däweritz (CFO) 1,043,069 3,821,987 350,000 1,303,463
Total Group Management Team 8,127,333 8,400,489 4,909,512 5,780,074

1) Mr. Richard Ridinger left the Board of Directors in 2022

2) Mr. Andreas Pfluger and Mr. Andreas Weigelt were elected to the Board of Directors in 2022
3) Mr. Oliver Walker left the Group Management Team in February 2022
4) Mr. Christian Wichert joined the Group Management Team in February 2022

ANNUAL REPORT 2022 155

NOTES TO THE STATUTORY FINANCIAL
STATEMENTS OF EVOLVA HOLDING SA

12. Significant shareholders

As of 31 December 2022, Pictet Asset Management SA

has share holdings of 8.60% (2021: 9.64%), Veraison
Capital AG has shareholdings of 5.69% (2021: 6.19%) and
3V Asset Management AG has shareholdings of 4.19%
(2021: 3.62%) of the total outstanding shares.

13. Events subsequent to the reporting date

There are no reportable events subsequent to the

reporting date.

156 ANNUAL REPORT 2022

 Mazars AG
Herostrasse 12
CH-8048 Zurich

Tel: +41 44 384 84 44

www.mazars.ch

Report of the statutory auditor to the General Meeting of Evolva Holding SA,
Reinach (BL)

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Evolva Holding SA (the Company), which comprise the
statement of financial position as at 31 December 2022, the statement of financial performance for the
year then ended, and notes to the financial statements, including a summary of significant accounting
policies.

In our opinion, the accompanying financial statements (pages 147 to 156) comply with Swiss law and
the Company’s articles of incorporation.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our
responsibilities under those provisions and standards are further described in the “Auditor's
Responsibilities for the Audit of the Financial Statements” section of our report. We are independent of
the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

ANNUAL REPORT 2022 157

 Valuation of long-term receivables from shareholdings

Key audit matter How our audit addressed the key audit matter

As of 31 December 2022, long-term receivables We performed the following audit procedures with
from shareholdings amount to CHF 111.0 million regard to the valuation of long-term receivables
after the deduction of a further value adjustment of from shareholdings:
CHF 81.5 million in 2022. We consider the • We tested the recoverability of the recognised
valuation of this balance sheet item as key audit amounts by comparing them with
matter for the following reasons: management’s assessment.
• The long-term receivables from • We analysed the assumptions used by
shareholdings are significant and represent management and verified the consistency of
99 % of the total assets. the assumptions used and corroborated them
• The valuation of long-term receivables from with available information.
shareholdings considers the financial • With the support of our valuation specialists we
substance of the subsidiaries and depends benchmarked key assumptions included in the
on the future performance of the cash flow forecasts against data from internal
subsidiaries as well as their ability to and external sources.
generate sufficient cash flows. This • With the support of our valuation specialists
assessment includes a significant scope of we benchmarked the control premium against
judgement. comparable transactions and the cost of
disposal against external data.
Please refer to page 150 (Principles – 3.3 Long-
term receivables from shareholdings) and page In performing the audit procedures listed above, we
152 (8. Long-term receivables from addressed the risk of incorrect valuation of the long-
shareholdings) in the notes to the financial term receivables from shareholdings. The results of
statements. our audit procedures support the assessment made
by management.

Other Information

The Board of Directors is responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements,
the stand-alone financial statements, the compensation report and our auditor’s reports thereon.

Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

158 ANNUAL REPORT 2022

Board of Directors’ Responsibilities for the Financial Statements

The Board of Directors is responsible for the preparation of the financial statements in accordance with
the provisions of Swiss law and the Company's articles of incorporation, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with Swiss law and SA-CH will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on
EXPERTsuisse’s website at: https://www.expertsuisse.ch/en/audit-report. This description forms an
integral part of our report.

Report on Other Legal and Regulatory Requirements

In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control
system exists, which has been designed for the preparation of the financial statements according to the
instructions of the Board of Directors.

We recommend that the financial statements submitted to you be approved.

Zurich, 8 March 2023

MAZARS AG

Cyprian Bumann Roger Leu

Licensed audit expert Licensed audit expert
(auditor in charge)

ANNUAL REPORT 2022 159

Design
Word Wide KG, Munich, Germany

Photography credits
Page 1: AdobeStock©vetre; Page 3: AdobeStock©oksix;
Page 4: Sara Barth; Page 9: AdobeStock©wywenka;
iStock©Ridofranz, iStock©MixMedia, AdobeStock©New Africa;
Page 14/15: iStock©DNY59; Page 16: AdobeStock©Yeti Studio,
AdobeStock©baibaz; Page 19, 22: ©Evolva, customers, business
partners; Page 23: ©AdobeStock; Page 28/29: iStock©Ridofranz;
Page 33: AdobeStock©Hinrich Behrens; Page 34/35:
iStock©MixMedia; Page 41: iStock©yul38885 yul38885;
Page 42/43: AdobeStock©New Africa; Page 46/47:
iStock©Fahroni; Page 48: AdobeStock©kerdkanno;
Page 49: AdobeStock©Maks Narodenko; Page 50/51: Evolva Holding SA
AdobeStock©Graficriver; Page 52/53: iStock©Olivier Le Moal; Duggingerstrasse 23
Page 63: Stefan Schmidlin Fotografie; Page 64/65: Stefan CH-4153 Reinach
Schmidlin Fotografie, Sara Barth (2); Page 66: Dominik Switzerland
Plüss; Page 67: Stefan Schmidlin Fotografie; Page 72: Tel. +41 61 485 2000
AdobeStock©Netfalls; Page 86: AdobeStock©sergign; Page 139: Fax +41 61 485 2001
AdobeStock©gopixa; Page 146: AdobeStock©StockHouse. [email protected]
www.evolva.com
© Evolva Holding SA

160 ANNUAL REPORT 2022