SHORTENED SEMI-ANNUAL CONSOLIDATED FINANCIAL STATEMENT AS AT 30 JUNE 2017 AND FOR THE PERIOD FROM 01 JANUARY 2017 TILL 30 JUNE 2017

Transcription

1 SHORTENED SEMI-ANNUAL CONSOLIDATED FINANCIAL STATEMENT AS AT 30 JUNE 2017 AND FOR THE PERIOD FROM 01 JANUARY 2017 TILL 30 JUNE

2 TABLE OF CONTENTS Introduction to the shortened semi-annual consolidated financial statement 3 Consolidated profit and loss account 8 Consolidated total income statement 9 Consolidated balance sheet 10 Consolidated cash-flow statement 11 Consolidated statement of changes in equity 12 Explanatory notes to the shortened semi-annual consolidated financial statement

3 1.1 SHORTENED SEMI-ANNUAL CONSOLIDATED FINANCIAL STATEMENT OF THE CAPITAL GROUP BIOTON S.A. AS AT 30 JUNE 2017 AND FOR THE PERIOD FROM 1 JANUARY 2017 TILL 30 JUNE 2017 INCLUDING COMPARATIVE DATA AS AT 31 DECEMBER 2016 AND FOR THE PERIOD FROM 1 JANUARY 2016 TILL 30 JUNE 2016 INTRODUCTION TO THE SHORTENED SEMI-ANNUAL CONSOLIDATED FINANCIAL STATEMENTOF THE CAPITAL GROUP BIOTON S.A Identification details of the parent Company BIOTON Spółka Akcyjna [joint stock company] (Company) with the registered seat in Warsaw, ul. Starościńska 5, is registered under the number at the District Court for the capital city of Warsaw in Warsaw, 13 th Commercial Department of the National Court Register. The basic object of activity of BIOTON S.A. is manufacturing of medicines and pharmaceutical preparations and production of pharmaceutical substances Periods covered by the shortened semi-annual consolidated financial statement and comparative financial data The shortened semi-annual consolidated financial statement of the capital group BIOTON S.A. ("Group") has been drawn up as at 30 June 2017 and covers the accounting period from 01 January 2017 till 30 June The comparative financial data covers the accounting period from 01 January 2016 till 30 June 2016 and the balance sheet as at 31 December According to the regulation of the Minister of Finance of 19 February 2009 on current and periodical information submitted by issuers of securities and conditions of deeming equivalent the information required by the regulations of a state being a nonmember state (Journal of Laws of 2009, No. 33, item 259 as amended) the Group is obliged to publish financial results for the period of 6 months ending on 30 June 2017, which is the current semi-annual reporting period. The shortened semi-annual consolidated financial statement has been approved for publication by the Managing Board of the Company on 31 August Composition of the Managing Board and Supervisory Board of BIOTON S.A. Current composition of the Managing Board of BIOTON S.A.: - Robert Neymann (President of the Managing Board, since 15 May 2017), - Marek Dziki (a Member of the Managing Board), - Adam Polonek (a Member of the Managing Board). Below is the history of changes in the composition of the Managing Board since 01 January 2017 until the publication of the financial statement. On 15 May 2017 Mr. Jubo Liu resigned with immediate effect from the position of the President of the Managing Board. On 15 May 2017 the Supervisory Board appointed Mr. Robert Neymann to serve as the President of the Managing Board. Current composition of the Supervisory Board of BIOTON S.A.: - Mr. Jubo Liu (Chairman of the Supervisory Board since 15 May 2017, a Member of the Supervisory Board since 15 May 2017), - Mr. Dariusz Trzeciak (a Vice Chairman of the Supervisory Board since 15 May 2017, a Member of the Supervisory Board fulfilling the criteria referred to in 18 clause 1 of the Articles of Association of the Company since 15 May 2017), - Mr. Alejandro Gomez Blanco (a Member of the Supervisory Board), - Mr. Ming-Tso Mark Chiang (a Member of the Supervisory Board since 15 May 2017), - Mr. Vaidyanathan Viswanath (a Member of the Supervisory Board)

4 Below is the history of changes in the composition of the Supervisory Board since 01 January 2017 until the publication of the financial statement. As at 01 January 2017: - Mr. Dariusz Trzeciak (Chairman of the Supervisory Board), - Mr. David Martin Comberbach (a Vice Chairman of the Supervisory Board), - Mr. Marcin Dukaczewski (a Vice Chairman of the Supervisory Board), - Mr. Alejandro Gomez Blanco (a Member of the Supervisory Board), - Mr. Yu Liang Huang (a Member of the Supervisory Board), - Mr. Vaidyanathan Viswanath (a Member of the Supervisory Board), - Mr. Sławomir Ziegert (a Member of the Supervisory Board). On 7 February 2017, Mr. Marcin Dukaczewski, a Vice Chairman of the Supervisory Board, submitted his resignation from the position of a Member of the Supervisory Board. On 28 March 2017, the Supervisory Board appointed Mr. Yu Liang Huang to serve as a Vice Chairman of the Supervisory Board. On 12 May 2017, Mr. David Martin Comberbach, a Vice Chairman of the Supervisory Board, submitted his resignation from the position of a Member of the Supervisory Board. On 15 May 2017, Mr. Sławomir Ziegert submitted his resignation from the position of a Member of the Supervisory Board with immediate effect. The Extraordinary General Meeting of the Company which was held on 15 May 2017: dismissed from the Supervisory Board: o o Mr. Yu Liang Huang, a Vice Chairman of the Supervisory Board, Mr. Dariusz Trzeciak, Chairman of the Supervisory Board; appointed the following members of the Supervisory Board: o o o o Mr. Dariusz Trzeciak, as a Member of the Supervisory Board fulfilling the criteria referred to in 18 clause 1 of the Articles of Association of the Company, Mr. Jubo Liu, Mr. Tomasz Siembida, Mr. Ming-Tso Mark Chiang. On 15 May 2017, the Supervisory Board appointed: Mr. Jubo Liu to serve as Chairman of the Supervisory Board, Mr. Tomasz Siembida to serve as a Vice Chairman of the Supervisory Board, Mr. Dariusz Trzeciak to serve as a Vice Chairman of the Supervisory Board. On 28 June 2017, Mr. Tomasz Siembida, a Vice Chairman of the Supervisory Board, submitted his resignation from the position of a Member of the Supervisory Board

5 1.1.4 The ownership structure of the Group BIOTON S.A. The ownership structure of the Group BIOTON S.A. as at 30 June 2017 is as follows: Description of the main accounting principles applied (a) Conformity statement The shortened semi-annual consolidated financial statement as at 30 June 2017 has been reviewed by a chartered auditor. The consolidated financial statement as at 31 December 2016 has been reviewed by a chartered auditor. The shortened semi-annual consolidated financial statement as at 30 June 2016 has been reviewed by a chartered auditor. The shortened semi-annual consolidated financial statement as at 30 June 2017 has been prepared according to the International Accounting Standard No. 34 Semi-annual financial statements, which was approved by the European Union, according to Art. 45 clause 1a-1c of the act on accounting (uniform text in the Journal of Laws of 2016, item 1047) and the implementing provisions to this act, and according to the requirements specified in the regulation of the Minister of Finance of 19 February 2009 on current and periodical information submitted by issuers of securities and conditions of deeming equivalent the information required by the regulations of a state being a non-member state (Journal of Laws of 2014, item 133, as amended). The consolidated financial statement as at 31 December 2016 has been prepared according to the International Financial Reporting Standards approved by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") acting at IASB which have been approved by the European Union The shortened semi-annual consolidated financial statement as at 30 June 2017 should be read together with the audited consolidated financial statement as at 31 December Amendments to the existing standards and interpretations applied for the first time in the financial report of the company/group in 2017 While approving this financial statement there were no amendments to the existing standards which have been published by IASB and approved for application in the EU and which have would have taken effect for the first time in the financial statement of the Group for Information about new standards and amendments thereto which take effect has been disclosed in the annual financial statement prepared as at 31 December

6 (b) Principles of preparing the shortened semi-annual consolidated financial statement The Managing Board of BIOTON S.A. and Members of the Supervisory Board are responsible for drawing up and reliable presentation of the shortened semi-annual consolidated financial statement according to the International Financial Reporting Standards and other applicable regulations. In the opinion of the Managing Board and the Supervisory Board drawing up the shortened semi-annual standalone financial statement based on the principle of continuance of operation in the predictable future is deemed justified. In the opinion of the Managing Board there are no circumstances which would indicate that continuance of operation by the Group is at risk. As at the balance date, the Company has fulfilled all financial covenants indicated in the conditions of credit agreements concluded by BIOTON S.A., but the presentation of credits in accordance with requirements in MSR 1, i.e. reclassification of long-term credits into short-term credits, is caused by the fact that amendments to credit agreements amending terms and conditions of financing were executed in the period from the balance sheet date till the publication date (see note 17). Simultaneously, the balance sheet in the standalone financial statement of BIOTON S.A. which was prepared by the Managing Board and audited by an auditor demonstrated: (i) losses from the previous years, caused mainly by updating the value of non-financial (non-cash) assets of BIOTON in 2015, and (ii) net loss from the current period, which was caused mainly by recognised unrealised (statistical) exchange rate differences as a result of the strengthening of PLN in relation to USD, in connection with converting balance sheet items between 31 December 2016 (USD/PLN according to the average exchange rate of the National Bank of Poland as at ) and 30 June 2017 (USD/PLN according to the average exchange rate of the National Bank of Poland as at ), including, in particular, the estimation of items related to loans granted to companies from the Capital Group, denominated in USD, which constitute 80% of all recognised unrealised (statistical) exchange rate differences, and which are disclosed in the standalone statement in the Profit and Loss Account. Those loans form a part of the net investment of BIOTON S.A. in companies from the Capital Group and in accordance with z MSR21.32 the unrealised (statistical) exchange rate differences from those loans are disclosed in other total incomes, and thus are not disclosed in the net result achieved in the consolidated financial statement of the Capital Group, which in total exceed the sum of: (i) the supplementary capital, (ii) the reserve capital, and (iii) one third of the share capital, and therefore the Managing Board, in accordance with applicable provisions, will without undue delay convene an extraordinary general meeting in order to adopt a relevant resolution in respect of continuing the operation of the Company, which is a formal requirement as provided for in the Polish Code of Commercial Partnerships and Companies. Simultaneously, the Managing Board has noted that the value of equity capital of BIOTON SA exceeds 1.13 billion PLN as at 30 June Therefore, drawing up the standalone semi-annual consolidated financial statement of BIOTON S.A. on the basis of the principle of continuance of operation is deemed justified. The shortened semi-annual consolidated financial statement has been based on the principle of historical costs. Drawing the consolidated financial statement up in accordance with IFRS EU requires that the Managing Board makes assessments, estimates and assumptions which affect the adopted principles and presented values of assets, liabilities, revenues and costs. Estimates and assumptions related thereto are based on historical experience and other factors considered reasonable under given circumstances and their results are the grounds for assessment as regards the carrying value of assets and liabilities, which does not result directly from other sources. The actual value may be different than the estimated value. The estimates and assumptions related thereto are subject to ongoing verification. The change of accounting estimates is recorded in time when such revaluation is made or in the current and future periods, if it pertains to both the current and future periods. While preparing the shortened semi-annual consolidated financial statement the Group applied the same accounting principles as specified in the consolidated financial statement as at 31 December

7 The consolidated semi-annual financial statement for the accounting period from 01 January 2017 till 30 June 2017 covers the financial statements of the following subsidiaries: standalone semi-annual financial statement of BIOTON S.A. covering the accounting period from 01 January 2017 till 30 June 2017 (parent company); standalone semi-annual financial statement of BIOTON MARKETING AGENCY Sp. z o.o., in which BIOTON S.A. holds 100% of the share capital and number of votes at the GM, covering the accounting period from 01 January 2017 till 30 June 2017; consolidated semi-annual financial statement of the Capital Group SciGen Ltd, in which BIOTON S.A. holds 95.57% of the share capital and number of votes at the GM, covering the period from 01 January 2017 till 30 June Consolidated semi-annual financial statement of the Capital Group SciGen Ltd covers the following subsidiaries: SciGen Australia PTY Ltd (100% shares and the number of votes at the GM), SciGen Korea Ltd (100% shares and the number of votes at the GM) and SciGen (Beijing) Biotechnology Company Ltd (100% shares and the number of votes at the GM); consolidated semi-annual financial statement of the Capital BioPartners Holding AG, in which BIOTON S.A. holds 100% of the share capital of BioPartners Holding AG and the number of votes at the GM, covering the period from 01 January 2017 till 30 June Consolidated semi-annual financial statement of the Capital Group BioPartners Holding AG covers the following subsidiaries: BioPartners GmbH Switzerland (100% shares and the number of votes at the GM) and BioPartners GmbH Germany (100% shares and the number of votes at the GM standalone semi-annual financial statement of Pharmatex Italia S.r.l., in which BIOTON S.A. held through TRICEL S.A. 100% of the share capital and the number of votes at the GM, covering the accounting period from 01 January 2017 till the day of sale (see note 8); standalone semi-annual financial statement of Fisiopharma S.r.l., in which BIOTON S.A. held through TRICEL S.A. 100% of the share capital and the number of votes at the GM, covering the accounting period from 01 January 2017 till the day of sale (see note 8); standalone semi-annual financial statement of BIOLEK Sp. z o.o., in which BIOTON S.A. holds 100% of the share capital and the number of votes at the GM, covering the accounting period from 01 January 2017 till 30 June 2017; standalone semi-annual financial statement of BIOTON International GmbH, in which BIOTON S.A. holds through Germonta Holdings Ltd. 100% of the share capital and the number of votes at the GM, covering the accounting period from 01 January 2017 till 30 June Due to the fact that there are companies within BIOTON Group whose net assets are not significant from the point of view of the consolidated statement, and the operations of these companies are only limited to holding shares in lower level subsidiaries, such companies are not covered by the consolidation. The consolidated semi-annual statement covers directly the above mentioned lower level subsidiaries. The above mentioned higher level subsidiaries which are not covered by the consolidation include: - Mindar Holdings Ltd (subsidiary); - Germonta Holdings Ltd (subsidiary); - TRICEL S.A. (subsidiary) company has been sold (see note 8)

8 CONSOLIDATED PROFIT AND LOSS ACCOUNT in thousands PLN Note unaudited Continued Discontinued operations operations Total unaudited Continued Discontinued operations operations Revenues from sales 155,414 23, , ,618 36, ,175 Own cost of sales (77,472) (18,347) (95,819) (65,592) (32,965) (98,557) Cost of standstill and unused process line capacity (203) - (203) (657) - (657) Gross profit on sales 77,739 4,990 82,729 79,369 3,592 82,961 Total Other operating revenues 3 4, ,919 2,005 1,117 3,122 Cost of sales (44,965) (675) (45,640) (43,591) (942) (44,533) Cost of general management (26,646) (1,990) (28,636) (25,823) (2,186) (28,009) Research and development costs (3,562) - (3,562) (3,468) - (3,648) Other operating costs 4 (3,898) - (3,898) (2,571) (193) (2,764) Gross profit on operating activity 3,561 2,351 5,912 5,741 1,388 7,129 Financial revenues ,046 6,161 1,645-1,417 Financial cost 6 (16,106) (266) (16,372) (8,309) (716) (8,797) Net financial revenues / (costs) (15,991) 5,780 (10,211) (6,664) (716) (7,380) Profit before taxation (12,430) 8,131 (4,299) (923) 672 (251) Income tax (6,140) (613) (6,753) (2,403) (201) (2,604) Net profit (18,570) 7,518 (11,052) (3,326) 471 (2,855) Attributable to Shareholders of the parent company (18,743) 7,518 (11,225) (3,484) 471 (3,013) Minority shareholders Net profit (18,570) 7,518 (11,052) (3,326) 471 (2,855) Weighted average number of shares (in pcs) 16 85,864,200 85,864,200 85,864,200 85,864,200 85,864,200 85,864,200 Watered average number of shares 16 85,864,200 85,864,200 85,864,200 85,864,200 85,864,200 85,864,200 Profit as per one share (in PLN) Basic (0.22) 0.09 (0.13) (0.041) (0.035) Diluted (0.22) 0.09 (0.13) (0.041) (0.035) - 8 -

9 CONSOLIDATED TOTAL INCOME STATEMENT in thousands PLN Note unaudited Continued Discontinued operations operations Total unaudited Continued Discontinued operations operations Net profit in the reporting period (18,570) 7,518 (11,052) (3,326) 471 (2,855) Other elements of total income: Capital from calculation of exchange rate differences (17,886) (9,233) (27,119) 27, ,515 Total income recognised in the reporting period (36,456) (1,715) (38,171) 23, ,660 Attributable to: Shareholders of the parent company (36,629) (1,715) (38,344) 23, ,502 Minority shareholders Total - 9 -

10 CONSOLIDATED BALANCE SHEET in thousands PLN ASSETS Note unaudited unaudited Fixed assets 896, ,675 Tangible fixed assets 9 342, ,354 Goodwill 55,534 55,534 Other intangible assets , ,194 Investments in affiliates Long-term receivables 11 50,520 56,929 Deferred income tax assets 12 24,626 32,267 Long-term accruals 3,201 2,387 Current assets 271, ,512 Inventories 133, ,142 Income tax receivables Receivables from sale of goods and services and other 13 83,870 77,312 Cash 46,009 88,587 Short-term accruals 14 8,112 7,283 Assets for sale 15-74,757 TOTAL ASSETS 1,168,249 1,295,187 LIABILITIES Equity capitals , ,825 Equity capital attributable to the shareholders of the parent company 792, ,979 Share capital 1,717,284 1,717,284 Share premium 57,130 57,130 Supplementary capital 260, ,776 Other capitals (267,224) (272,129) Revaluation reserve capital 6,022 6,022 Reserve capital from transactions between shareholders (105,070) (105,070) Currency translation profit/loss of subsidiaries 49,117 76,236 Retained profit / (loss) (925,400) (909,270) Minority shares (15,973) (17,154) Long-term liabilities 115, ,729 Liabilities for credits, loans and other debt instruments 17 27,034 47,509 Employees benefits 3,934 4,055 Deferred income 20,015 20,391 Deferred tax liabilities 12 52,914 55,574 Reserves and long-term accruals - - Other liabilities 18 11,354 11,200 Short-term liabilities 276, ,633 Credits in the current account 17 7,297 7,093 Liabilities for credits, loans and other debt instruments , ,641 Trade liabilities and other 19 69,705 72,494 Income tax liabilities 1,621 2,650 Reserves and other accruals 28,560 25,376 Liabilities related to assets for sale - 60,379 TOTAL LIABILITIES 1,168,249 1,295,

11 CONSOLIDATED CASH FLOW STATEMENT in thousands PLN Cash flow from operating activity unaudited unaudited Net profit (11,052) (2,855) Corrections of the items: Depreciation 17,324 17,653 (Profit) / loss resulting from foreign exchange rate differences, net 5,927 4,387 Interest and dividends paid, net (4,905) 2,471 (Profit) / loss from investment activities (6,268) 3,262 Income tax in the current period 2,484 1,596 Income tax paid (3,038) (1,839) Other items net (81) (659) Net cash from operating activity before the change of working capital ,016 Change of the working capital: (Increase)/decrease of receivables 7,857 15,731 (Increase)/decrease of inventories (14,053) (13,353) Increase / (decrease) of liabilities and passive accruals (5,027) (5,004) (Increase)/decrease of active accruals 5,811 (4,358) Increase / (decrease) of reserves (1,801) 2,084 Increase / (decrease) of deferred income ,874 Cash flows from operating activities (6,198) 30,990 Cash flow from investment activity Inflows: 5, Disposal of intangible assets and tangible fixed assets Disposal of discontinued operations after reducing by cash 5,809 - Other inflows Expenditures: (9,447) (11,189) Acquisition of intangible assets and tangible fixed assets (8,212) (10,483) Other expenditures (1,235) (706) Net cash from investment activity (3,492) (11,173) Cash flow from financial activity Inflows: ,544 Credits and loans ,544 Expenditures: (34,523) (32,916) Repayment of loans and credits (26,520) (26,933) Interest (5,638) (3,687) Payments of financial leasing liabilities (2,365) (2,296) Net cash from financial activity (34,215) (7,372) Change of net cash (43,905) 12,445 Cash at the beginning of the period 89,914 32,540 Cash at the beginning of the period as part of assets for sale (1,327) - Cash at the beginning of the period (balance amount) 88,587 32,540 Cash at the end of the period 46,009 44,985 Cash as part of assets for sale - - Cash at the end of the period (balance amount) 46,009 44,985 Credits in the current account (7,297) (15,543) Cash at the end of the period, excluding credit in the current account and cash within assets for sale 38,712 29,

12 CONSOLIDATED SUMMARY OF CHANGES IN THE EQUITY CAPITAL Specification Share capital Share premium Supplement ary capital Other capitals Revaluation reserve capital Capital from transactions between shareholders Currency translation profit/loss of subsidiaries Retained profit / (loss) Equity capital attributable to the shareholders of the parent company Equity capital as at audited 1,717,284 57, ,776 (272,129) 6,022 (105,070) 76,236 (909,270) 830,979 (17,154) 813,825 Currency translation profit/loss of subsidiaries (27,119) - (27,119) - (27,119) Profit (loss) in the period (11,225) (11,225) 173 (11,052) Total income recognised in the reporting period (27,119) (11,225) (38,344) 173 (38,171) Reclassification of other capitals in Fisiopharma i Pharmatex , (4,905) Minority shares SciGen Group ,008 1,008 Equity capital as at unaudited 1,717,284 57, ,776 (267,224) 6,022 (105,070) 49,117 (925,400) 792,635 (15,973) 776,662 Minority shares Total capital

13 Specification Share capital Share premium Supplement ary capital Other capitals Revaluation reserve capital Capital from transactions between shareholders Currency translation profit/loss of subsidiaries Retained profit / (loss) Equity capital attributable to the shareholders of the parent company Equity capital as at audited 1,717,284 57, ,776 (271,691) 6,022 (105,070) 39,531 (880,703) 823,279 (16,640) 806,639 Currency translation profit/loss of subsidiaries ,515-27,515-27,515 Profit (loss) in the period (3,013) (3,013) 158 (2,855) Total income recognised in the reporting period ,515 (3,013) 24, ,660 Minority shares SciGen Group (192) (192) Equity capital as at unaudited 1,717,284 57, ,776 (271,691) 6,022 (105,070) 67,046 (883,716) 847,781 (16,674) 831,107 Minority shares Total capital

14 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT 1. Operating segments Since 1 January 2009 there have been applied IFRS 8 Operating segments which had replaced the so far IAS 14 Reporting concerning operating segments. This standard requires disclosure of information on the segments based on the components of the Group monitored by the managers within taking operating decisions. Operating segments are the components of the Group, for which there is available separate financial information regularly reviewed by the persons taking key decisions as regards allocation of the resources and reviewing operation of the Group. For management purposes the Group has been divided into operating segments based on the capital groups and the companies constituting the BIOTON Group. There have been separated the following reporting segments: - BIOTON S.A. and BIOTON MARKETING AGENCY Sp. z o.o. (jointly BIOTON PL); - SciGen Ltd Group; - Biopartners Holdings AG Group; - BIOLEK Sp. z o.o.; - BIOTON International GmbH; - Fisiopharma S.r.l. and Pharmatex Italia S.r.l. (discontinued activity see note 7); - MJ BIOTON Life Sciences LTD GROUP (group sold in 2016). The accounting principles of the operating segments are the same as the accounting principles of the Group. The managing board monitors the operating results of the segments separately mainly for the purpose of taking decisions concerning allocation of the resources, assessment of the effects of the allocation and operating results. The assessment of respective segments is made up to the level of profit/ loss from operating activity. The Group's financing (including the costs and financial revenues) and income tax are monitored on the Group level and are not subject to allocation. The Group reports the segments by geographical location. Below is the list of the most important countries as regards operation of the Group: - Poland, - Italy, - Australia, - Thailand, - Singapore, - China, - South Korea, - Vietnam

15 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. OPERATING SEGMENTS For the period from 01 January 2017 till 30 June 2017, and as at 30 June 2017 (the operating segments are shown with the exclusion of intra-group transactions) in thousands PLN BIOTON PL SCIGEN* BIOPARTNERS BIOLEK BIOTON Reconciling TOTAL FISIOPHARMA Reconciling TOTAL Total GROUP GROUP INTER- items continued and items discontinued NATIONAL operations PHARMATEX operations Revenues Sales to external clients 79,090 75, ,414 23,337 23, ,751 Sales between the segments 39,111 1, (41,407) - 8,534 (8,534) - - Total segment revenues 118,201 77, (41,407) 155,414 31,871 (8,534) 23, ,751 Result Segment result 40,830 36, ,739 4,990 4,990 82,729 Other operating revenues 4, , ,919 Other operating costs 3, ,898 3,898 Cost of sales 23,134 21, , ,640 Cost of general management 17,766 7,078 1, ,646 1,990 1,990 28,636 Research and development costs 2,420 1,142 3,562 3,562 Gross operating profit / (loss) (1,535) 7,986 (2,759) (102) (29) 3,561 2,351 2,351 5,912 Financial revenues ,046 6,046 6,161 Financial cost 16,106 16, ,372 Net financial revenues / (costs) (15,991) (15,991) 5,780 5,780 (10,211) Profit / (loss) before taxation (1,535) 7,986 (2,759) (102) (29) (15,991) (12,430) 2,351 5,780 8,131 (4,299) Income tax 6,140 6, ,753 Net profit / (loss) (1,535) 7,986 (2,759) (102) (29) (22,131) (18,570) 2,351 5,167 7,518 (11,052) Depreciation 12,131 3, ,015 1,309 1,309 17,324 * The costs of general management of SciGen Group include depreciation of fair values of licences being the result of acquisition of SciGen Group by BIOTON Group. In the period from 01 January 2017 till 30 June 2017 the value of depreciation of fair values of licences in the SciGen Group amounted to 3,119 k PLN

16 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. in thousands PLN BIOTON PL SCIGEN* BIOPARTNERS BIOLEK BIOTON INTER- Reconciling items Total GROUP GROUP NATIONAL Segment assets Tangible fixed assets 342, ,448 Goodwill 55,534 55,534 Other intangible assets 224, ,845 92, ,096 Shares in affiliated companies consolidated by the ownership rights method Inventories 122,370 11, ,799 Receivables from deliveries and services 60,584 22, ,870 Cash 22,687 23, ,009 Other assets 60,989 24,375 1,553 2 (436) 86,483 Total assets 832, , , (436) 1,168,

17 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. GEOGRAPHICAL SEGMENTS For the period from 01 January 2017 till 30 June 2017 and as at 30 June 2017 in thousands PLN Poland Italy Australia Thailand Singapore China South Korea Vietnam Other Total Revenues from continued operations Sales to external clients 49,635 22,221 8, ,614 35,040 5,618 17, ,414 Revenues from discontinued operations Sales to external clients 12,779 10,558 23,337 Total segment revenues 49,635 12,779 22,221 8, ,614 35,040 5,618 27, ,751 Fixed assets, including: Tangible fixed assets 342, ,448 Intangible assets 317, , ,

18 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. OPERATING SEGMENTS For the period from 01 January 2016 till 30 June 2016, and as at 30 June 2016 (the operating segments are shown with the exclusion of intra-group transactions) in thousands PLN BIOTON PL SCIGEN* BIOPARTNERS BIOLEK BIOTON Reconciling TOTAL FISIOPHARMA Reconciling TOTAL Total GROUP GROUP INTER- items continued and items discontinued NATIONAL operations PHARMATEX operations Revenues Sales to external clients 94,851 50, ,618 36,557 36, ,175 Sales between the segments 34,790 2,078 (36,868) - 9,307 (9,307) - - Total segment revenues 129,641 52, (36,868) 145,618 45,864 (9,307) 36, ,175 Result Segment result 51,122 28, ,369 3,592 3,592 82,961 Other operating revenues 1, ,005 1,117 1,117 3,122 Other operating costs 2, , ,764 Cost of sales 27,193 16, , ,533 Cost of general management 16,947 7,125 1, ,823 2,186 2,186 28,009 Research and development costs 2, ,648 3,648 Gross operating profit / (loss) 3,690 4,850 (2,542) (248) (9) 5,741 1,388 1,388 7,129 Financial revenues 1,645 1,645 1,417 Financial cost 8,309 8, ,797 Net financial revenues / (costs) (6,664) (6,664) (716) (716) (7,380) Profit / (loss) before taxation 3,690 4,850 (2,542) (248) (9) (6,664) (923) 1,388 (716) 672 (251) Income tax 2,403 2, ,604 Net profit / (loss) 3,690 4,850 (2,542) (248) (9) (9,067) (3,326) 1,388 (917) 471 (2,855) Depreciation 11,636 3, ,542 2,111 2,111 17,653 * The costs of general management of SciGen Group include depreciation of fair values of licences being the result of acquisition of SciGen Group by BIOTON Group. In the period from 01 January 2016 till 30 June 2016 the value of depreciation of fair values of licences in the SciGen Group amounted to 3,151 k PLN

19 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. in thousands PLN BIOTON PL SCIGEN* BIOPARTNERS MJ BIOTON FISIOPHARMA BIOLEK BIOTON INTER- Reconciling items Total GROUP GROUP Life Sciences and NATIONAL LTD GROUP PHARMATEX Segment assets Tangible fixed assets 345, , ,417 Goodwill 55,534 55,534 Other intangible assets 175, ,459 1,540 91, ,645 Shares in affiliated companies consolidated by the ownership rights method Inventories 92,491 10,898 15, ,214 Receivables from deliveries and services 64,899 16, , ,204 Cash 28,979 14, , ,985 Other assets 3,036 23,882 26,918 Total assets 61,764 27, ,497 1, (641) 92,386 Tangible fixed assets 772, , ,882 84, , (641) 1,261,

20 Annual consolidated financial statement as at 31 December 2016 the Capital Group BIOTON S.A. GEOGRAPHICAL SEGMENTS For the period from 01 January 2016 till 30 June 2016 and as at 30 June 2016 in thousands PLN Poland Italy Australia Thailand Singapore China South Korea Other Total Revenues from continued operations Sales to external clients 62,056 10,781 7, ,810 27,564 13, ,618 Revenues from discontinued operations Sales to external clients 23,928 12,629 36,557 Total segment revenues 62,056 23,928 10,781 7, ,810 27,564 25, ,175 Fixed assets, including: Tangible fixed assets 345,567 30, ,417 Intangible assets 266,647 1, , ,

21 2. Explanatory notes pertaining to the seasonal character or cyclical nature of activity of the Group The sale of insulin is subject to relatively small seasonal fluctuations. Due to the chronic character of the illness and long period of use of the preparations by the patients, the sale of insulin is maintained on similar level during all months in a year (except for vacation months which are traditionally the least advantageous for the pharmaceutical industry). However, it should be noted that most of the new cases of diabetes are diagnosed during the time when the patient is suffering from infections. The infections may also disturb metabolic balance in patients who are already treated for diabetes. Therefore, the patients are most likely to change the method of treatment in spring and in autumn, and it is then that most of the new cases of diabetes are diagnosed. 3. Other operating revenues (continued operations) In the first half of 2017, in other operating revenues the Group recognised, among other: revenues from release of other reserves in the amount of 2,650 kpln (in the first half of kpln), and revenues from sales of materials in the amount of 725 kpln (as at 30 June 2016 the amount of 22 kpln), revenues from subsidies in the amount of 388 kpln (in the first half of kpln). 4. Other operating costs (continued operations) In the first half of 2017 other operating cost included, among other, the cost of liquidation of liquidation of operating assets in the amount of 1,048 kpln (in the first half of ,372 kpln), the cost of holiday provisions in the amount of 559 kpln (in the first half of kpln), the cost of updating of the value of non-financial assets in the amount of 23 kpln (in the first half of kpln), the cost of sales of materials in the amount of 632 kpln (in the first half of kpln) and the costs of donations in the amount of 472 kpln (in the first half of kpln). 5. Financial revenues (continued operations) In the first half of 2017 the financial revenues from interest amounted to 115 kpln (in the first half of kpln). 6. Financial cost (continued operations) In the first half of 2017 in the financial cost the Group included costs of interest in the amount of 6,326 kpln (in the first half of ,640 kpln). In the first half of 2017 in the financial cost also includes results on financial instruments in the amount of 109 kpln (in the first half of 2016 it did not occur) and cost on account of negative exchange rate differences in the amount of 9,593 kpln. 7. Discontinued operations In the current reporting period the BIOTON Group implemented the sale transaction of the TRICEL S.A. Group, comprising TRICEL S.A. and subsidiaries of TRICEL S.A.: Fisiopharma S.r.l. and Pharmatex Italia S.r.l. (see note 8). Due to the fact that net assets as well as revenues and costs of TRICEL S.A. are not significant in the context of the consolidated statement, and the operation of TRICEL S.A. is limited to holding shares in lower subsidiaries, Fisiopharma S.r.l. and Pharmatex Italia S.r.l., TRICEL S.A. was not subject to consolidation. As a result, the consolidated financial statement of the BIOTON Group includes lower subsidiaries, Fisiopharma S.r.l. and Pharmatex Italia S.r.l., directly. Since Fisiopharma S.r.l. and Pharmatex Italia S.r.l. constituted a separate operating segment, therefore, according to IFRS 5 "Fixed assets intended for sale and discontinued operations" the BIOTON Group presented the revenues, costs, and financial result on the operations of Fisiopharma S.r.l. and Pharmatex Italia S.r.l. as discontinued operations. The revenues, costs, and financial result on the discontinued operations, both in the current period and for the previous year (comparative data), concern Fisiopharma S.r.l. and Pharmatex Italia S.r.l. exclusively and are presented in the consolidated profit and loss account and in operational segments. Profit from the sale of Fisiopharma S.r.l. and Pharmatex Italia S.r.l., which amounted to 6,046 kpln and which has been included in financial revenues from discontinued operations, has also been recognised in discontinued operations

22 8. Mergers, acquisitions, sales of subsidiaries and affiliates As in the period from 01 January 2017 till 30 June 2017 On 10 April 2017 BIOTON S.A. concluded with Medwise Pharmaceuticals Limited with its registered seat in Vancouver, Canada, a shares and liabilities sale agreement being a preliminary agreement imposing upon BIOTON S.A. the obligation to: 1) execute the final sale agreement for the benefit of Medwise of 100% shares of the TRICEL S.A. holding company with its registered seat in Luxembourg, the Grand Duchy of Luxembourg, held by BIOTON S.A., i.e. 100 shares of the nominal value of EUR 320 each and of the total nominal value of EUR 32,000, TRICEL S.A.being the owner of (a) 100% shares in Fisiopharma s.r.l. with its registered seat in Palomonte, Italy and (b) 100% shares in Pharmatex Italia s.r.l. with its registered seat in Milan, Italy, and 2) execute the final transfer agreement for the benefit of Medwise of non-matured receivables to which BIOTON S.A. is entitled, and (i) for the return of a loan granted to TRICEL S.A., resulting from the original purchase price of TRICEL S.A.shares, and ii) for the return of a loan granted to Fisiopharma s.r.l. in the course of operational activity, in return of the aggregate price not higher than 3,250, EUR. On 27 April 2017 BIOTON S.A. and Medwise Pharmaceuticals Limited signed documentation required to transfer the ownership of TRICEL S.A. shares and for the transfer of TRICEL S.A. receivables, and the bank account of BIOTON S.A. was credited with the price for TRICEL S.A. shares and TRICEL S.A. receivables in the aggregate amount of 2,250, EUR, as a result of which on that day the shares of TRICEL S.Awere transferred to Medwise Pharmaceuticals Limited. The transfer of Fisiopharma s.r.l. receivables in the performance of the preliminary agreement will occur no later than by 31 December 2017, for the price of 1,000, EUR, to be decreased by amounts of contingent claims raised by Medwise Pharmaceuticals Limited against BIOTON S.A. and accepted by BIOTON S.A., related to guarantee obligations undertaken by BIOTON S.A. in the preliminary agreement. The performance of the preliminary agreement concluded the de-investment process in companies whose principle areas of activity are outside the BIOTON Group s strategy. In the assessment of the Managing Board of BIOTON S.A., the concluded process will allow to concentrate resources held on key development areas and main sales markets of pharmaceutical products of BIOTON S.A. and the BIOTON Group, enabling to consistently implement the long-term development strategy. As in the period from 01 January 2016 till 30 June 2016 On 20 May 2016 the subsidiaries of BIOTON S.A. - Mindar Holdings Ltd and Germonta Holdings Ltd, both based in Cyprus ( Subsidiaries ) and Luraq Investments Ltd with the seat in Cyprus ( Luraq ) concluded a conditional agreement on sale to Luraq of all shares held by the Subsidiaries in INDAR ZAO based in Ukraine ( Agreement ), constituting in total 29.29% of the share capital of INDAR ZAO and entitling to the total of 29.29% votes at the general meeting of that company ( Indar Shares ). On 10 June 2016 the Agreement has been executed in full, i.e. Indar shares were transferred to Luraq for the total amount of 4.9 million USD, paid on the date of the execution of the Agreement (see note 6). Funds obtained from the disposal of INDAR ZAO shares were transferred to BIOTON S.A. on 14 June 2016 as a loan from Mindar Holdings Ltd and Germonta Holding Ltd for the total amount of 4,880 k USD. 9. Tangible fixed assets In the first half of 2017 the value of tangible fixed assets decreased by 1,906 kpln. During that period the increase of tangible fixed assets amounted to the total of 8,268 kpln and consisted of purchases in the amount of 6,448 kpln and leasing in the amount of 1,820 kpln. Decreases of tangible fixed assets value in the first half of 2017 amounted to the total of 10,174 kpln, and the biggest value constituted depreciation in the amount of 7,479 kpln (in the first half of ,947 kpln)

23 10. Other intangible assets In the first half of 2017 other intangible assets decreased by 18,098 kpln. During that period the increase of other intangible assets amounted to the total of 5,360 kpln and consisted of outlays in the amount of 2,825 kpln (including, among others, registration in the territory of Brazil in the amount of 287 kpln, launching production of the recombinant human insulin substance in the plant with increased production capacity - the amount of 1,028 kpln, launching production of a new form of insulin drug in the amount of 1,109 kpln) and other increases in the amount of 2,535 kpln. Other intangible values in the first half of 2017 decreased by the value of depreciation in the amount of 8,538 kpln (depreciation in the first half of 2016 amounted to 8,647 kpln) and negative exchange rate differences in the amount of 14,920 kpln. 11. Long-term receivables As at 30 June 2017 long-term receivables concerned payments on account of future payments for profit sharing on the Chinese market, which result from the agreement concluded on 21 October 2011 (with annexes) concluded between BIOTON S.A. and its subsidiary SciGen Ltd. and Hefei Life Science & Technology Park Investments & Development Co Ltd. (HLST) and Mr. Gao Xiaoming. The settlement of the prepaid portions of profit-sharing fees is related, among other, to the extension of the deadline of payments of fees for the sales of insulin on Chinese market and the total amount of prepayments made was 13,500 kusd and shall be settled by 4 th quarter of Assets and deferred tax reserves As at 30 June 2017 in the balance of assets and the deferred tax reserve the amount of 39,198 kpln constituted assets on account of deferred tax for tax losses for: BIOTON S.A. 14,571 kpln for 2016 and the first half of 2017 (as at 31 December 2016 the amount of assets was kpln); SciGen group 23,012 kpln for (as at 31 December 2016 the amount of assets was kpln); Biolek Sp. z o.o. 1,148 kpln for (as at 31 December 2016 the amount of assets was kpln); BIOTON Marketing Agency Sp. z o.o. 467 kpln for (as at 31 December 2016 the amount of assets was 935 kpln). The Group did not conduct any write-downs for assets on account of tax losses since it is deemed that the assets were realized. 13. Receivables from sale of goods and services and other As at 30 June 2017 receivables from deliveries and services and other amounted to 83,870 kpln, where the receivables from deliveries and services amounted to 69,015 kpln, receivables from taxes in the amount of 6,647 kpln and other receivables in the amount of 8,208 kpln. Other receivables include among other: receivables in the amount of 4,227 kpln from disposal of shares in the Tricel group (see note 8) and receivables in the amount of 2,102 kpln on account of advances towards deliveries. 14. Short-term accruals As at 30 June 2017 the balance of short-term accruals included, among other, registration fees in the amount of 1,024 kpln, taxes and fees in the amount of 2,926 kpln, insurance in the amount of 847 kpln, deposits in the amount of 890 kpln, noncompetition costs in the amount of 896 kpln and validations in the amount of 533 kpln. 15. Assets for sale and liabilities related to assets for sale As at 30 June 2017 assets for sale and liabilities related to assets for sale did not occur. The change in relation to 31 December 2016 is a result of implementation of the sale transaction of Fisiopharma S.r.l. and Pharmatex Italia S.r.l. being a part of the TRICEL S.A. group (see note 8)

24 16. Equity capitals Share capital in thousands of shares Ordinary shares Number of shares at the beginning of the period 85,864 85,864 Number of shares at the end of the period (fully paid-up) 85,864 85,864 Face value of 1 share 20 PLN 20 PLN As at 30 June 2017 the ownership structure in the Company was as follows: Shareholder Number of shares / votes (in pcs) % of the share capital 1 UniApek S.A. 16,989, Perfect Trend Ventures Ltd. 8,586, Troqueera Enterprises Ltd 8,480, Basolma Holding Ltd 6,151, AIS Investment 2 Sp. z o. o. 5,151, Other shareholders holding < 5% 40,504, ,864, Weighted average number of shares in the period from 01 January 2017 till 30 June 2017 Shares series Qty in pcs Cumulative qty in pcs Period No. of days Weighted average number of shares A 85,864,200 85,864, ,864, Total 85,864, ,864,200 Weighted average number of shares in the period from 01 January 2016 till 30 June 2016 Shares series Qty in pcs Cumulative qty in pcs Period No. of days Weighted average number of shares A 85,864,200 85,864, ,864, Total 85,864, ,864,200 In the first half of 2017 BIOTON S.A. holding company paid no dividends

25 17. Liabilities for credits, loans and other debt instruments Long-term liabilities in thousands PLN Credits 21,189 40,434 Leasing liabilities 5,845 7,075 Long-term liabilities, total 27,034 47,509 Short-term liabilities in thousands PLN Credits, including: 112, ,354 - credit in the current account 7,297 7,093 - other credits, including: 105, ,261 factoring line 14,370 19,371 Loans 58,865 61,660 Derivatives 66 - Credit cards liabilities Leasing liabilities 4,991 4,515 Short-term liabilities, total 176, ,

26 Analysis of age categories as at in kpln up to one year from 1 up to 2 years from 2 up to 5 years More than 5 years Total BOŚ S.A. revolving credit 20, ,259 BOŚ S.A mortgage loan 2,260 2,372 8,056 8,497 21,185 BOŚ S.A investment credit ,583 BOŚ S.A. (factoring line) 14, ,370 ING Bank Śląski S.A. 1) 9,134 9,179 18,437-36,750 HSBC Bank Polska S.A. 1) 8,003 7,961 9,964-25,928 HSBC Bank Polska S.A. (overdraft) 1) 3, ,913 UNIAPEK S.A. 58, ,152 HSBC Bank Polska S.A. (overdraft) 1) 3, ,384 HSBC Bank Polska S.A. 1) 1,400 1,400 2,380-5,180 Others ,907 21,235 39,834 9, ,417 1) As at the publication date, all financial covenants specified in the terms and conditions of credit agreements have been complied with, but the presentation of credits in accordance with requirements in MSR 1, i.e. reclassification of long-term credits into short-term credits, is caused by the fact that amendments to credit agreements amending terms and conditions of financing were executed in the period from the balance sheet date till the publication date Prior to reclassification Reclassification After reclassification Long-term credits and loans 70,510 (49,321) 21,189 Short-term credits and loans 121,907 49, ,228 Credits and loan total 192, ,

27 A list of loans and credits (partially long- and short-term) BOŚ S.A. BOŚ S.A. mortgage loan BOŚ S.A. investment credit BOŚ S.A. (factoring line) ING Bank Śląski S.A. 1) HSBC Bank Polska S.A. 1) Currency Maturity date Interest charging conditions Amount as at PLN PLN PLN PLN PLN PLN HSBC Bank Polska S.A. (overdraft) 1) PLN UNIAPEK S.A. HSBC Bank Polska S.A. 1) PLN Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin Variable interest rate - WIBOR 3M plus margin in kpln 20,259 21,185 2,583 14,370 36,750 25,928 3,913 EUR Fixed interest rate 58,152 Variable interest rate - WIBOR 3M plus margin HSBC Bank Polska S.A. (overdraft) 1) PLN Variable interest rate - WIBOR 3M plus margin Other credits and loans 713 Total 192,417 including: Long-term credits and loans 21,189 Short-term credits and loans 171,228 1) As at the publication date, all financial covenants specified in the terms and conditions of credit agreements have been complied with, but the presentation of credits in accordance with requirements in MSR 1, i.e. reclassification of long-term credits into short-term credits, is caused by the fact that amendments to credit agreements amending terms and conditions of financing were executed in the period from the balance sheet date till the publication date. Credits and loans As at 30 June 2017 total credit and loans liabilities amounted to 192,417 kpln and decreased by the total amount of 25,031 kpln as compared with the amount on 31 December The total decrease of credit and loan liabilities was due to the decrease of credit and loan liabilities in BIOTON S.A. for the amount of 24,148 kpln and in other companies within the Group for the amount of 883 kpln. Hedge of credits resulting from the agreements: - mortgage on the real estates of the value of 255,000 kpln (as at 31 December 2016 the amount of 255,000 kpln) including transfer of rights from the insurance policy), - registered pledge on tangible fixed assets in the amount of 112,425 kpln, (as at 31 December 2016 the amount of 112,425 kpln), including transfer of rights from the insurance policy, - registered pledge on inventories in the amount of 87,453 kpln (as at 31 December 2016 the amount of 89,042 kpln) including transfer of rights from the insurance policy. The difference in value of security is a result of exchange rate differences after the calculation of prices, the number of securities unchanged. - guarantee by the subsidiary SciGen in the amount of 62,000 kpln (as at 31 December 2016 the amount of 62,000 kpln). 3,384 5,