Symrise AG s Mandatory Offer to the Shareholders in Probi Aktiebolag (publ)

Transcription

1 Symrise AG s Mandatory Offer to the Shareholders in Probi Aktiebolag (publ)

2 Symrise AG, reg.no HRB , ( Symrise ) has submitted a mandatory public offer to the shareholders in Probi Aktiebolag (publ), reg.no , ( Probi or the Company ) to acquire all the shares in Probi in accordance with the terms and conditions stated in this offer document (the Mandatory Offer ). The information regarding Probi on pages in the offer document has been reviewed by the Board of Directors of Probi. Symrise does not guarantee that the information included herein with respect to Probi is accurate or complete and does not take any responsibility for such information being accurate or complete. The offer document has been prepared in accordance with Swedish law and the regulations and rules applicable on public offers in Sweden. Swedish law, NASDAQ OMX Stockholm AB s ( NASDAQ OMX ) rules concerning Takeover Bids on the Stock Market (the Takeover Rules ), the Swedish Securities Council s rulings regarding the interpretation and application of the Takeover Rules, and where applicable, Swedish Securities Council s former rulings regarding the interpretation and application of the Swedish Industry and Commerce Stock Exchange Committee s rules on public offers, are applicable on the Mandatory Offer. Further, Symrise has on 27 January 2014 undertaken towards NASDAQ OMX to comply with the Takeover Rules, the Swedish Securities Council s rulings regarding the interpretation and application of the Takeover Rules, and where applicable, Swedish Securities Council s former rulings regarding the interpretation and application of the Swedish Industry and Commerce Stock Exchange Committee s rules on public offers, and to submit to any sanctions that NASDAQ OMX may decide upon in the event of infringement of the Takeover Rules. Symrise has on 29 January 2014 informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the SFSA ) about the Mandatory Offer and the above-mentioned undertakings towards NASDAQ OMX. The Mandatory Offer shall be governed by and construed in accordance with Swedish laws. Any dispute relating to, or arising in connection with the Mandatory Offer shall be settled exclusively by Swedish courts applying Swedish law with the City Court of Stockholm as the court of first instance. The offer document is available both in Swedish and English. The Swedish language offer document has been approved and registered by the SFSA in accordance with Chapter 2 Section 3 of the Swedish Act on Public Takeovers on the Stock Market (sw. lag (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden) and Chapter 2a Section 9 of the Swedish Financial Instruments Trading Act (Sw. lagen (1991:980) om handel med finansiella instrument). The approval and registration with the SFSA does not imply that the SFSA guarantees that the factual information herein is correct or complete. In the event of any discrepancy between the English and Swedish language versions, the Swedish language version shall prevail. The Mandatory Offer is not being made to persons whose participation in the Mandatory Offer requires that any additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish law. This offer document and any documentation relating to the Mandatory Offer are not being distributed and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any law or regulation in such country. Any such action will not be permitted or sanctioned by Symrise. Any purported acceptance of the Mandatory Offer resulting directly or indirectly from a violation of these restrictions may be disregarded. The Mandatory Offer is not being made, directly or indirectly, in or into Australia, Canada, Japan, New Zealand, South Africa or the United States by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the internet) of interstate or foreign commerce, or of any facility of national security exchange, of Australia, Canada, Japan, New Zealand, South Africa or the United States, and the Mandatory Offer cannot be accepted by any such use, means, instrumentality or facility of, or from within, Australia, Canada, Japan, New Zealand, South Africa or the United States. Accordingly, this offer document and any documentation relating to the Mandatory Offer are not being and should not be mailed or otherwise distributed, forwarded or sent into Australia, Canada, Japan, New Zealand, South Africa or the United States. Symrise will not deliver any consideration from the Mandatory Offer into Australia, Canada, Japan, New Zealand, South Africa or the United States. Statements in this offer document relating to future status or circumstances, including statements regarding future performance, growth and other trend projections and the other benefits of the Mandatory Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as anticipates, intends, expects, believes, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Symrise and Probi. Any such forward-looking statements speak only as of the date when the offer document is made public and Symrise has no obligation (and undertakes no such obligation) to update or revise any of them, whether as a result of new information, future events or otherwise, except for in accordance with applicable laws and regulations. Certain figures in this offer document have been rounded off. As a result, certain tables appear to not summarise correctly. Handelsbanken Capital Markets ( Handelsbanken ), a part of Svenska Handelsbanken AB (publ), is acting as settlement agent to Symrise, and no one else, in connection with the Mandatory Offer and will not be responsible to anyone other than Symrise for providing the protections afforded to clients of Handelsbanken nor for providing advice in relation to the Mandatory Offer. The information in this offer document has been provided by Symrise. Handelsbanken has not assumed any obligation to independently verify, and disclaims any liability with respect to, information herein.

3 Table of contents Mandatory Offer to the shareholders in Probi 2 Background and rationale for the Mandatory Offer 4 Terms, conditions and instructions 6 Description of Symrise and the financing of the Mandatory Offer 8 Mandatory Offer in brief Price per share SEK in cash Acceptance period 13 February March 2014 Preliminary settlement date 20 March 2014 Statement from Probi s Board of Directors 9 Fairness opinion 11 Description of Probi 13 Summary of financial information 19 Share capital and ownership structure 23 Board of Directors, Management and Auditor 26 Articles of Association of Probi 28 Year-end report Report from Probi s Board of Directors 43 Auditor s report regarding summary of historical financial information 44 Tax issues in Sweden 45 Addresses 47 1

4 Mandatory Offer to the shareholders in Probi Mandatory Offer to the shareholders in Probi Symrise announced on 10 January 2014, that Symrise had acquired 11,010 shares in Probi. Through the acquisition Symrise increased its holdings in Probi to around per cent of the shares and votes, which gives rise to an obligation to launch a mandatory public offering. On 6 February 2014, Symrise launched such a mandatory offer to the shareholders in Probi to acquire all the shares in Probi for SEK in cash per share. 1) The shares in Probi are admitted to trading on NASDAQ OMX, Small Cap. The Mandatory Offer represents: a discount of approximately 0.50 per cent compared to the closing share price of SEK on 5 February 2014, the last trading day prior to the announcement of the Mandatory Offer; a premium of approximately 1.45 per cent compared to the volume weighted average share price of SEK during the last 30 trading days up to and including 5 February 2014; and a premium of approximately 0.38 per cent compared to the volume weighted average share price of SEK during the last 90 trading days up to and including 5 February The Mandatory Offer values the share capital in Probi at approximately SEK 375,548,530 2). The acceptance period commences on 13 February 2014 and ends on 12 March Settlement will begin as soon as Symrise has announced that the condition for the Mandatory Offer has been satisfied or that Symrise has otherwise resolved to complete the Mandatory Offer. Assuming that such an announcement is made no later than on 17 March 2014 it is estimated that settlement will begin on or about 20 March No commission will be charged in connection with the Mandatory Offer. Completion of the Mandatory Offer is conditional upon the fulfilment of the condition set out on page 6 in this offer document. Recommendation from Probi s Board of Directors Probi s Board of Directors unanimously 3) recommends the Company s shareholders not to accept the Mandatory Offer (see Section Statement from Probi s Board of Directors on pages 9 10). The statement from the Board of Directors is supported by a fairness opinion from Erik Penser Bankaktiebolag (see Section Fairness opinion on pages 11 12). Shareholding in Probi Symrise holds 2,812,505 shares in Probi. This corresponds to 2,812,505 voting rights and per cent of the votes in Probi. Probi holds 250,000 treasury shares, which were repurchased in Symrise has been a minority shareholder in Probi since September Symrise has resolved to increase its shareholding in Probi. As Symrise s acquisition of additional Probi shares on the 10 January 2014 has triggered the mandatory offer rules, Symrise has today published this Mandatory Offer to the other shareholders in accordance with the rules regarding mandatory offers. The shareholder structure in Probi is comparatively concentrated and the ten largest shareholders (including Symrise and treasury shares) as of 31 December 2013 hold approximately 61.5 per cent of the shares and votes in Probi. Furthermore, the trading in the Probi share has been characterised by low liquidity. The Mandatory Offer is an opportunity for the shareholders, that so wish, to sell their shareholdings in an orderly fashion without having to pay commission. 1) The offered price is subject to adjustment should Probi pay any dividend or make any other value transfer prior to the settlement of the Offer, and will accordingly be reduced by the amount per share of any such dividend or value transfer. 2) Based on 9,365,300 outstanding shares in Probi including the shares held by Symrise and the 250,000 shares held by Probi as of the date of the Offer. 3) Declan McFadden has not participated in Probi s Board of Directors evaluation of or resolution concerning the Mandatory Offer (see further Section Participation in the Mandatory Offer by members of the Board of Directors ). 2

5 Mandatory Offer to the shareholders in Probi Participation in the Mandatory Offer by members of the Board of Directors Declan MacFadden, board member of Probi, is also President of Symrise Asia Pacific, Flavor & Nutrition business based in Singapore. Declan MacFadden has not participated in Probi s Board of Directors evaluation of or resolutions concerning the Mandatory Offer. On this basis, Symrise applies Section III in the Takeover Rules for the purposes of the Mandatory Offer the independent Board members of Probi have in accordance with the Takeover Rules, obtained and made public a fairness opinion regarding the shares in Probi from independent expertise. Financing of the Mandatory Offer The Mandatory Offer is not subject to any financing condition. The Mandatory Offer will be financed by Symrise through available funds and existing credit facilities. Applicable law and compliance with the Takeover Rules The Mandatory Offer shall be governed by and construed in accordance with the laws of Sweden. The Takeover Rules, and the Swedish Securities Council s (Sw. Aktiemarknadsnämnden) rulings regarding the interpretation and application of the Takeover Rules, apply in relation to the Mandatory Offer. In accordance with the Swedish Takeover Act, Symrise has undertaken towards NASDAQ OMX to comply with the Takeover Rules and to submit to any sanctions imposed by NASDAQ OMX upon breach of the Takeover Rules. The courts of Sweden shall have exclusive jurisdiction over any dispute arising out of or in connection with the Mandatory Offer and the District Court of Stockholm shall be the court of first instance. 3

6 Background and rationale for the Mandatory Offer Background and rationale for the Mandatory Offer Symrise shares the strategic vision of Probi towards more comprehensive and captive product solutions. Since December 2012 Symrise and Probi are collaborating in a R&D partnership. The aim of the joint agreement is to produce innovative probiotic products with well-documented health benefits, a particular focus will be on oral health products. With the investment in Probi Symrise aims to become a full value chain player in the area of solutions with health benefits. Probi s focus on functional food complements Symrise s existing product portfolio in the area of Consumer Health applications. Symrise has a long term perspective and strongly believes that Probi will benefit from further combining the complementary competency of both sides and from receiving the resources necessary to accelerate the international growth strategy. Symrise envisions at least three ways in which an investment in Probi will enable Probi to strengthen its long-term strategic position in an increasingly competitive environment: Global Infrastructure: Symrise is a global company with a worldwide infrastructure. Symrise s exposure to the emerging markets is unmatched in its industry (approximately 48 per cent of revenues). Symrise aims to leverage these positions to create multiple opportunities for growth in the further industrialisation of Probi s product concepts. R&D and Technology: Symrise is perceived as the R&D leader in its industry with extensive capabilities in sensory science and process technology (for example microencapsulation). Bundling the capabilities will lead to unique product formulations, superior consumer experiences and a better leverage of the strain portfolio. Customers: As one of the leading companies in its industry, Symrise has worldwide customer access points and share close relationships with global key accounts in both the consumer goods and supplements industry. A combined setup will provide for global marketing, sales and service networks and an expanding product and customer base for Probi. The success Probi has achieved to date is founded on its people. The entrepreneurial spirit, the R&Danchored culture and the customer intimacy of the current organisation are the key success factors from Symrise s perspective. Symrise therefore intends to maintain Probi as an independent entity operating under the brand Probi from its current site in Lund. Completion of the Mandatory Offer is not expected to entail any significant changes for Probi s management team or employees. Symrise currently has no intention to make any material changes to the terms of employment for Probi employees. Overall, only limited effects as a result of completion of the Mandatory Offer are anticipated for the employment and location where the Company and Symrise conduct their business. 4

7 Background and rationale for the Mandatory Offer Further reference is made to the information in this offer document, which has been prepared by Symrise for the purpose of the Mandatory Offer. The description of Probi on pages in this offer document has, in accordance with what is stated on page 43, been reviewed by Probi s Board of Directors. In accordance with what is stated on page 44, Probi s auditor has reviewed and expressed an opinion on the summary of historical financial information that is stated on pages With the exception of the above mentioned information, the Board of Directors of Symrise assure that, to the best knowledge of the Board of Directors, the information regarding Symrise presented in this offer document conforms with the actual conditions. Holzminden 11 February 2014 Symrise AG The Board of Directors 5

8 Terms, conditions and instructions Terms, conditions and instructions The Mandatory Offer Symrise offers SEK in cash per share in Probi. The offered price is subject to adjustment should Probi pay any dividend or make any other value transfer prior to the settlement of the Mandatory Offer, and will accordingly be reduced by the amount per share of any such dividend or value transfer. No commission will be charged in connection with the Mandatory Offer. The Mandatory Offer values the share capital in Probi at approximately SEK 375,548,530 1). Condition for the Mandatory Offer Completion of the Mandatory Offer is conditional upon all necessary regulatory, governmental or other similar clearances, approvals and decisions to consummate the Mandatory Offer, including approvals and clearances from competition authorities, being obtained, in each case on terms which, in Symrise s opinion, are acceptable. Symrise reserves the right to withdraw the Mandatory Offer in the event that it is clear that the above condition is not satisfied or cannot be satisfied. Such withdrawal will only be made if the non-satisfaction of such condition is of material importance to Symrise s acquisition of the shares in Probi. Symrise reserves the right to waive, in whole or in part, the condition above. Acceptance Shareholders in Probi that are subject to the Mandatory Offer whose holdings are registered in their own names with Euroclear Sweden AB ( Euroclear ) (the Swedish Central Securities Depository and Clearing Organisation) and who wish to accept the Mandatory Offer must during the period beginning on 13 February 2014 up to and including 5.00 pm (CET) 12 March 2014 sign and submit a duly completed acceptance form to Handelsbanken with address: The acceptance form must be or mailed, preferably using the enclosed prepaid envelope, in sufficient time prior to the final day of the acceptance period so as to be received by Handelsbanken no later than 5.00 pm (CET) on 12 March Mandatory Offer document and acceptance form will be sent to shareholders whose holdings in Probi were registered in their own names with Euroclear on 11 February Securities account number (Sw. VP-konto) and details of current holdings of shares will be provided on the pre-printed acceptance form. The person who executes and submits the acceptance form is responsible for checking that the preprinted information on the acceptance form is correct. Shareholders who are included on the list of pledgees and trustees connected to the share register, will not receive an acceptance form, but will be notified separately. Please note that incomplete or improperly filled out acceptance forms may be disregarded. Acceptance forms are also available on Handelsbanken s website ( and Symrise s website ( Shareholders in Probi accepting the Mandatory Offer authorise and direct Handelsbanken to deliver tendered shares in Probi to Symrise in accordance with the terms and conditions for the Mandatory Offer. The fact that Handelsbanken is the settlement agent does not in itself mean that Handelsbanken regards the shareholders accepting the Mandatory Offer as customers of the bank. Nominee registered holdings Shareholders in Probi whose holdings are registered in the name of a nominee, e.g., a bank or other nominee, will neither receive this offer document nor a pre-printed acceptance form. Acceptance is instead to be made in accordance with instructions from the nominee. Handelsbanken Capital Markets Issue Department HCOS-O SE Stockholm Sweden 1) Based on 9,365,300 outstanding shares in Probi including the shares held by Symrise and the 250,000 shares held by Probi as of the date of the Offer. 6

9 Terms, conditions and instructions Pledged holdings If shares are pledged, the pledgee must also complete and sign the acceptance form which is submitted. Acknowledgement of acceptance After the duly completed acceptance form has been received and registered, the shares will be transferred to a newly opened, blocked securities account (Sw. apportkonto) in the owner s name. In connection therewith, Euroclear will send a statement (Sw. VP-avi) showing the withdrawal of the shares from the original securities account, and a statement that shows the deposit in the newly opened, blocked securities account in the owner s name. Settlement Settlement will begin as soon as Symrise has announced that the condition for the Mandatory Offer has been satisfied or that Symrise has otherwise resolved to complete the Mandatory Offer. Assuming that such an announcement is made no later than on 17 March 2014 it is estimated that settlement will begin on or about 20 March Settlement of the Mandatory Offer will be arranged by sending a contract note to those who have accepted the Mandatory Offer. The Mandatory Offer amount will be credited to the proceeds account linked to the shareholder s securities account in which the shares in Probi were registered. Where shareholders in Probi do not have a proceeds account linked to their securities account or if the account is defective, or whose proceeds account is a PlusGiro account, they will receive settlement in accordance with the instructions in the contract note. In conjunction with the settlement of the Mandatory Offer, the shares in Probi will be withdrawn from the blocked securities account, which is then closed. No statement evidencing the removal from the blocked securities account will be sent to the shareholders. Note that if the shares in Probi are pledged, the payment will be made to the proceeds account linked to the pledged account or in accordance with the instructions in the contract note. If the shares are registered in the name of a nominee, settlement will be made in accordance with the procedure for each separate nominee. Right to extend the Mandatory Offer etc. Symrise reserves the right to extend the acceptance period for the Mandatory Offer, as well as the right to postpone the settlement date. Any extension of the acceptance period for the Mandatory Offer will not delay settlement in respect of the shareholders that have already accepted the Mandatory Offer during the course of the acceptance period, provided that Symrise prior to that has received the necessary regulatory clearances in accordance with the condition for completion of the Mandatory Offer. Right to withdraw acceptance Shareholders in Probi have the right to withdraw their acceptance of the Mandatory Offer. To be valid, such withdrawal must have been received in writing by Handelsbanken (at the address provided above) before Symrise has announced that the condition for the Mandatory Offer has been satisfied, or if such announcement has not been made during the acceptance period, not later than 5.00 p.m (CET) on the last day of the acceptance period. Shareholders in Probi holding nominee registered shares wishing to withdraw acceptance shall do so in accordance with instructions from the nominee. If the condition for the Mandatory Offer remains during any extension of the Mandatory Offer, the right to withdraw an acceptance will apply in the same manner throughout any such extension of the Mandatory Offer. Compulsory redemption and de-listing Should Symrise acquire more than 90 per cent of the shares outstanding in Probi, Symrise intends to call for compulsory redemption of the remaining shares outstanding in Probi. In connection hereto, Symrise intends to act to have the Probi shares delisted from NASDAQ OMX. Information related to the Mandatory Offer Information is also available on Handelsbanken s website ( and Symrise s website ( Questions relating to the Mandatory Offer may be directed to Symrise, telephone number: +49 (0)

10 Description of Symrise and the financing of the Mandatory Offer Description of Symrise and the financing of the Mandatory Offer Description of Symrise Symrise is a global supplier of fragrances, flavourings, cosmetic active ingredients, and raw materials as well as functional ingredients. With a market share of 10 per cent, Symrise is the world s fourth largest supplier in this industry. Its clients include manufacturers of perfumes, cosmetics, and foods, the pharmaceutical industry and producers of nutritional supplements. Symrise has two divisions: Flavour & Nutrition and Scent & Care. Flavour & Nutrition develops, produces, and sells flavours and functional ingredients that are used in foods, beverages, and health products. This includes culinary products and snacks, sweets and desserts, dairy products and ice cream, and beverages and nutritional supplements. Scent & Care develops, produces, and sells fragrances, cosmetic ingredients, aroma molecules, and mint aromas. They are used in the manufacture of perfumes, personal care and cosmetic products, cleaning products and detergents, home fragrances, and oral care products. With the combination of Flavour & Nutrition and Scent & Care, Symrise holds a unique portfolio. This allows Symrise to tap into new markets and segments while distinguishing itself from its competitors. The Symrise group reported a consolidated EBITDA of approximately MEUR and a net income of MEUR in Symrise is listed on the Frankfurt Stock Exchange and the market capitalisation is about EUR 4 billion. Symrise is a publicly listed, German company limited by shares (Aktiengesellschaft) with the corporate registration number HRB The registered office is at Muehlenfeldstrasse 1, Holzminden, Germany. Financing of the Mandatory Offer The Mandatory Offer is not subject to any financing condition. The Mandatory Offer will be financed by Symrise through available funds and existing credit facilities. 8

11 Statement from Probi s Board of Directors Statement from Probi s Board of Directors PRESS RELEASE This information was submitted for disclosure on 10 February 2014 at 08:45 (CET). This press release may not be distributed, directly or indirectly, in or into Australia, Japan, Canada, New Zealand, South Africa or USA, or any other jurisdiction in which the distribution of this press release would contravene applicable laws or regulations or require further documentation, filings or other actions in addition to those required under Swedish law. Statement by the Board of Probi AB in relation to Symrise AG s mandatory public cash offer The Board of Probi unanimously recommends the shareholders in Probi not to accept Symrise s mandatory public cash offer Background This statement is made by the Board of Directors (the Board ) of Probi AB (publ) ( Probi or the Company ) pursuant to section II.19 of the rules concerning public takeover offers on the stock market adopted by NASDAQ OMX Stockholm (the Takeover Rules ). Symrise AG ( Symrise ) has on 6 February 2014 announced a mandatory public cash offer to the shareholders in Probi to transfer all of their shares in Probi to Symrise for a price of SEK 40,10 in cash for each share in Probi 1 (the Mandatory Offer ). Symrise has declared that it holds approximately per cent of the capital and votes in Probi and states that the Mandatory Offer is launched in accordance with the special provisions regarding mandatory bids in the Stock Market Takeover Bids Act (2006:451). The Mandatory Offer values the outstanding shares in the Company at approximately SEK 376 million based on 9,365,300 outstanding shares in Probi, including the 250,000 shares held by Probi as of the date of the Mandatory Offer. According to the indicative timetable included in the press release through which the Mandatory Offer was announced, the acceptance period is expected to commence around 13 February 2014 and end around 12 March Settlement is expected to take place around 20 March Declan MacFadden, board member of Probi, is President of Symrise Asia Pacific, Flavor & Nutrition business based in Singapore. Due to conflict of interest, he will not participate in the Board s processing of or resolutions concerning the Mandatory Offer. Based on information from Symrise, Declan MacFadden is considered to participate in the Mandatory Offer. On this basis, the Company has an obligation in accordance with section III.3 in the Takeover Rules to obtain and make public a fairness opinion from independent expertise. Symrise has stated that completion of the Mandatory Offer is conditional upon all necessary regulatory, governmental or other similar clearances, approvals and decisions to consummate the Mandatory Offer, including approvals and clearances from competition authorities, being obtained, in each case on terms which, in Symrise s opinion, are acceptable. Otherwise, the Mandatory Offer is not subject to any conditions. Symrise has declared that it is not dependent upon any external financing for completion of the Mandatory Offer. For further information concerning the Mandatory Offer, reference is made to Symrise s press release which was made public on 6 February Symrise has not conducted any due diligence investigation prior to the announcement of the Mandatory Offer. Neither has Symrise otherwise received any unpublished information which could reasonably be expected to affect the price of the Company s shares. The Board has engaged Mannheimer Swartling as legal adviser in relation to the Mandatory Offer. No financial adviser has been engaged. The Board has retained Erik Penser Bankaktiebolag ( Penser ) to issue a fairness opinion concerning the Mandatory Offer. 1 The offered price will be subject to adjustment should Probi pay any dividend or make any other value transfer prior to the settlement of the Mandatory Offer, and will accordingly be reduced by a corresponding amount per share of each such dividend or value transfer. 9

12 Statement from Probi s Board of Directors The Board s recommendation The Board s statement is based on an assessment of a number of factors that the Board has considered relevant for the evaluation of the Mandatory Offer. These factors include, but are not limited to, the Company s present position, the expected future development of the Company and possibilities and risks related thereto. The Board notes that the price per share offered by Symrise represents a premium of approximately 0.38 per cent compared to the volume weighted average share price of SEK for Probi s share on NASDAQ OMX Stockholm during the last 90 trading days up to and including 5 February 2014 (i.e. the last trading day prior to the announcement of the Mandatory Offer). Compared to the closing share price of SEK per share in Probi on NASDAQ OMX Stockholm on 5 February 2014 the Mandatory Offer represents a discount of approximately 0.50 per cent. The Board s assessment is also based on a fairness opinion from Penser as to the fairness from a financial perspective of the Mandatory Offer for the shareholders in Probi, which the Board has obtained in accordance with section III.3 in the Takeover Rules. According to the fairness opinion, attached to this press release, Penser s opinion is that the Mandatory Offer, with reservation for the conditions and assumptions stated in the opinion, is not considered fair from a financial perspective for the shareholders in Probi. In light of the above, the Board unanimously recommends the shareholders in Probi not to accept the Mandatory Offer. Under the Takeover Rules, the Board must, taking into account the information given by Symrise in its announcement of the Mandatory Offer, give its opinion regarding the impact that the completion of the Mandatory Offer may have on Probi, particularly in terms of employment, and its opinion regarding Symrise s strategic plans for Probi and the effects such plans could be expected to have on employment and sites where Probi conducts its business. In this respect, the Board notes that Symrise has stated that the completion of the Mandatory Offer is not expected to entail any significant impact for Probi s management or employees and that Symrise currently does not intend to make any significant changes in relation to the terms of employment for the employees of Probi. In summary, according to the information in Symrise s press release regarding the Mandatory Offer, only limited effects of the completion of the Mandatory Offer for the employment and the sites where the Company currently conducts its business are expected. The Board assumes that this description is correct and has in relevant respects no reason to take a different view. This statement shall be governed by and construed in accordance with Swedish law. Any dispute arising out of or in connection with this statement shall be settled exclusively by Swedish courts. Lund on 10 February 2014 Probi AB (publ) The Board This information is such that Probi AB is required to disclose in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act. This is a translation of the Swedish version of the press release. In case of discrepancies, the Swedish wording prevails. FOR MORE INFORMATION, PLEASE CONTACT: Per Lundin, Chairman of the Board, Probi, mobile , per.lundin@transit.se ABOUT PROBI Probi is a leading player in probiotic research and the development of efficient and well-documented probiotics. Its research areas include: gastrointestinal tracts, immune system, metabolic syndrome and stress and recovery. Probi s customers are leading companies in the Functional Food and Consumer Healthcare segments. Total income for 2013 totalled MSEK 103,6. Probi s share is listed on the NASDAQ OMX Stockholm, Small Cap. Probi has approximately 4,000 shareholders. Read more at 10

13 Fairness opinion Fairness opinion To the independent board members of Probi AB (publ) Ideon Gamma Lund Fairness Opinion regarding mandatory offer On 6 February 2014 Symrise AG ( Symrise ) announced through a press release an offer to the shareholders in Probi AB ( Probi or the Company ) to transfer all of their shares in the Company to Symrise for cash payment of SEK for each share (the Offer ). According to the press release Symrise holds percent of the voting rights in Probi before the Offer. On 10 January 2014 Symrise announced through a press release that an additional 11,010 shares had been acquired and that the threshold of 30 percent of the voting rights had therefore been exceeded. The Offer is being made in accordance with the provisions regarding mandatory bids, which, under certain circumstances, force a shareholder that has acquired more than 30 percent of the voting rights in stock market listed companies to make a cash offer for all remaining outstanding shares. In view of the above, the Board of Directors of Probi has instructed Erik Penser Bankaktiebolag ( EPB ) to provide an opinion ( Opinion ) on the fairness of the Offer from a financial perspective, called a fairness opinion. Probi has since 10 January 2014 been aware of the requirement for Symrise to make a mandatory offer and EPB has had reasonable time to prepare this Fairness Opinion. EPB bases this Opinion with regard to the Offer on the following information: i. Press release dated 6 February 2014 in which Symrise made public the Offer and associated terms and conditions ii. Publicly available financial information about the Company, including publicly available annual reports for the most recent financial years and the most recent publicly available interim reports iii. Briefings with representatives of the Company's management in which the Company's business, financial position, earnings performance, strategy and prospects were discussed iv. Statistics for the Company's share with regard to price performance and trading volumes v. Publicly available information about other comparable public offers vi. Other information deemed relevant in the process of evaluating the Offer EPB has relied upon the accuracy, completeness and reliability of the information received from Probi and obtained from third parties. No independent in- Erik Penser Bankaktiebolag (publ.) Biblioteksgatan 9 P.O. Box 7405 SE STOCKHOLM SWEDEN phone: fax: registration number:

14 Fairness opinion vestigation or verification has thus been made to ensure the accuracy of the information. Furthermore EPB has assumed that the forecasts and prospects as explained by representatives of Probi are well-founded and based on accurate and reasonable assumptions. The Opinion is based on the market, economic, financial and other circumstances concerning Probi, directly and indirectly, that EPB had knowledge of and access to on the date of this Opinion. Events that occur or become known after the date of this Opinion may make the Opinion obsolete. EPB s instruction does not include updating or revising the Opinion during the period of validity of the Offer. Based on and subject to the foregoing, it is the opinion of EPB, as of this date, that the Offer should not be considered to be fair from a financial perspective for the holders of shares in Probi. EPB conducts securities operations in accordance with Swedish Law. In the ordinary course of business, EPB may take positions for its own accounts or for the accounts of its customers in securities that may, directly or indirectly, be affected by or affect the Offer. EPB will receive a fixed fee for the preparation of this Opinion. This valuation opinion is intended only for the use of the Board of Directors of Probi in their evaluation of the Offer and shall as such not be construed as a recommendation to the shareholders in Probi. Neither is the Opinion an assessment of the prices at which the Probi share may trade in the future. EPB permits the Board of Directors of Probi to refer to the Opinion and allows the Opinion to be published in its whole in an offer document relating to the Offer or as a separate press release. Otherwise the Opinion may not be used, quoted, copied or otherwise reproduced without written consent from EPB. EPB shall not be liable for the content of the Opinion towards any person other than the Board of Directors of Probi. Swedish substantive laws shall apply to this Opinion and any disputes in respect of the Opinion shall be settled exclusively by Swedish courts. Stockholm, 7 February 2014 Erik Penser Bankaktiebolag Corporate Finance Erik Penser Bankaktiebolag (publ.) Biblioteksgatan 9 P.O. Box 7405 SE STOCKHOLM SWEDEN phone: fax: registration number:

15 Description of Probi Description of Probi The information about Probi on pages in this offer document is based on Probi s annual reports for the financial years 2011 and 2012, the year-end report for 2013 and Probi s website, unless otherwise stated. Probi in brief Probi is a research-driven biotechnology company focused on the global probiotics market. Through Probi s research Probi has developed probiotics with well-documented beneficial health effects. Probi s customers are international food, health and pharmaceutical companies active in the global health product market. Probiotics developed by Probi are used in Functional Food and Consumer Healthcare. Products containing Probi s bacteria are available or in the process of being launched in more than 35 markets around the world. In 2012, the global market for probiotics/probiotic food amounted to approximately USD 25 billion in the consumer sector with an expected annual growth of 10 per cent. Functional Food comprises about 90 per cent of the market while the remaining 10 per cent is Consumer Healthcare. Probi s current key business partners in Functional Food are Danone and American company NextFoods. Important partners in Consumer Healthcare are Lallemand/Rosell, Bringwell, Vifor, Merck, Sanum Polska, Proton System, Pharmavite/Nature Made and Health World/Metagenics. Milestones 1991 Probi founded. Patent application for Lp299v submitted The Company signs an agreement with Skånemejerier, which launches ProViva, a fruit drink containing Probi s Lp299v patented bacterium Probi listed on NGM Equity list Probi executes new share issue for MSEK 78 to commercialise the Lp299v bacterium in the Functional Food and Dietary Supplement business areas. Positive results from treatment of irritable bowel syndrome ( IBS ) published The rights to market Lp299v in Europe, with the exception of the Nordic countries and the UK, are repurchased from Skånemejerier Scientific studies in the field of clinical nutrition published. Results of studies into risk factors for cardiovascular diseases published International license agreements signed with the world s leading Functional Food distributor, Group Danone, and dietary supplement leader, Institut Rosell. ProViva becomes the first product outside Japan to be approved for marketing using product-specific health claims Probi listed on the O-list of the Stockholm Stock Exchange Launch of dietary supplement containing Probi bacterium in the US, UK and France. Patent applications regarding new discoveries relating to the effect of Lp299v on the immune system. Probi receives the Technology Leadership Award from the international consultancy firm Frost & Sullivan for the successful commercialisation of its bacterium. 13

16 Description of Probi Milestones, cont Agreements signed for seven new geographical markets relating to dietary supplements Agreement with NextFoods covering the launch of fruit drinks containing Probi bacterium in the United States market. Agreements signed for six new geographical markets relating to dietary supplements Successful common-cold clinical study opens the way for the launch of immune product. Agreements signed for 12 new geographical markets relating to dietary supplements. US partner NextFoods invests significantly in launch of GoodBelly fruit drink with Probi s probiotics in the US. Global food group Kraft Foods launches three varieties of muesli bars with probiotics in the United States under the LiveActive brand. Research grant totalling MSEK 1.8 received from VINNOVA as partial financing of a clinical study regarding the beneficial health effects of Probi probiotics in the cardiovascular field Agreement signed with Skånemejerier relating to the launch of a new range of immune products, Bravo Friscus. Partnership with Bringwell for the launch of Probi s dietary supplements for immune health and digestive health under Probi s own brands on the Nordic market. Agreement signed between Institut Rosell and Jarrow Formulas regarding the launch of Probi s dietary supplement for digestive health on the United States Health Food channel. Agreement signed between Institut Rosell and Merck KGaA regarding the launch of Probi s dietary supplement for digestive health in Latin America Ten year license agreement with Danone giving the company exclusive global rights outside of North America to use Probi s strain Lp299v and other relevant technology in probiotic fruit drinks and juices for gut health. The dietary supplements ProbiMage and ProbiFrisk were launched in Sweden. Probi and Institut Rosell enter into a new long-term agreement. Probi s Swedish common cold study was published in the European Journal of Nutrition. New license agreement with Institut Rosell for Mercks s launch of Probi s dietary supplement in Latin America. Agreement signed with Camox Pharmaceuticals for the launch of three dietary supplements based on Probi s strains in South Africa. Agreement signed with Alapis Group for the launch of Probi s immune supplement in Greece Probi has entered into a co-development agreement with a leading global food company focusing on joint clinical development of Probi s immune health platform. Probi signed a dietary supplement agreement with Pharmaviet, a leader in the United States vitamin, minerals and supplement market ( VMS ). Probi s dietary supplement containing Lp299v was launched under the Nature Made brand which is the leading United States brand in VMS. Probi signed an agreement giving Ta am Teva Altman the right to launch Probi s dietary supplement for gut health based on Lp299v in Israel Probi signed a distribution agreement with USV Limited, a leading Indian pharmaceutical company. USV will launch Vibact IBS based on the formulation Probi Digestis. Probi signed an agreement with Heinz Australia regarding launch of Golden Circle Healthy LifeTM Probiotic Juice in The product range is based on Probi s unique immune supporting platform Probi Defendum and creates a new category of probiotic juices on the Australian market. Probi signed a distribution and co-marketing agreement with Vifor Pharma to launch Probi Digestis and Probi Defendum in the Swiss pharmacy market. Probi signed a distribution agreement with Alvogen IPCO S.Á.R.L. to launch Probi Digestis and Probi Defendum in Taiwan. Probi signed a research and development agreement with Symrise concerning oral health. 14

17 Description of Probi Milestones, cont Probi signed a business development agreement with Viva 5 to market Probi Digestis and Probi Defendum to new Consumer Healthcare distributors in North America. Probi s environmental management system acquired ISO14001 certification Probi signed a new agreement with NextFoods, USA, pertaining to strengthen the GoodBelly partnership. Probi signed an agreement with AlenMed Promotion SIA for the distribution of Probi Digestis and Probi Defendum in Belarus. Probi signed an agreement with BioLife for the distribution of Probi Digestis in Malaysia. Probi signed an agreement with Botanic Pharma for the distribution of Probi Digestis in Morocco. Probi s partnership with Health World in Australia was expanded to include the launch of Probi Defendum. Vifor Pharma launched Probi s digestive health capsules in the Swiss market Peter Nählstedt assumed the position of CEO. Probi s bacterial diversity patent for Lactobacillus plantarum 299v was approved by patent authorities in both the US and Europe. Vision Probi s vision is to be the world leader in the premium segment for probiotics by providing a top-quality product range, with profound health benefits, in the world s most important health markets. Mission Probi provides consumers over the world the opportunity to improve their health through clinically tested, effective probiotics. Business concept To provide probiotics with clinically documented, positive health benefits for leading food and dietary supplement companies. Business model Probi applies three business models adapted to business area, risk and opportunity. These business models and a summary of Probi s partnerships are described below. Licensing model This model is applied in the Functional Food business area. Customers are predominantly leading food companies with the potential to achieve major sales volumes. Revenue is mainly derived from royalties from partner-generated sales. This model carries a very low risk, but Probi receives a limited portion of the revenue and the value chain. The licensee usually owns the product brand, while Probi guarantees the product through its ingredient brand. Product model This model is applied in the Consumer Healthcare business area. Revenue derives from sales of ready-made products in bulk or consumer packaging to a partner or distributor. This model carries a low to medium-high risk and provides opportunities for higher revenue and a larger share of the value chain than the licensing model. The product brand is owned by the partner or distributor, while Probi guarantees the product through its ingredient brand. Consumer model This model is applied in the Consumer Healthcare business area. Probiʼs proprietary brands are marked clearly on the packaging and in all communication. Examples include sales of ProbiFrisk and ProbiMage in the Nordic market and the Swiss launch in partnership with Vifor in Revenue is derived from sales of ready-made products to a partner, or in a joint-venture model that creates opportunities for building Probi s brand among consumers. A joint venture model enables more control and generates higher revenue for Probi, but also entails higher risk since Probi contributes to marketing investments. 15

18 Description of Probi BUSINESS MODEL REVENUE STREAM RISK REVENUE LEVEL EXAMPLES OF CUSTOMERS/ PARTNERS EXAMPLES OF PRODUCTS LICENSING MODEL Royalties based on partner-generated sales Low Low Danone NextFoods ProViva GoodBelly PRODUCT MODEL Sale of goods in bulk or consumer packaging Low/ Medium Medium/ High Camox Sanum Polska Proton Systems Health World Pharmavite Based on Probiʼs product platforms under each distributorʼs brand. CONSUMER MODEL Sale of goods in consumer packaging Medium High Bringwell Vifor ProbiMage ProbiFrisk ProbiIntestis Research and development Probi is a bioengineering company that researches and develops probiotic bacteria. Probi has a network of researchers in several countries documenting new beneficial health effects of Probi s patented strains and identifying new, more effective strains for patent protection. Probi works actively and continuously to maintain a wellbalanced research portfolio that includes both short-term and long-term projects with various risk profiles. This entails that Probi is continuously able to offer customers and business partners new products and product concepts. Since its launch in 1991, Probi has established a comprehensive library of bacteria containing bacterial strains isolated from humans and that offer potentially beneficial health attributes. The main requirement for a strain to qualify for a research project is that it can survive passage through the gastrointestinal tract and that it has specific characteristics providing it with the ability to benefit human health. In early laboratory tests, the new bacterial strain is identified, described and assessed for safety. Preclinical studies are then carried out in various animal models to further ensure that the bacterial strain has the desired characteristics and does not present any risks. The final evidence that a bacterial strain can be commercialised is obtained in clinical trials involving human test subjects. Probi s objective is to conduct independent clinical trials with documented positive results before a product or product concept is introduced to the market. This entails that all Probi s commercially available products have profound clinical documentation. From initial laboratory testing to market launch, the research and development process for probiotics has many similarities with the pharmaceutical development process, but the requirements for resources and time are less extensive. On average, Probi can develop a completely new product concept in three to five years. Probi has during the recent years primarily focused its research activities on further strengthening the clinical documentation for the product platforms Probi Digestis and Probi Defendum. In Sweden, products based on these platforms are sold under the brands ProViva, ProbiMage and Probi- Frisk. In 2013, a large number of clinical research studies were initiated, including projects to broaden the clinical documentation to also include children. Business areas Probi s business is organised into two business areas, Functional Food and Consumer Healthcare. Functional Food business area Probi s Functional Food business area develops food that provides beneficial health effects. This takes place in partnership with leading food companies with the aim of commercialising and marketing products with high volume potential. Consumer Healthcare business area The Consumer Healthcare business area develops, markets and sells Probi probiotics in partnership with pharmaceutical companies and other companies specialised in probiotics and self-care products, under Probi s proprietary brand and those of its partners. The regulatory status of the products is either food or consumer healthcare products depending on the market. Competitors The Functional Food market is dominated by a smaller number of food companies that are usually global operators. The dietary supplement market, in which the Consumer Health- 16

19 Description of Probi care business area operates, is fragmented. The three largest operators on the probiotics market are ingredients companies Danish Chr. Hansen, Dupont/Danisco and the Canadian company Lallemand/Rosell. Other players are normally small companies, which usually produce their products on a smaller scale. Other competitors to Probi are Swedish BioGaia and Finnish Valio. Like Probi, they have mixed business models and offer ready-made products and applications to customers. In addition to these companies, major food companies such as Danone, Yakult and Nestlé have their own probiotics research and production of consumer products. Agreements with the bidder At the end of 2012, Probi signed a research and development agreement with Symrise. The aim of the joint agreement is to produce innovative probiotic products with well-documented health benefits. The partnership will initially focus on oral health. Risks RISK Agreements with selected strategic partners EXPOSURE Probi has agreements in various countries with a number of partners that market Probi s products and technology or plan to do so. If one or more of these partnerships were to be discontinued or not lead to a launch, this would have a negative impact on Probi s revenue, earnings and financial position. Competition The growing interest in probiotics entails that Probi faces increased international competition from ingredients companies and suppliers of probiotics. Competition will also come from other products with equivalent health benefits. Over time, this could entail a threat to Probi s market position and growth. Regulatory risks Requirements and regulations regarding the use of health claims are constantly being made more stringent. Since 1 July 2007, nutritional and health claims have been regulated by an EU regulation (1924/2006) that applies in all EU countries. This means that all applications for new health claims must be approved by the EFSA (European Food Safety Authority). To date, the EFSA has adopted a very restrictive approach to the approval of health claims. This applies to all types of food-grade health products. Up until the end of 2013, no applications for probiotics have been approved, thus entailing a great deal of uncertainty for Probi and other leading players in the global market. Probi s continued expansion is contingent on product launches in a greater number of geographic markets, also outside Europe. Regulatory processes in various markets could entail risks for deferred launches and entail costs for Probi. Patents and intellectual property rights Product supply Probi s continued development depends largely on continued successful research and the ability to protect future revenue streams with extensive patent protection. Accordingly, it is important that granted patents can be maintained and that newly developed products and applications can be patented or otherwise protected. Probi works continuously to strengthen the intellectual property rights and commercial protection of its products. In addition to new patents for existing and new products, this work encompasses the following: Development of know-how concerning technology and products. Regulatory protection in the form of government approval of health claims and the sale of products. Legal protection for Probi s brands and determined efforts to raise awareness of the brands. Long-term commercial agreements with Probi s key customers. A significant portion of Probi s future growth is based on the delivery of finished products in the form of powder, capsules and tablets. Accordingly, Probi is dependent on a relatively limited number of suppliers living up to the agreed requirements concerning quality, volumes and delivery times. 17

20 Description of Probi RISK Product liability Strategic research partnerships Key individuals and employees Future capital requirements Market risks EXPOSURE Probi may be subject to product liability claims if the Company s products are alleged to have caused personal injury or property damage. Probi s insurance programme includes product liability protection. However, Probi s business may give rise to claims for damage that are not covered by the insurance. Should this occur, this will have a negative impact on Probi s earnings and financial position. Probi s research and development encompasses both proprietary efforts and partnerships with external Swedish and international researchers and organisations. However, there is no guarantee that these efforts or partnerships will lead to new launch-ready products, or that Probi will obtain exclusive use of any results. Probi depends on a number of key individuals and specialists, and the skills they possess. The Company s future development is strongly dependent on being able to retain employees, and recruit and introduce new employees with the skills that are in demand. Probi s strategy entails that the Company will continue to invest significant resources in research and development. These initiatives are currently covered by commercial revenues and Probi has a solid financial position. If opportunities for faster growth arise, through strategic acquisitions for example, Probi may need to acquire additional capital by issuing shares or borrowing. Currency risks Since Probi is active on the international market, income and expenses arise in varying currencies affected by exchange-rate fluctuations. Most of Probiʼs revenue comprises SEK-denominated revenue based on agreements with ProViva AB and Bringwell. In 2013, revenue from these agreements accounted for approximately 60 per cent of total revenue. Revenue in foreign currencies primarily involves USD and EUR. The proportion of foreign currencies could increase as a result of new agreements being signed or an increase in sales based on existing agreements. Probiʼs financial policy describes the manner in which the Company is to manage currency risks in relation to SEK. The objective, wherever possible, is to minimise currency exposure, and thus the currency risk, by matching sales and purchases in each currency. Probi can also hedge currencies through forward contracts. To date, this has not been done, since payment of the balance in foreign currencies often takes place in conjunction with the signing of a contract, or has involved receivables with a short term and limited credit risk. When delivery contracts have longer terms, Probi includes a renegotiation clause in the contract that is triggered when currency fluctuations exceed agreed levels. Interest risks Probi has no interest-bearing liabilities and thus no interest risks. Credit risks Liquidity risk Credit risk is related to the counterpartiesʼ creditworthiness and requires an assessment of whether the counterparty can fulfil its obligations. The customersʼ financial performance is monitored on an ongoing basis. During recent years, Probi has suffered no bad debt losses. Cash-flow forecasts are established regularly to ensure that the Group has sufficient cash funds to satisfy requirements in operating activities. Cash and cash equivalents are invested in interest-bearing accounts with special terms for deposits. For surplus liquidity meaning the portion of cash and cash equivalents that exceeds MSEK 20.0 alternative investment types may be considered if a higher return can be expected. According to Probiʼs financial policy, investments may be made in Nordic banks or Swedish government bonds. The fixed period must be between three and 12 months and investments may only be made after approval by Probiʼs Chairman. At present, Probi is not utilising alternative investment forms for its surplus liquidity. 18

21 Summary of financial information Summary of financial information Certain figures in this offer document have been rounded off. As a result, certain tables appear to not summarise correctly. The financial information below regarding Probi is based on the audited annual reports for 2012, 2011 and 2010 and from the auditor reviewed year-end report for Probi s consolidated financial statements for the financial years 2012, 2011 and 2010 are presented in accordance with International Financial Reporting Standards ( IFRS ), as adopted by the EU, which is in compliance with Swedish law through the application of the Swedish Financial Reporting Board s (Sw. Rådet för finansiell rapportering) recommendations RFR 1 Supplementary Rules for Consolidated Financial Statements. Probi s year-end report for 2013 has been prepared in accordance with IAS 34, Interim Financial Reporting, which is in compliance with Swedish law through the application of the Swedish Financial Reporting Board s recommendations RFR 1 Supplementary Rules for Consolidated Financial Statements. The year-end report for 2013, which is fully recited on pages has been reviewed by the Company s auditor in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of Year-end Financial Information Performed by the Independent Auditor of the Entity (Sw. Översiktlig granskning av finansiell delårsinformation utförd av företagets valda revisor). The group s income statement in summary Currency KSEK Unaudited Full-year 2013 Full year 2012 Full year 2011 Full year 2010 Operating revenue Net sales 102,210 99,562 94,379 80,381 Other revenue 1, Total operating revenue 103, ,392 95,009 81,127 Operating expenses Cost of goods sold 25,792 18,477 16,833 9,858 Employee benefit expenses 27,639 25,659 21,174 21,041 Other external costs 27,046 32,696 30,258 23,093 Depreciation and impairment of fixed assets 4,934 6,351 8,947 9,038 Total operating expenses 85,411 83,183 77,212 63,030 Operating income 18,143 17,209 17,797 18,097 Financial income 1,645 2,000 2, Financial expenses Income before taxes 19,491 18,322 19,505 18,709 Tax on income 4,446 4,817 5,312 5,048 Net income 15,045 13,505 14,193 13,661 Other comprehensive income Total comprehensive income 15,045 13,505 14,193 13,661 19

22 Summary of financial information The group s balance sheet in summary Currency KSEK Unaudited ASSETS Fixed assets Capitalised development expenses 16,611 7,969 5,336 3,629 Patents and licenses 8,818 7,888 10,316 13,047 Goodwill 2,762 2,762 2,762 2,762 Equipment, tools and fixtures 2,359 3,021 3,265 3,766 Deferred tax assets ,711 Total fixed assets 30,550 21,640 21,679 27,915 Current assets Inventories 2,679 2,466 4,404 2,263 Current receivables 25,185 25,337 27,145 15,177 Cash and cash equivalents 91,301 87,285 76,202 89,762 Total current assets 119, , , ,202 Total assets 149, , , ,117 EQUITY AND LIABILITIES Equity 131, , , ,985 Non-current liabilities 132 1, Current liabilities 18,558 12,770 13,281 12,132 Total equity and liabilities 149, , , ,117 20

23 Summary of financial information The group s cash flow in summary Currency KSEK Unaudited Full-year 2013 Full year 2012 Full year 2011 Full year 2010 Operating activities Income before tax 19,491 18,322 19,505 18,709 Depreciation/amortisation and discarding 4,934 6,351 8,947 9,038 Capital gains/losses from disposal of tangible fixed assets Income tax paid 4,151 4, Cash flow from operating activities before changes in working capital 20,274 20,378 27,685 27,206 Change in inventories 213 1,938 2,141 1,025 Change in operating receivables 152 1,808 11,968 2,855 Change in operating liabilities 4, ,280 5,382 Cash flow from operating activities 24,696 24,201 14,856 28,708 Investing activities Acquisition of intangible fixed assets 13,373 5,446 6,713 4,077 Acquisition of tangible fixed assets 471 1, ,038 Divestment of tangible fixed assets Cash flow from investing activities 13,844 6,281 7,388 5,970 Financing activities Repurchase treasury shares ,813 0 Dividend to shareholders 6,836 6,837 9,215 4,683 Cash flow from financing activities 6,836 6,837 21,028 4,683 Change in cash and cash equivalents 4,016 11,083 13,560 18,055 Cash and cash equivalents at the beginning of the year 87,285 76,202 89,762 71,707 Cash and cash equivalents at end of the year 91,301 87,285 76,202 89,762 Interest paid and received Interest received 1,196 1,615 1, Interest paid

24 Summary of financial information The group s key ratios Key ratios Unaudited Equity ratio, % 1) Debt/equity ratio, % 2) Return on total assets, % 3) Return on equity, % 4) R&D expenses as part of operating income, % Average number of employees ) Equity as a percentage of balance sheet total. 2) Interest-bearing liabilities as a percentage of equity. 3) Operating income plus financial income as a percentage of the average total assets. 4) Profit before tax as a percentage of average equity. The group s key figures per share Key ratio Unaudited Earnings per share, (SEK) Equity per share (SEK) Cash flow per share (SEK) Closing share price per balance date (SEK) Price/equity ratio, multiple P/E-ratio, multiple Dividend, SEK per share ) Market value per balance date (SEK) 360, , , ,090 1) The Board of Directors proposal for dividend. 22

25 Share capital and ownership structure Share capital and ownership structure Share capital and ownership structure The Probi share is listed on NASDAQ OMX, Small Cap. The share is listed under the symbol PROB with ISIN-code SE The share capital and the development of the share capital As per the date of the offer document, the registered share capital of Probi amounts to SEK 46,826,500 divided into 9,365,300 shares, with a quota value of SEK 5 per share. Each share carries one vote and carries equal right to the Company s assets and profits and possible surplus in liquidation. As per the date of the offer document, Probi holds 250,000 treasury shares, which were repurchased in The development of the share capital in Probi since its incorporation is stated below. Share capital development Event Year Issue price Increase in no. of shares Total no. of shares Quota value per share Increase in share capital Share capital Company formed ,000 50,000 Bonus issue 1: , , ,000 Directed issue 1) , , ,000 Split 100: , , ,000 Bonus issue 34: ,910,000 4,025, ,910,000 4,025,000 Directed issue 2) ,006,250 5,031, ,006,250 5,031,250 Bonus issue 15: ,546,875 12,578, ,546,875 12,578,125 Directed issue 3) ,721,875 14,300, ,721,875 14,300,000 Bonus issue 13: ,590,000 32,890, ,590,000 32,890,000 Rights issue ,222,500 41,112, ,222,500 41,112,500 Reverse split 5: ,222, ,112,500 New share issue ,142,800 9,365, ,714,000 46,826,500 1) The issue was directed at founders and senior executives. 2) The issue was directed at Skånemejerier s owners. 3) The issue was directed at shareholders in Skånemejerier, staff at Probi and Skånemejerier and other affiliates. 23

26 Share capital and ownership structure Probi s largest shareholders The table below shows the ten largest shareholders of the Company as of 31 December As of 31 December 2013 there were 4,188 shareholders in the Company. Shareholder No. of shares Share of share capital, % Share of voting rights, % Symrise 1) 2,781, Livförsäkringar Skandia 895, Fjärde AP-fonden 409, Göran Molin and company 364, Bengt Jeppsson 300, Probi 250, ) Avanza Pension 240, Nordea Life & Pension 194, Nordea Investment Funds 191, Pfizer Health AB 127, Other 3,610, Total 9,365, ) As of 10 January 2014, Symrise s shareholdings amounted to 2,812,505 shares representing approximately per cent of the total number of outstanding shares and votes in Probi. 2) Probi is not entitled to vote for its shares on shareholders meetings. Share price performance The Probi share has been listed on NASDAQ OMX since 2004 and is traded in the Small Cap segment. The chart below illustrates the performance and turnover of the Probi share over the past five years prior to the announcement of the Mandatory Offer (5 February February 2014), compared with the OMX Stockholm PI for the same period Price (Indexed) Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 Probi AB OMX Stockholm Allshare 24

27 Share capital and ownership structure Dividend policy Assuming that Probi is able to maintain a suitable capital structure in the future, and that it is deemed possible to maintain the Company s financial objectives, Probi s goal is to be able to pay a dividend of per cent of profit after tax. Authorisation to resolve on issue of new shares At the annual general meeting of Probi 24 April 2013, the Board of Directors was authorised to, on one or several occasions until the next annual general meeting, resolve on issuance of a maximum of 936,530 new shares with or without deviation from the shareholders preferential right. Deviation from the shareholders preferential right may only be resolved if payment shall be made in kind in connection with acquisition. Such issue may include conditions according to the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)) Chapter 13, Section 5, Paragraph 1, Item 6 (payment in kind, by way of set-off or subject to other terms and conditions). Authorisation to resolve on acquisition and sale of treasury shares At the annual general meeting of Probi 24 April 2013, the Board of Directors was authorised to, on one or several occasions until the next annual general meeting, resolve on acquisition of treasury shares over NASDAQ OMX at a price falling within the current registered trading rate interval. The total holding of treasury shares may not exceed 10 per cent of the total number of outstanding shares of the Company. At the same annual general meeting, the Probi Board of Directors was also authorised to resolve on sale of treasury shares over NASDAQ OMX at a price falling within the current registered trading rate interval. The Board of Directors was also authorised to resolve on sale of treasury shares, with or without deviation from the preferential rights of the shareholders, outside NASDAQ OMX against consideration in cash, kind or set-off. As of the date of the Mandatory Offer, target is in possession of 250,000 treasury shares, which were repurchased in Shareholder agreements To the knowledge of the Board of Director of Probi there are no shareholders agreements or other arrangements between shareholders of the Company aiming at achieving a common influence over the Company. Furthermore, to the knowledge of the Board of Directors of Probi, there are no arrangements or similar which may lead to a change in control over the Company. Material agreements Probi has co-operation agreements with Bringwell and Pro- Viva. These agreements entail provisions that could entitle each party the right to terminate the agreement in case the control over the Company is changed following a completed public offer. Stock related incentive plans On 28 April 2011, the annual general meeting of Probi resolved to implement a share-related incentive programme for executive management based on the Company s share performance between 2011 and The CEO and other senior executives participate in the incentive programme. The incentive results are contingent on a comparison of the Company s share price and the general index on NASDAQ OMX in 2014 compared with 2011, whereby the Company s share price must have surpassed the general index by not less than 25 per cent by 2014 compared to 2011 to entitle the participant to remuneration. Any remuneration will be paid in The result of the incentive programme by 2015 is limited to an amount equivalent to 1.44 months salary for the CEO and other senior executives participating in the incentive programme. Remuneration under this incentive programme is encompassed within the framework of variable remuneration as described in the Company s remuneration policy. Probi further applies variable premiums for management based on personal development targets, and for all employees based on EBIT and net sales targets. 25

28 Board of Directors, Management and Auditor Board of Directors, Management and Auditor Board of Directors PER LUNDIN (Chairman) Board member since Chairman of the Board of Directors since Born: 1947 Occupation: Senior Advisor in retail business. Other board assignments: Chairman of Kung Markatta AB, M3 Bygg AB, Gastronomi Sverige AB, board member of Kinnan Holding AB and Seniorlife AB. Experience: Director Sales at Kraft Foods Nordic, Vice President of ICA Meny and President of Arvid Nordquist. Probi shareholding: Lundin is independent in relation to the Company and its major shareholders. BENEDICTE FOSSUM Board member since Born: 1962 Occupation: Own consultant. Other board assignments: Chairman of Smartfish AS, board member of Ayanda Group AS, Bionor Pharma AS, Foinco AS, Zentuvo AS and Mittas AS. Experience: Director Strategic development PHARMAQ AS, and other managerial positions in Alpharma AS and Statens Legemiddelsverk. Probi shareholding: Fossum is independent in relation to the Company and its major shareholders. MATS LIDGARD Board member since Born: 1954 Occupation: Senior partner in Lavindia AB. Other board assignments: Cebix AB, Jatab Care AB, Scandinavian Biopharma Holding AB and Synphora AB. Experience: Formerly worked in the Pharmacia group of companies, Active Biotech AB and SBL Vaccin AB as Chief Legal Officer and other managerial positions. Probi shareholding: 1,000 Lidgard is independent in relation to the Company and its major shareholders. EVA REDHE RIDDERSTAD Board member since Born: 1962 Occupation: Chairman of Spago Imaging AB and FTrack AB. Other board assignments: Board member of Pled Pharma AB, Protector Forsikring ASA, TAM Group AB, Axel Christiernsson International AB and Första AP-fonden. Experience: CEO and working chairman Erik Penser Fondkommission AB, founder and CEO Mercurius Financial Communications AB and various positions in Investor AB. Probi shareholding: 4,000 shares Redhe Ridderstad is independent in relation to the Company and its major shareholders. JAN NILSSON Board member since Born: 1953 Occupation: Professor in Experimental Cardiovascular Research at Lund University. Other board assignments: Malmö Högskola. Experience: Dean of the Faculty of Medicine at Lund University and Deputy Secretary General at the Swedish Medical Research Council Probi shareholding: Nilsson is independent in relation to the Company and its major shareholders. DECLAN MACFADDEN Board member since Born: 1954 Occupation: President of Symrise Asia Pacific, Flavor & Nutrition business based in Singapore since Other board assignments: Chairman of UWCSEA Foundation Board. Former Chairman and board member of Esterol Malaysia. Experience: Senior management positions in various companies, such as ICI, Unilever, Biocon, Guinness and Warner Lambert. Probi shareholding: MacFadden is independent in relation to the Company. 26

29 Board of Directors, Management and Auditor Management PETER NÄHLSTEDT CEO Born: 1974 Qualifications: MSc Chemical Engineering and BSc Business Administration from Lund University. Background: Peter Nählstedt was employed in January 2014 as CEO. He joined Probi from Trelleborg Marine Systems, where he was responsible for operations in Europe, South America and North Africa. Peter Nählstedt has extensive experience in the international life science industry through various executive positions in USA and Sweden, in strategy as well as marketing and sales of GE Healthcare Life Sciences. Probi shareholding: GUN-BRITT FRANSSON Vice president research and development Born: 1953 Qualifications: Ph. D. in Nutrition from Uppsala University. Background: Gun-Britt Fransson was employed in February 2012 with overall responsibility for the Company s research and development activities. Gun-Britt Fransson has extensive experience from senior positions in the food, pharmaceutical and biotechnology industry and acted for more than 10 years as Director of Research at Procordia Food AB and Orkla Foods AS. Most recently, Gun-Britt comes from a position as CEO of Alligator Bioscience AB in Lund, a position she had for six years. Probi shareholding: 2,000 shares NIKLAS BJÄRUM Vice president of marketing and sales Born: 1963 Qualifications: Degree in International Business Administration from Lund University. Background: Niklas Bjärum was employed in February 2001 and assumed responsibility for the Company s sales and marketing. Since receiving his degree in 1988, he has worked in a number of positions in marketing, sales and business development of both an operational and strategic nature at such international food companies as Nestlé and Masterfoods (Mars Inc.). In 1998, he changed industries and worked at Ericsson Mobile Communications for three years, where he was responsible for business development for the European market. Probi shareholding: 4,000 shares Auditor At the 2010 Annual General Meeting, Deloitte AB was appointed as the Company s auditor, with Authorised Public Accountant Per-Arne Pettersson as Auditor in Charge until the close of the 2014 annual general meeting. NIKLAS BRANDT CFO Born: 1959 Qualifications: Business Administration Degree from Lund University. Background: Niklas Brandt was employed in May 2008 as CFO. He joined the Company from Moving AB, where he was CFO for six years. Prior to this, he held a number of senior positions in finance and administration in various companies, such as Tibnor and EF Education. Probi shareholding: 1,000 shares 27

30 Articles of Association of Probi Articles of Association of Probi N.B. This English version of the Articles of Association is an in-house translation of the original Swedish Articles of Association. In the event of any discrepancies between the English version and the Swedish version, the latter shall prevail. Articles of Association of Probi Aktiebolag (publ) Reg. No Article 1 The company s name is Probi Aktiebolag (publ). Article 2 The registered office of the Board of Directors shall be situated in the Municipality of Lund, Skåne County, Sweden. Article 3 The company shall engage, directly or through subsidiaries, in the development, manufacture and marketing of products stimulating growth and/or regulating the natural microbial flora in humans, and undertake any other operations compatible therewith. Article 4 The company s share capital shall amount to not less than SEK 40,000,000 and not more than SEK 160,000,000. Article 5 The company shall have not less than 8,000,000 shares and not more than 32,000,000 shares. Article 6 The Board of Directors shall consist of three to seven members, with not more than two deputies. Article 7 The company shall have one auditor, with or without one deputy. The auditor shall be an authorised public accountant or firm of authorised public accountants. Article 8 Notices of General Meetings shall be published in Post- och Inrikes Tidingar (Swedish Official Gazette) and on the company s website. That the notice has been issued shall be published in Dagens Industri. Article 9 The following items of business shall be addressed at the company s annual general meeting: 1. Election of chairman of the meeting; 2. Preparation and approval of the voting list; 3. Approval of the agenda for the meeting; 4. Election of one or two persons to verify the minutes; 5. Determination of whether the meeting has been duly convened; 6. Presentation of the annual report and the auditors report and, where applicable, the consolidated financial statements and the auditors report for the Group; 7. Resolutions concerning: (a) adoption of the income statement and the balance sheet and, where applicable, the consolidated income statement and the consolidated balance sheet; (b) disposition of the company s profits or losses pursuant to the adopted balance sheet; (c) discharge of the members of the Board of Directors and the President from liability. 8. Determination of the fees to be paid to the Board of Directors and the auditors; 9. Determination of the number of members and deputy members of the Board of Directors and, where applicable, the number of deputy auditors; 10. Election of members of the Board of Directors and, where applicable, deputy members and auditors and deputy auditors; 11. Other matters which rest upon the general meeting pursuant to the Swedish Companies Act (1975:1385) or the Articles of Association. Article 10 The company s financial year shall be the calendar year. Article 11 The company s shares shall be registered in a central securities depository register in accordance with the Swedish Financial Instruments Accounts Act (1998:1479). Article 12 In order to be entitled to participate in a general meeting, shareholders shall notify the company of their intention not later than 4.00 p.m. on the day stipulated in the notice convening the general meeting. This day must not be a Sunday, any other public holiday, a Saturday, Midsummer s Eve, Christmas Eve or New Year s Eve and must not be earlier than the fifth weekday prior to the general meeting. Assistants to the shareholder shall be entitled to attend the general meeting only if the shareholder has notified the company of the number of assistants (not more than two) in the manner set out above. 28

31 Year-end report 2013 Year-end report 2013 PROBI AB YEAR-END REPORT 2013 CONSUMER HEALTHCARE UP 24% IN 2013 FOURTH QUARTER OF 2013 NET SALES amounted to MSEK 26.2 (26.2). OPERATING PROFIT totalled MSEK 3.1 (2.6). PROFIT AFTER TAX amounted to MSEK 2.6 (2.1). PROFIT AFTER TAX PER SHARE was SEK 0.29 (0.24). Cash flow amounted to a negative MSEK 0.1 (pos: 1.2) FULL-YEAR 2013 NET SALES amounted to MSEK (99.6). OPERATING PROFIT totalled MSEK 18.1 (17.2). PROFIT AFTER TAX amounted to MSEK 15.0 (13.5). PROFIT AFTER TAX PER SHARE was SEK 1.65 (1.48). CASH FLOW amounted to MSEK 4.0 (11.1). Probi paid dividends of MSEK 6.8 (6.8). INFORMATION FOR COMPARATIVE PURPOSES: The comparative figures for the year-earlier period are impacted by two contractual changes, which totalled MSEK 7.0, pertaining to NextFoods and Danone. Adjusted for these changes net sales increased MSEK 9.6, from MSEK 92.6 to MSEK 102.2, and operating profit increased MSEK 7.9, from MSEK 10.2 to MSEK SIGNIFICANT EVENTS DURING THE FOURTH QUARTER: Probi recruited Peter Nählstedt as the company s new CEO, and he assumed his new position on 7 January Probi s bacterial diversity patent for Lactobacillus plantarum 299v was approved by patent authorities in both the US and Europe. SIGNIFICANT EVENTS AFTER THE CLOSE OF THE PERIOD: Symrise has increased its shareholding in Probi to more than 30%, thus requiring Symrise to make a mandatory offer to acquire all of Probi s shares. The Board of Directors proposes a total dividend of MSEK 6.8 (6.8), corresponding to SEK 0.75 (0.75) per share. CEO S COMMENTS: During the year, net sales in Consumer Healthcare rose 24% to slightly more than MSEK 60, which is very gratifying in view of our investment in this business area. Growth was largely driven by a positive trend in our key North American market. Overall, this increase offset the decline in Functional Food, where lower royalty revenue was mainly due to contractual changes. Adjusted for the effect of these changes, our operating profit improved MSEK 7.9 compared with We also signed new agreements in Asia and Eastern Europe during the year, and a number of new distributors were added in North America who will conduct launches during the first six months of These markets have been prioritised to enable continued growth. Probi is therefore well positioned for continued positive growth through international expansion during 2014, says Peter Nählstedt, CEO of Probi. FOR FURTHER INFORMATION, PLEASE CONTACT: Peter Nählstedt, CEO Probi, tel: +46 (0) or +46 (0) , peter.nahlstedt@probi.se Niklas Brandt, CFO Probi, tel: +46 (0) or +46 (0) , niklas.brandt@probi.se This information is such that Probi AB is required to disclose in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on January 23, 2014 at 8.45 a.m. This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails. ABOUT PROBI Probi is a leading player in probiotic research and development of effective and well-documented probiotics. The research areas are: the gastrointestinal tract, immune system, metabolic syndrome and stress and recovery. Probi s customers are leading companies in the Functional Food and Consumer Healthcare segments. Total revenue for 2013 was MSEK Probi s share is listed on Nasdaq OMX Stockholm, Small Cap. Probi has about 4,000 shareholders. Read more on 29

32 Year-end report 2013 Probi AB Year-end Report 2013 ABOUT THE OPERATIONS Net sales for 2013 rose MSEK 2.6, or 3%, to MSEK (99.6). The year-on-year comparison was impacted by two contractual changes pertaining to NextFoods and Danone, which are described below. When the comparative figures for the year-earlier period are adjusted for these changes, which totalled MSEK 7.0, net sales increased MSEK 9.6, from MSEK 92.6 to MSEK All growth is attributable to Consumer Healthcare, which grew 24% compared with full-year Net sales for 2012 included royalties of MSEK 3.8 from NextFoods under the agreement that was applicable at the time, which entitled NextFoods to retain the rights to Lactobacillus plantarum 299v (DSM 9843) in the North American market. Under the new agreement signed with NextFoods in the first quarter of 2013, the minimum royalty amount has been replaced by an exit fee, which is payable if NextFoods terminates the agreement prior to The new agreement also entails that Probi will have higher royalty levels as of mid As Probi previously announced, the calculation of royalties for ProViva sales in Sweden has been changed as of 2013 in accordance with the agreements signed with Danone in Probi s royalty revenue from ProViva for full-year 2013 was MSEK 3.2 lower than it would have been based on the royalty level that applied until the end of In 2013, Probi s revenue in the key North American market totalled MSEK Excluding royalty of MSEK 3.8 from NextFoods, as described above, this represents a two-fold increase compared with Pharmavite, which launched Probi s digestive health capsules in 2012, accounted for a significant portion of this growth. Various opportunities for further development of the partnership are being discussed with Pharmavite. In 2012, Probi also signed a business development agreement with the US-based probiotics specialist Viva 5. The first launch within the framework of this agreement was conducted in September when Wakunaga, a leading player in the Health Food channel, launched digestive health capsules under the ProBiata brand. At the end of 2013, Probi made additional deliveries through the Viva 5 partnership to a number of new distributors, prior to launches scheduled for the first quarter of 2014 in North America. NextFoods sales revenue from Good Belly, based on Probi s bacteria, also rose slightly more than 20% in 2013, year-on-year. During the year, Probi initiated new customer partnerships and strengthened its partnerships with existing customers. New agreements were signed with AlenMed for the distribution of Probi Digestis and Probi Defendum in Belarus, and with Bio-Life in Malaysia and Botanic Pharma in Morocco for the distribution of Probi Digestis in each market. Probi s long-standing partnerships with companies including NextFoods in the US, Sanum Polska in Poland and Health World in Australia were also strengthened and broadened through revisions of existing agreements. Business development was intensified in a number of markets throughout Asia and Eastern Europe and discussions are ongoing in regard to new distribution solutions in these regions. In 2013, the main focus of Probi s research and development was to continue strengthening the clinical documentation for Probi Digestis and Probi Defendum, and a number of clinical trials commenced. In parallel, a project to define Probi s long-term research strategy was initiated. During the year, Bundesamt für Gesundheit (BAG), the authority responsible for health claims in Switzerland, approved a specific health claim for Probi Digestis. This approval is highly significant for Probi, since BAG largely complies with the same regulations as the EU and, apart from the approval of Probi Digestis, has only approved two other health claims for probiotics to date, both related to probiotic food. During the second half of 2013, Probi Digestis was launched in Switzerland under the product name of Probi Intestis through Probi s partnership with Vifor Pharma. Probi s LP299V protection was strengthened in 2013 when patent authorities in both the US and Europe approved Probi s patent application for the increased bacterial diversity observed when Lactobacillus Plantarum 299v (DSM 9843) is given to individuals. Probi has recruited Peter Nählstedt as the company s new CEO. Peter Nählstedt has extensive experience in the international Life Science industry from his various executive positions involving strategy, marketing and sales at GE Healthcare Life Science. Peter Nählstedt joins us from Trelleborg Marine Systems, where he was responsible for operations in Europe, South America and North Africa. Peter Nählstedt assumed his position on 7 January Gun-Britt Fransson, who had been Interim CEO since the end of May 2013 when Michael Oredsson stepped down, continues in her role of Head of Research and Development and member of Probi s Management Group. Probi AB (publ) Corp. Reg. No

33 Year-end report 2013 Probi AB Year-end Report 2013 SALES AND COSTS Full-year, 2013 Probi s net sales during the year amounted to MSEK (99.6). Net sales in the Functional Food business area totalled MSEK 41.3 (50.5). The comparative figure for the year-earlier period would have been MSEK 43.5 had the impact of the contractual changes pertaining to Danone and NextFoods described above been excluded. Royalty revenue from ProViva totalled MSEK 38.3 (42.7). MSEK 3.2 of this decline derived from a change in the royalty rate calculation, which became applicable at the end of The remaining portion of the decline was due to changes in the product mix. Net sales in the Consumer Healthcare business area rose MSEK 11.8, or 24%, to MSEK 60.9 (49.1). This growth derived primarily from deliveries to Pharmavite in the US, which reported a very positive sales trend, and to Vifor in Switzerland and Wakunaga in the US, which launched Probi s digestive health capsules during the autumn. Operating expenses totalled MSEK 85.4 (83.2), up MSEK 2.2. Deliveries rose 30% year-on-year, entailing a corresponding increase in product costs. Personnel expenses were 2.0 MSEK higher, due to factors such as strengthening the organisation, which was implemented during the year. Other costs were MSEK 5.7 lower than in 2012, with the decline mainly attributable to sales and management costs. Fourth quarter October December 2013 Probi s net sales for the fourth quarter amounted to MSEK 26.2 (26.2). Net sales in Functional Food declined from MSEK 11.7 to MSEK 9.5. Royalty from ProViva declined MSEK 1.7 in the fourth quarter, of which MSEK 0.7 was due to the changed royalty rate calculation. Net sales in Consumer Healthcare rose MSEK 2.2 to MSEK 16.7 (14.5). Deliveries to Proton Systems in Serbia and to distributors within the Viva5 partnership accounted for the largest portion of this increase. Operating expenses declined MSEK 0.4 compared with the fourth quarter of 2012 to MSEK 23.3 (23.7). Distribution of operating revenue: KSEK Q Q Full-year 2013 Full-year 2012 Sales, goods 15,103 12,321 53,446 41,120 Royalty, licenses, etc. 11,054 13,852 48,764 58,442 Net sales 26,157 26, ,210 99,562 Other operating income , Total operating revenue 26,404 26, , ,392 Profit after tax Profit after tax for the year amounted to MSEK 15.0 (13.5). Tax expense was MSEK 4.4 (4.8), of which MSEK 5.5 (3.7) was current tax. Deferred tax on appropriations accounted for the difference between recognised tax expense and current tax. Earnings per share Earnings per share for the year amounted to SEK 1.65 (1.48). Cash flow Cash and cash equivalents increased MSEK 4.0 during the year to MSEK 91.3 (87.3) at year-end. Cash flow from operating activities during the year rose MSEK 0.5 compared with 2012 to MSEK 24.7 (24.2). Probi AB (publ) Corp. Reg. No

34 Year-end report 2013 Probi AB Year-end Report 2013 Investments During the year, investments in intangible fixed assets totalled MSEK 13.4 (5.5), of which patents accounted for MSEK 2.5 (2.4) and capitalisation of development costs for MSEK 10.9 (3.1). Capitalised development expenditure primarily pertains to clinical trials in the area of immune and gastrointestinal health, which are intended to provide supplementary information for health claim applications in the EU. Investments in tangible fixed assets totalled MSEK 0.5 (1.1). Probi invests in prioritised research and development projects to ensure long-term growth. The R&D proportion of total expenses, excluding goods for resale and depreciation/amortisation, was 36% (31). Including development expenditure capitalised during the year, this figure increased to 46% (35). SEGMENT INFORMATION General information Probi s operations are organised in two business segments, with two separate managers: Functional Food and Consumer Healthcare. The Functional Food segment focuses on developing food that provides beneficial health effects. This development is conducted in partnership with leading food companies in order to commercialise and market products with a high volume potential. The Consumer Healthcare segment develops, markets and sells Probi probiotics in partnership with pharmaceutical companies and other companies specialised in probiotics and health and wellness products, under Probi s proprietary brands or those of its partners. No business transactions are conducted between the two segments. Operating profit per segment: Q Q KSEK FF CHC Total FF CHC Total Operating revenue Operating expenses Operating profit/loss 9,549 16,855 26,404 11,731 14,611 26,342-7,157-16,192-23,349-7,799-15,942-23,741 2, ,055 3,932-1,331 2,601 Full-year, 2013 Full-year, 2012 KSEK FF CHC Total FF CHC Total Operating revenue Operating expenses Operating profit/loss 41,640 61, ,554 50,573 49, ,392-25,782-59,629-85,411-31,496-51,687-83,183 15,858 2,285 18,143 19,077-1,868 17,209 FF= Functional Food CHC= Consumer Healthcare Probi's growth strategy comprises increased investment to develop the Consumer Healthcare business area. Such investment includes new distribution solutions, the establishment of proprietary brands and more intensive business development primarily in the US, as well as in selected markets throughout Asia and Eastern Europe. In line with the growth strategy, new resources have been allocated to Consumer Healthcare in recent years, leading to higher personnel costs. Some existing resources have also been transferred, resulting in a comparable decrease in operating expenses in Functional Food. Of the total year-on-year cost Probi AB (publ) Corp. Reg. No

35 Year-end report 2013 Probi AB Year-end Report 2013 increase of MSEK 7.9 in Consumer Healthcare, however, MSEK 7.3 was due to product costs resulting from the higher sales volume. Operating revenue distributed by geographic market: KSEK Q Q Full-year 2013 Full-year 2012 Sweden 13,872 16,752 59,073 64,749 Rest of Europe 3,578 3,755 14,585 11,347 North America 5,024 2,457 18,250 12,969 Rest of the world 3,930 3,378 11,646 11,327 Total 26,404 26, , ,392 The revenue decline in Sweden was primarily due to an MSEK 4.4 decrease in royalty revenue from ProViva sales, of which MSEK 3.2 derived from the contractual change in the royalty rate calculation that became effective at the end of The remaining portion of the decline was due to changes in the product mix. Higher revenue in the rest of Europe derived from deliveries to Vifor in Switzerland, which launched Probi s digestive health capsules in September The increase in North America resulted from deliveries to Pharmavite, which reported a very positive sales trend, and initial deliveries through the Viva5 partnership. The comparative figure for North America in the year-earlier period includes minimum royalty payments of MSEK 3.8 from NextFoods in accordance with the agreement applicable at the time, which entitled NextFoods to retain the rights to Lactobacillus plantarum 299v (DSM 9843) in the North American market. Functional Food Since its launch in 1994, the ProViva range has been continuously developed with new flavours and product varieties. In May 2013, Danone/Proviva AB launched ProViva 50 to meet the growing demand for products with low sugar content. The new ProViva fruit beverages do not contain any added sugar, only the natural sugars found in the beverage s berries and fruits. Stevia is used as a sweetener to maintain a pleasant flavour. ProViva 50 contains 50% less sugar than juice and other fruit juice drinks. The products received a positive consumer response and are available in the following flavours: Orange Mango, Raspberry Blackberry and Tropical. Probi has collaborated with NextFoods in the North American market since The partnership has now been further strengthened by a revised agreement that was signed in the first quarter of The new agreement will remain valid until 2020 and includes an option for extension. For Probi, the agreement entails higher royalty levels from mid-2014, and clear exposure of Probi s brand on packaging and advertising in one of the world s most exciting markets. During the period, Probi generated revenue from NextFoods in the form of minimum royalty payments. In 2013, minimum royalty payments were replaced by an exit fee, which is paid if NextFoods terminates the agreement prior to NextFoods sales of the Good Belly range in the North American market continue to show a positive trend. Sales revenue in local currency rose 20% compared with full-year During the fourth quarter of 2013, Heinz in Australia discontinued sales of the probiotic juice Golden Circle Healthy Life, which is based on Probi s product platform Probi Defendum. Probi s revenue was only marginally impacted by this decision. Consumer Healthcare The resource strengthening in Consumer Healthcare has generated conditions for more intense business development primarily in the US and selected markets throughout Asia and Eastern Europe. During 2013, this began to generate results in the form of higher revenue, new customer agreements and renegotiation of existing agreements. Probi reported a highly positive trend in the growing and key Consumer Healthcare market in North America in Pharmavite, which launched Probi s digestive health capsules in 2012, accounted for a significant portion of this growth. In 2012, Probi signed a business development agreement with the leading US-based probiotics specialist, Viva 5. In September 2013, the first launch within the framework of this agreement was implemented. Wakunaga, a leading player in the Health Food channel, launched digestive health capsules under the ProBiata brand at the Natural Products Expo East convention in Baltimore in the US. In late 2013, Probi made additional deliveries through the Viva 5 partnership to a number of new distributors, prior to launches scheduled for the first quarter of 2014 in North America. Probi AB (publ) Corp. Reg. No

36 Year-end report 2013 Probi AB Year-end Report 2013 In 2010, Probi entered into a partnership with Bringwell for the marketing and sales of Probi Mage and Probi Frisk in the Nordic market. These products now account for a market share of about 50% in the Swedish market for probiotic dietary supplements. Probi s revenue from this partnership declined marginally during 2013 in pace with a total market decline driven by lower levels of activity primarily in the various pharmacy channels. Probi deems that pressure on activity in the various sales channels, including a number of major campaigns, will increase during In early 2014, Probi Mage was also launched in a new packaging size, Travel Pack, containing 20 digestive health capsules in a blister pack. In September 2013, Probi s digestive health capsules based on Lactobacillus plantarum 299v (DSM 9843) were launched in Switzerland. The launch was a result of the agreement signed in 2012 with Vifor Pharma, one of the leading consumer healthcare companies in the Swiss market. The product is marketed under the Vitafor brand, with Probi Intestis as the product name. The launch was successful and Probi received new orders for deliveries. In 2013, Probi signed three agreements in Consumer Healthcare concerning launches in new markets: In June, Probi signed a distribution agreement with AlenMed Promotion SIA in Latvia concerning the launch of Probi Digestis and Probi Defendum in Belarus. The launch is scheduled for the second quarter of 2014 and the products will be registered under the Probi brands Probi Digestis and Probi Defendum. The Agreement with AlenMed is considered highly strategic for Probi s future expansion into other markets in the region. In July, an agreement was signed with Bio-Life Marketing Sdn. Bhd in Malaysia. The launch was conducted in leading pharmacies throughout Malaysia in the second half of 2013, under the Bio-Life brand with the product name PROBI LP299V. Bio-Life is an expansive healthcare company with extensive experience in the introduction of probiotic products. The company is part of the Swiss DKSH Group, a leading global player with a focus on market expansion in Asia in multiple product areas. This will provide conditions for expanding launches of Probi s products to additional markets throughout Southeast Asia at a later stage. In August, Probi also signed an agreement with Botanic Pharma to launch Probi Digestis in Morocco during the first quarter of The market for gastrointestinal-health products in Morocco is growing and amounts to about MEUR 35. The launch will be directed toward general practitioners, gastroenterologists and consumers through pharmacies and health food stores. Probi has a long-standing partnership with Health World Ltd., one of the leading probiotic players in Australia. Health World has successfully marketed Probi Digestis over the past eight years. In September, the companies signed an agreement to expand their partnership with Probi s immune product, Probi Defendum. The launch is scheduled for the first quarter of 2014 under the Inner Health Immune brand. The agreements that Probi signed with Sanum Polska in Poland in 2008 have also been renegotiated and extended. The revised agreement with Sanum Polska also includes broadening the range that is marketed in Poland. RESEARCH AND DEVELOPMENT Regulatory confidence in the clinical effects of Probi Digestis increased during the year, when Bundesamt für Gesundheit (BAG), the authority responsible for health claims in Switzerland, approved a specific health claim for Probi Digestis. This approval is highly significant for Probi, since BAG largely complies with the same regulations as the EU and, apart from the approval of Probi Digestis, has only approved two other health claims for probiotics to date, both related to probiotic food. New technology and major international research strategies are beginning to explain the significance of the intestinal microflora for various diseases. Research has shown that low microbiological diversity is associated with increased risk for various diseases and is also a side effect of antibiotic treatment. This has also led to a growing interest in how probiotics can influence/increase this diversity. Probi submitted one of the first patent applications in this area. The application is based on observed effects following the intake of Lactobacillus plantarum 299v (DSM 9843) and pertains to increased bacterial diversity in the microbiota. This could be applied in treatment, or for prophylactic treatment, of low bacterial diversity, small and large intestinal bacterial overgrowth and translocation the movement of bacteria across intestinal tissue into other tissue. The results are unique, and this was also confirmed during the year when patent authorities in both Europe and the US approved the patent. Probi AB (publ) Corp. Reg. No

37 Year-end report 2013 Probi AB Year-end Report 2013 In 2013, the main focus of Probi s research and development was to continue strengthening the clinical documentation for Probi Digestis and Probi Defendum. Early in the year, major resources were dedicated to the identification of suitable Contract Research Organisations (CRO) and to approaches for clinical trial designs in areas related to the immune system and gastrointestinal health. The main objectives were to design trials that could, should the results be positive, provide supplementary documentation for health claim applications for the European market, and to design trials that strengthen clinical documentation for children and subsequently broaden Probi s market offering. An initiation and implementation period was introduced during the second half of the year, following commencement of the practical work involved in the scheduled trials. A project to define Probi s long-term research focus was also initiated. Resources in the R&D organisation were strengthened in conjunction with this initiative. The partnership with Symrise in the field of oral health, which commenced at the end of 2012, has progressed according to plan. Several articles based on studies of Probi s probiotic strains were published in Three of these have been mentioned previously: One of the articles, by Rask, C., I. Adlerberth, et al. Differential effect on cellmediated immunity in human volunteers after intake of different lactobacilli. Clin Exp Immunol 172(2): , studied the effects of daily doses of six different strains of lactobacilli on the immune system. The results of the study suggest that doses of probiotic bacteria may improve the immune system s response to virus infections and tumours, for example. Another article by Xu, J., I. L. Ahren, et al. Intake of Blueberry Fermented by Lactobacillus plantarum Affects the Gut Microbiota of L-NAME Treated Rats. Evidence-Basic Complementary and Alternative Medicine 2013:9, describes how blueberries fermented with Lactobacillus plantarum HEAL19 (DSM 15313) provided protection against liver-cell damage and altered microflora, to varying degrees, in rats with induced high blood pressure. The third article, Differential effect on cell-mediated immunity in human volunteers after intake of different lactobacilli, which was published in the scientific journal Clinical and Experimental Immunology (2013 May; 172 (2): ), described some of the screening process used by Probi to produce the combination of bacterial strains for Probi Defendum. This was one of the most downloaded articles from Clinical and Experimental Immunology, thus indicating the high degree of scientific interest. EMPLOYEES At the end of the period, Probi had 26 (24) employees, of whom 18 (15) were women and eight (9) men. The average number of employees was 25 (23). Probi has recruited Peter Nählstedt as the company s new CEO. Peter Nählstedt assumed his position on 7 January Gun-Britt Fransson, who has been Interim CEO since the end of May 2013 when Michael Oredsson stepped down, continues in her role of Head of Research and Development and member of Probi s Management Group. During the year, Probi s research and development organisation was bolstered by the employment of Anna- Karin Robertson, who is leading the project to define the company s long-term research focus. Anna-Lena Karlsson has been appointed Head of Regulatory Affairs and will manage the registration of Probi s products in connection with launches in new markets. RELATED-PARTY TRANSACTIONS During the reporting period, Jan Nilsson, Board member, invoiced fees of SEK 90,000 (60,000) via Atherioco AB pertaining to Probi s Scientific Advisory Board and Mats Lidgard, Board member, invoiced consulting fees of SEK 39,000 (0) via Lavindia AB pertaining to legal issues during the reporting period. No additional significant related-party transactions occurred during Probi AB (publ) Corp. Reg. No

38 Year-end report 2013 Probi AB Year-end Report 2013 SIGNIFICANT EVENTS AFTER THE CLOSE OF THE REPORTING PERIOD On 10 January 2014, Probi s largest owner, German Symrise, acquired additional shares in Probi, which means that the company s shareholding now exceeds 30% of the share capital and voting rights. Symrise is thus required to make a mandatory offer to acquire all of Probi s shares. Symrise intends to make an announcement regarding a possible mandatory offer not later than Friday, 7 February SIGNIFICANT RISKS AND UNCERTAINTIES The risks and uncertainties to which Probi s operations are exposed are described on pages of the 2012 Annual Report. At 31 December 2013, no significant changes to these risks or uncertainties were considered to have occurred. PROPOSAL FOR APPROPRIATION OF PROFIT The Board of Directors proposes to the 2014 Annual General Meeting that the company, in accordance with the applicable dividend policy, pay a dividend totalling MSEK 6.8 (6.8), comprising SEK 0.75 (0.75) per share. CALENDAR Interim report Q1, April Annual General Meeting 29 April 2014, at 3:.00 p.m. Interim report Q2, August 2014 Interim report Q3, October 2014 Year-end report, January 2015 ANNUAL GENERAL MEETING The Annual General Meeting for 2013 will be held on Wednesday 29 April 2014 at 3:00 p.m. at Elite Hotel, Ideon Gateway, Scheelevägen 27, Lund. Shareholders wishing to have matters considered at the Annual General Meeting are requested to submit proposals to the Chairman of the Board not later than Friday, 14 March Such proposals are to be e- mailed to sofie.forsman@probi.se or sent by mail to Annual General Meeting, Probi AB, Att: Sofie Forsman, Ideon Gamma 1, SE Lund. The 2013 Annual Report is scheduled for publication on Probi s website on 28 March ACCOUNTING AND MEASUREMENT POLICIES Group The consolidated financial statements have been prepared in accordance with the Swedish Annual Accounts Act, RFR 1 Supplementary Accounting Regulations for Groups January 2013, and the International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union. This year-end report was prepared in compliance with IAS 34 Interim Reporting and the Swedish Annual Accounts Act. Probi AB (publ) Corp. Reg. No

39 Year-end report 2013 Probi AB Year-end Report 2013 The accounting policies applied when these consolidated financial statements were prepared were consistent for all presented periods, unless otherwise stated. The complete accounting policies can be found on pages of the 2012 Annual Report. The Parent Company s functional currency is the Swedish krona (SEK), which is also the reporting currency for both the Parent Company and the Group. All amounts stated have been rounded off to the nearest thousand Swedish kronor (KSEK), unless otherwise stated. Amounts and figures in parentheses pertain to comparative figures for the year-earlier period. Amounts are stated in Swedish kronor (SEK), thousands of Swedish kronor (KSEK) or millions of Swedish kronor (MSEK) according to that which is stated. Parent Company The Parent Company applies the same accounting policies as the Group, with the exceptions and supplements stipulated in RFR 2, Accounting for Legal Entities January The year-end report complies with the Swedish Annual Accounts Act. ASSURANCE BY THE BOARD OF DIRECTORS The Board of Directors and the CEO provide their assurance that this year-end report gives a fair and accurate view of the Parent Company s and the Group s operations, financial position and revenue, and describes the material risks and uncertainties facing the Parent Company and the Group. Lund, 23 January 2014 Per Lundin Chairman of the Board Mats Lidgard Board member Jan Nilsson Board member Benedicte Fossum Board member Declan MacFadden Board member Eva Redhe Ridderstad Board member Peter Nählstedt CEO Probi AB (publ) Corp. Reg. No

40 Year-end report 2013 Probi AB Year-end Report 2013 Auditor s review report of the interim financial information in summary (year-end report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act (1995:1554). To the Board of Directors of Probi AB (publ), Corp. Reg. No Introduction We have conducted a review of the year-end report (interim report) for Probi AB (publ) as of 31 December 2013 and the 12-month period that ended on this date. The Board of Directors and the Chief Executive Officer are responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express an opinion on this interim financial information based on our review. Focus and scope of the review We have conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and significantly less scope than an audit in accordance with International Standards on Auditing (ISA), and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that would have been identified if an audit had been conducted. Accordingly, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit. Opinion Based on our review, nothing has come to our attention that causes us to believe that the interim financial information has not, in all material respects, been prepared for the Group in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act. Malmö 23 January 2014 Deloitte AB Per-Arne Pettersson Authorised Public Accountant Probi AB (publ) Corp. Reg. No

41 Year-end report 2013 Probi AB Year-end Report 2013 Probi AB (publ) Statement of comprehensive income (Group) Currency: KSEK Q Q Full-year 2013 Full-year 2012 Operating revenue Net sales 26,157 26, ,210 99,562 Other revenue Total operating revenue 26,404 26, , ,392 Operating expenses Cost of goods sold -7,885-6,495-25,792-18,477 Employee benefit expenses -7,142-6,890-27,639-25,659 Other external costs -6,984-8,743-27,046-32,696 Depreciation of fixed assets -1,338-1,613-4,934-6,351 Total operating expenses -23,349-23,741-85,411-83,183 Operating profit 3,055 2,601 18,143 17,209 Financial income ,645 2,000 Financial expenses Profit before tax 3,473 2,921 19,491 18,322 Tax for the period ,446-4,817 Profit for the period 2,615 2,147 15,045 13,505 Other comprehensive income Total comprehensive income for the period 2,615 2,147 15,045 13,505 Number of shares at end of the reporting period Average no.of shares Earnings per share before and after dilution 0,29 0,24 1,65 1,48 Net profit and total comprehensive income are attributable in their entirety to the Parent Company s shareholders Since the company has no outstanding convertible loans or outstanding w arrants, no dilution effect arises. During 2011, Probi bought back company shares and at the end of the reporting period ow ned 250,000 treasury shares, corresponding to 2.7% of the total number of shares, w ith a quotient value of SEK 5.00 per share. Income statement (Parent Company) Currency: KSEK Q Q Full-year 2013 Full-year 2012 Operating revenue Net sales 26,157 26, ,210 99,562 Other revenue Total operating revenue 26,404 26, , ,392 Operating expenses Cost of goods sold -7,885-6,495-25,792-18,477 Employee benefit expenses -7,142-6,890-27,639-25,659 Other external costs -6,984-8,743-27,046-32,696 Depreciation of fixed assets -1,338-1,613-4,934-6,351 Total operating expenses -23,349-23,741-85,411-83,183 Operating profit 3,055 2,601 18,143 17,209 Financial income ,645 2,000 Financial expenses Appropriations 4,595-5,193 4,595-5,193 Profit before tax 8,068-2,272 24,086 13,129 Tax for the period -1, ,457-3,675 Profit for the period 6,199-1,904 18,629 9,454 Other comprehensive income Total comprehensive income for the period 6,199-1,904 18,629 9,454 Probi AB (publ) Corp. Reg. No

42 Year-end report 2013 Probi AB Year-end Report 2013 Consolidated statement of financial position (Group) 31 Dec Dec Assets Fixed assets Capitalised development expenses 16,611 7,969 Patents and licenses 8,818 7,888 Goodwill 2,762 2,762 Equipment, tools and fixtures 2,359 3,021 Total fixed assets 30,550 21,640 Current liabilities Inventories 2,679 2,466 Current receivables 25,185 25,337 Cash and cash equivalents 91,301 87,285 Total current assets 119, ,088 Total assets 149, ,728 Equity and liabilities Equity 131, ,816 Deferred tax 132 1,142 Current liabilities 18,558 12,770 Total equity and liabilities 149, ,728 Balance sheet (Parent Company) 31 Dec Dec Assets Fixed assets Capitalised development expenses 16,611 7,969 Patents and licenses 8,818 7,888 Equipment, tools and fixtures 2,359 3,021 Participation in Group Companies 4,031 4,031 Total fixed assets 31,819 22,909 Current liabilities Inventories 2,679 2,466 Current receivables 25,185 25,337 Cash and cash equivalents 91,301 87,285 Total current assets 119, ,088 Total assets 150, ,997 Equity and liabilities Equity 127, ,998 Untaxed reserves 598 5,193 Long-term liabilities 4,036 4,036 Current liabilities 18,559 12,770 Total equity and liabilities 150, ,997 Probi AB (publ) Corp. Reg. No

43 Year-end report 2013 Probi AB Year-end Report 2013 Probi AB (publ), koncernen Currency: KSEK Changes in equity (Group) Reporting period, 1 Jan Sep Share capital Other contributions received Result brought forward Total equity Opening balance, 1 Jan ,827 71,578-2, ,149 Total comprehensive income for the period 13,505 13,505 Dividends for ,837-6,837 Equity, 30 Sep ,827 64,740 11, ,816 Reporting period, 1 Jan Sep Share capital Other contributions received Result brought forward Total equity Opening balance, 1 Jan ,827 64,740 11, ,816 Total comprehensive income for the period 15,045 15,045 Dividends for ,836-6,836 Equity, 30 Sep ,827 57,904 26, ,025 Statement of cash flows Full-year 2013 Full-year 2012 Operating activities Profit before tax 19,491 18,322 Depreciation/amortisation 4,934 6,351 Capital gains/losses from disposal of tangible fixed assets Income tax paid -4,151-4,264 Cash flow from operating activities before changes in 20,274 20,378 Change in inventories ,938 Change in operating receivables 152 1,808 Change in operating liabilities 4, Cash flow from operating activities 24,696 24,201 Inveesting activities Acquisition of intangible fixed assets -13,373-5,446 Acquisition of tangible fixed assets ,102 Divestment of tangible fixed assets Cash flow from investing activities -13,844-6,281 Change in cash and cash equivalents Dividend to shareholders -6,836-6,837 Cash flow from financing activities -6,836-6,837 Change in cash and cash equivalents 4,016 11,083 Cash and cash equivalents at the beginning of the year 87,285 76,202 Cash and cash equivalents at the end of the period 91,301 87,285 Interest paid and received Interest received 1,196 1,615 Interest paid - - Probi AB (publ) Corp. Reg. No

44 Year-end report 2013 Probi AB Year-end Report 2013 Currency: KSEK Key ratios Def. Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net sales Functional Food, quarterly Net sales Consumer Healthcare, quarterly Total net sales, quarterly Operating profit Growth, accumulated, % 1 2,7 3,6-1,2-17,1 5,5 5,1 9,7 28,4 R&D expenses as part of operating income, % Operating margin, % 2 17,8 19,8 20,4 23,7 17,3 19,9 20,3 27,7 Net margin, % 3 19,1 21,1 21,7 24,9 18,4 21,0 21,7 28,7 Average no. of employees Assets Working capital Liquid ratio, % Equity ratio, % 6 87,5 88,5 88,8 89,8 89,8 90,9 90,1 89,3 Debt/equity ratio, % 7 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Return on total assets, % 8 13,7 11,4 8,1 4,5 14,1 12,1 8,8 6,7 Return on equity, % 9 15,4 12,9 9,1 5,0 15,3 13,0 9,7 7,4 Equity per share, SEK 14,37 14,09 13,68 14,01 13,47 13,24 12,91 13,45 Cash flow per share, SEK 0,44 0,45 0,00 0,95 1,22 1,09 0,79 1,07 Share price, SEK 39,50 41,10 40,50 39,20 44,40 49,80 58,00 62,00 Market cap Definitions of key ratios 1. Change in net sales 2. Operating income as a percentage of net sales 3. Profit before tax as a percentage of net sales 4. Total current assets less current liabilities 5. Total current assets excluding inventories as a percentage of current liabilities 6. Equity as a percentage af balance sheet total 7. Interest-bearing liabilities as a percentage of equity 8. Operating income and interest income as a percentage of average total assets 9. Profit before tax as a percentage of average equity Probi AB (publ) Corp. Reg. No