The gross margin of the Group decreased to 35.6% (2011: 43.7%). The margin difference compared to 2011 is mainly attributable to a decrease in upfront payments, the ramp-up of capacities in EVT Execute, lower margin compound management revenues and the move into the new Manfred Eigen Campus at the start of 2012.Evotec's operating result for 2012 amounted to € (3.2) m (2011: € 5.2 m), which primarily was due to a lower gross profit and an impairment of intangible assets in the amount of € 3.5 m (2011: € 0.6 m net of reversal of impairment). The impairment was mainly the result of the termination of the VR1 partnership with Pfizer. The operating result before impairment and changes in contingent consideration was positive at € 1.4 m (2011: € 5.8 m). Net income amounted to € 2.5 m (2011: € 6.7 m). The improvement in the net income primarily resulted from deferred tax income amounting to € 8.3 m (2011: € 2.5 m). R&D expenditure amounted to € 8.3 m (2011: € 8.4 m). Evotec's unfunded research focused on selected discovery projects in the key areas of CNS, oncology, inflammation, metabolic and kidney disease such as the Cure Beta and Cure Nephron alliances with Harvard University. Although there were significant investments in capital expenditures of € 8.2 m (2011: € 8.1 m) as well as in intangible assets and earn-out payments, the Company's liquidity position increased to € 64.2 m (2011: € 62.4 m), this is composed of cash and cash equivalents (€ 39.1 m) and of investments (€ 25.1 m). Therefore Evotec is very well-financed. 2. Evotec Action Plan 2016 – Step by step forward for higher Innovation Efficiency Update on discovery alliances, development partnerships and status of pre-clinical programmes Action Plan 2016 – Innovation Efficiency is the strategy framework that was initiated in March 2012. EVT Execute aims to deliver cost efficient and industrialised services for drug discovery on a fee-for-service basis. EVT Integrate is the systematic approach to progress targets through the pre-clinic, on a research payments, milestones and royalties success basis. EVT Innovate involves accelerating promising drug discovery ideas and assets to partnerships with upfront payments, premium research fees, milestones and royalties. EVT Execute – Continued trend towards outsourcing services for biotech and Pharma; important new and extended collaborations With CHDI, a privately funded not-for-profit research organisation dedicated to developing therapies for Huntington's disease (HD), Evotec extended its collaboration until the end of 2015. This contract extension could be worth up to $ 41 m in research payments for Evotec.