BIOTON S.A. CAPITAL GROUP WARSAW, UL. STAROŚCIŃSKA 5 CONSOLIDATED FINANCIAL STATEMENTS FOR THE 2012 FINANCIAL YEAR

Transcription

1 BIOTON S.A. CAPITAL GROUP WARSAW, UL. STAROŚCIŃSKA 5 CONSOLIDATED FINANCIAL STATEMENTS FOR THE 2012 FINANCIAL YEAR WITH AUDITOR S OPINION AND AUDIT REPORT

2 TABLE OF CONTENTS AUDITOR S OPINION... 3 REPORT SUPPLEMENTING THE OPINION ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF BIOTON S.A. CAPITAL GROUP FOR THE 2012 FINANCIAL YEAR... 5 I. GENERAL INFORMATION Details of the audited Parent Information about the consolidated financial statements for the prior financial year Details of the authorized entity and the key certified auditor acting on its behalf Availability of data and management s representations II. ECONOMIC AND FINANCIAL POSITION OF THE CAPITAL GROUP III. DETAILED INFORMATION Information about the audited consolidated financial statements Consolidation documentation Justification of the opinion issued Completeness and correctness of drawing up the notes and explanations and the report on the activities of the Capital Group IV. FINAL NOTES CONSOLIDATED FINANCIAL STATEMENTS OF BIOTON S.A. CAPITAL GROUP FOR THE 2012 FINANCIAL YEAR 1. Introduction to the Consolidated Financial Statements 2. Consolidated Income Statement 3. Consolidated Statement of Comprehensive Income 4. Consolidated Balance Sheet 5. Consolidated Cash Flow Statement 6. Consolidated Statement of Changes in Equity 7. Notes REPORT ON THE ACTIVITIES OF BIOTON S.A. CAPITAL GROUP FOR THE 2012 FINANCIAL YEAR Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 2

3 AUDITOR S OPINION To the Shareholders and Supervisory Board of BIOTON S.A. We have audited the attached consolidated financial statements of the BIOTON S.A. Capital Group (the Group ) with BIOTON S.A. having its registered office in Warsaw, at ul. Starościńska 5 as the Parent, including a consolidated balance sheet prepared as of, consolidated income statement and consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows for the period from 1 January 2012 to and notes, comprising a summary of significant accounting policies and other explanatory information. Preparation of the consolidated financial statements and a report on the activities of the Capital Group in line with the law is the responsibility of the Management Board of the Parent. The Management Board of the Parent and members of its Supervisory Body are obliged to ensure that the consolidated financial statements and the report on the activities of the capital group meet the requirements of the Accounting Act of 29 September 1994 (Journal of Laws of 2013, item 330), hereinafter referred to as the Accounting Act. Our responsibility was to audit and express an opinion on compliance of the consolidated financial statements with the accounting principles (policy) adopted by the Capital Group, and express an opinion whether the consolidated financial statements present fairly and clearly, in all material respects, the financial and economic position as well as the financial profit or loss of the Capital Group. Our audit of the financial statements has been planned and performed in accordance with: section 7 of the Accounting Act; national auditing standards, issued by the National Council of Statutory Auditors in Poland; International Standards on Auditing. We have planned and performed our audit of the consolidated financial statements in such a way as to obtain reasonable assurance to express an opinion on the financial statements. Our audit included, in particular, verification of the correctness of the accounting principles (policy) applied by the Parent and the subsidiaries, verification largely on a test basis of the basis for the amounts and disclosures in the consolidated financial statements, as well as overall evaluation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. 3

4 As at, the Group held shares in ZAO INDAR, an associate with the registered office in Ukraine, fully impaired in previous reporting periods. In accordance to IAS 36, the Group should have recognized these assets in their recoverable amount. Due to absence of full information, including data on projected net realizable price or the recoverable amount determined in another manner, we are unable to evaluate correctness of measurement of the above assets as at the balance sheet date. As at, R&D work in the amount of PLN 130 million was recognized in the consolidated financial statements of the Group. Since the ability to realize the assets is highly dependent on future events, as at the opinion date, we are unable to reliably determine their recoverable value, and therefore correctness of their measurement as at the balance sheet date. The Management Board has initiated measures aimed at commercialization of Beta Interferon; however, the result cannot be reliably estimated as at the balance sheet date. In our opinion, except for possible consequences of adjustments related to the issue presented above, the audited financial statements in all material respects: present fairly and clearly the information material to evaluate the economic and financial position of the Capital Group as at, as well as its financial profit or loss in the financial year from 1 January 2012 to ; have been prepared in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published as European Commission regulations, and in all matters not regulated in the standards in accordance with the provisions of the Accounting Act and secondary legislation to the Act; comply with the provisions of law applicable to the Capital Group which affect the contents of the consolidated financial statements. The Report on the activities of the Capital Group for the 2012 financial year is complete within the meaning of Article 49.2 of the Accounting Act and the Ordinance of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and the rules of equal treatment of the information required by the laws of non-member states and consistent with underlying information disclosed in the audited consolidated financial statements. Piotr Sokołowski Key certified auditor conducting the audit No On behalf of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) an entity authorized to audit financial statements recorded under number 73 on the list of entities authorized to provide audit services kept by the National Council of Statutory Auditors. Piotr Sokołowski Deputy Chairman of the Management Board of Deloitte Polska Sp. z o.o. General Partner of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) Warsaw, 26 April 2013 The above audit opinion together with audit report is a translation from the original Polish version. In case of any discrepancies between the Polish and English version, the Polish version shall prevail. 4

5 REPORT SUPPLEMENTING THE OPINION ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF BIOTON S.A. CAPITAL GROUP FOR THE 2012 FINANCIAL YEAR I. GENERAL INFORMATION 1. Details of the audited Parent The Parent of the Capital Group operates under the business name BIOTON S.A. The Company s registered office is located in Warsaw, ul. Starościńska 5. The Company was incorporated as a limited liability company by means of a notarized deed concluded on 24 August 1989 before Leszek Zabielski, Notary Public in Warsaw (Rep. A No /89). Based on the notarized deed of 30 June 2004 concluded before Zbigniew Szaniawski, Notary Public in Warsaw (Rep. A No. 4971/2004), the Company was transformed from a limited liability company into a joint stock company. The Company was recorded in the Commercial Register kept by the District Court for the capital city of Warsaw, XX Business- Registry Division, section B, under number , based on the decision of 2 August Currently, the Company is recorded in the Register of Entrepreneurs kept by the District Court for the capital city of Warsaw, XIII Business-Registry Division in Warsaw, under KRS number The Company s tax identification number NIP, assigned by Warszawa-Mokotów Tax Office on 24 May The REGON number assigned by the Statistical Office is The Company operates in accordance with the provisions of the Code of Commercial Companies. In accordance with the Company s by-laws, the scope of its activities includes: Manufacture of homogenized food preparations and dietetic food; Publishing of books; Publishing of newspapers; Publishing of journals and periodicals; Sound recording and music publishing activities; Other publishing activities; Other printing; Manufacture of other inorganic basic chemicals; Manufacture of other organic basic chemicals; Manufacture of pesticides and other agrochemical products; Manufacture of basic pharmaceutical products; Manufacture of pharmaceutical products and preparations; Manufacture of medical and dental instruments and supplies; Manufacture of soap and detergents, cleaning and polishing preparations; Manufacture of perfumes and toilet preparations; Manufacture of non-domestic cooling and ventilation equipment; Repair and maintenance of machines; Installation of industrial machinery and equipment; Manufacture of irradiation, electromedical and electrotherapeutic equipment; Manufacture of office and shop furniture; Wholesale of perfume and cosmetics; Wholesale of pharmaceutical goods; Wholesale of chemical products; Dispensing chemist in specialized stores; Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 5

6 Retail sale of medical and orthopedic goods in specialized stores; Retail sale of cosmetics and toilet products in specialized stores; Buying and selling of own real estate; Renting and operating of own or leased real estate; Research and development in other natural and technical sciences; Market research and public opinion polling; Other business and management consultancy activities; Other professional, scientific and technical activities, n.e.c.; Architecture and engineering activities; Engineering activities and related technical consultancy; Advertisement agency activities; Packaging activities; Water collection, treatment and supply; Sewerage; Collection of non-hazardous waste; Collection of hazardous waste; Treatment and disposal of non-hazardous waste; Treatment and disposal of hazardous waste; Manufacture of other food products, n.e.c.; Wholesale of other food; Accounting, bookkeeping and tax advisory services; Administrative office support; Photocopying, document preparation and other specialized office support activities; Collection agencies and credit bureaus; Other business support service activities n.e.c.; Other education n.e.c.; Activities auxiliary to education; Other human health activities, n.e.c. In the audited period, the Company s business activity included manufacture of basic pharmaceutical products and medicines. As at, the Company s share capital amounted to PLN 1,677,357 thousand and was divided into 8,386,785, ordinary shares with a face value of PLN 0.20 each (including 1,084,320, shares assumed in December 2012 and recorded in the National Court Register on 11 January 2013). As at 17 April 2013 (the date of the last Shareholders Meeting) the Company s shareholders included: Ryszard Krauze 4.78% of shares; PROKOM Investments S.A % of shares; Troqueera Enterprises Ltd 13.50% of shares; Others 69.62% of shares. In accordance with the Company s By-Laws, PROKOM Investments S.A. is the Authorized Founder. According to Article 14 of the By-Laws, the Authorized Founder is authorized to: appoint and dismiss the Chairman and Deputy Chairman of the Management Board; appoint and dismiss Chairman and Deputy Chairman of the Supervisory Board. As at, the Authorized Founder held less than 20% of share capital. Changes in the share capital of the Company during the financial year: On 19 January 2012, the Management Board of the Company decided to grant Troqueera Enterprises 94,614,264 registered subscription warrants issued based on a resolution of the General Shareholders Meeting, each giving the title to assume one AA series share at the issue price of PLN 0.20 per share. Troqueera Enterprises assumed the shares on 19 January Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 6

7 2012. The share capital increase by PLN 18,922, under the AA series shares issue was registered in the National Court Register on 6 February On 30 March 2012, the Management Board of the Company decided to grant Troqueera Enterprises 63,291,139 registered subscription warrants issued based on a resolution of the General Shareholders Meeting, each giving the title to assume one AA series share at the issue price of PLN 0.20 per share. Troqueera Enterprises assumed the shares on 30 March The share capital increase by PLN 12,658, under the AA series shares issue was registered in the National Court Register on 20 April On 14 May 2012, the Management Board of the Company decided to grant Troqueera Enterprises 516,057,736 registered subscription warrants issued based on a resolution of the General Shareholders Meeting, each giving the title to assume one AA series share at the issue price of PLN 0.20 per share. Troqueera Enterprises assumed the shares on 14 May The share capital increase by PLN 103,211, under the AA series shares issue was registered in the National Court Register on 29 May On 14 December 2012, the Management Board of the Company decided to grant Troqueera Enterprises 1,084,320,112 registered subscription warrants issued based on a resolution of the General Shareholders Meeting, each giving the title to assume one AB series share at the issue price of PLN 0.20 per share. Troqueera Enterprises assumed the shares on 14 December The share capital increase by PLN 216,864, under the AB series shares issue was registered in the National Court Register on 11 January The difference between the nominal and market value of the shares issued and assumed by Troqueera Enterprises in relation to execution of the acquisition contract regarding Biolek Sp. z o.o. is recognized under reserve capital in the separate financial statements. During the audited period, the shareholding structure of the Company s share capital did not undergo any changes, other than the ones specified above. After the balance sheet date there were no changes in the Company s share capital. As at, the Capital Group s equity amounted to PLN 1,336,633 thousand. The Capital Group s financial year is the calendar year. Composition of the Management Board as at the date of the opinion: Sławomir Piotr Ziegert Chairman of the Management Board; Adam Wilczęga Vice-Chairman of the Management Board; Piotr Igor Błaszczyk Member of the Management Board; Adam Tomasz Polonek Member of the Management Board. In the audited period and until the opinion date, there were no changes in the composition of the Management Board. Composition of the BIOTON S.A. Capital Group as at : parent - BIOTON S.A. and Subsidiaries: Mindar Holdings Ltd 100% subsidiary; Germonta Holdings Ltd 100% subsidiary; Bioton Marketing Agency Sp. z o.o. (formerly: BIOTON TRADE Sp. z o.o.) 100% subsidiary; Biopartners Holdings AG 100% subsidiary; TRICEL S.A. 100% subsidiary; Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 7

8 Biolek Sp. z o.o. 100% subsidiary; SciGen Ltd 95.57% subsidiary; Copernicus Sp. z o.o. 60% subsidiary; MJ BIOTON Life Sciences Ltd 1 50 % subsidiary. Indirect subsidiaries related through SciGen Ltd: SciGen Australia PTY Ltd, 100% subsidiary; SciGen Korea Ltd, 100% subsidiary; SciGen Biopharma PrivateLtd, 100% subsidiary; SciGen (Beijng) Biotechnology Company Ltd, 100 % subsidiary. Indirect subsidiaries related through BioPartners Holdings AG: BioPartners GmbH (Switzerland), 100% subsidiary; BioPartners GmbH (Germany), 100% subsidiary; BioPartners Polska Sp. z o.o. 100 % subsidiary. Indirect subsidiaries related through MJ BIOTON Life Sciences LTD: MJ BioPharm Pvt Ltd, 100% subsidiary; Marvel Life Sciences Pvt Ltd. 100 % subsidiary. Indirect subsidiaries related through TRICEL S.A.: Pharmatex Italia S.r.l., 100% subsidiary; Fisiopharma S.r.l. 100 % subsidiary. Indirect subsidiaries related through Biolek Sp. z o.o.: Biolek Inc. 67 % subsidiary. The consolidated financial statements as at included the following entities: a) parent BIOTON S.A. We have audited the financial statements of BIOTON S.A., the parent, for the period from 1 January to. As a result of our audit, on 26 April 2013 we issued an opinion with the following qualification: As at, the Company held shares in ZAO INDAR, an associate with the registered office in Ukraine, fully impaired in previous reporting periods. In accordance to IAS 36, the Company should have recognized these assets in their recoverable amount. Due to absence of full information, including data on projected net realizable price or the recoverable amount determined in another manner, we are unable to evaluate correctness of measurement of the above assets as at the balance sheet date. As at, the Company holds shares and loans originated by its wholly owned subsidiary, BioPartners Holding AG with the registered office in Switzerland, with key assets in the form of R&D work on Beta Interferon in the net amount of PLN 130 million. Since the ability to realize the asset is highly dependent on future events, as at the opinion date, we are unable to reliably determine the recoverable value of the asset, and therefore correctness of its measurement as at the balance sheet date. The Management Board has initiated measures aimed at commercialization of Beta Interferon; however, the result cannot be reliably estimated as at the balance sheet date. 1 Spółka posiada kontrolę poprzez strukturę Zarządu oraz umowę wspólników. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 8

9 b) Companies subject to full consolidation: Name and address of the Company BioPartners Holdings AG (capital group) Sihlbruggstrasse 3, 6340 Baar, Switzerland SciGen Ltd (capital group) 152 Beach Road, #26-07/08 Gateway East, Singapore Pharmatex Italia S.r.l., Milan Via Appiani 22, Italy Fisiopharma S.r.l. Palomonte, Nucleo Industriale cap 84020, Italy Biolek Sp. z o.o. ul. Elbląska Warsaw Copernicus Sp z o.o. ul. Litewska 10a, Szczecin MJ Biopharm Pvt. Ltd. 113 Jolly Makers Chamber No. 2 Nariman Point, Mumbai India Bioton Marketing Agency Sp. z o.o. (formerly: BIOTON TRADE Sp. z o.o.) ul. Poznańska 12, Macierzysz, Ożarów Mazowiecki Interest in the capital (%) Entity performing audit for the purpose of consolidation of BIOTON S.A. Capital Group Balance sheet date of the consolidated entity 100,00% Deloitte AG, Switzerland 95,57% 100,00% 100,00% 100,00% 60,00% 50,00% 100,00% MJ BIOTON Life Sciences LTD 50,00% c) Companies subject to equity method of consolidation: Deloitte & Touche LLP, Singapore Deloitte and Touche S.p.A., Italy Deloitte and Touche S.p.A., Italy The entity was not subject to an audit. The entity was not subject to an audit. N.V. Parmar & Co. Chartered Accountants, India The entity was not subject to an audit. The entity was not subject to an audit. Name and address of the Company ZAO INDAR 5 Orositelnaya Street, Kiev, Ukraine Actavis BIOTON GmbH* Turmstrasse 28, 6300 Zug, Switzerland Interest in the capital (%) 29,29% 50,00% Entity performing audit for the purpose of consolidation of BIOTON S.A. Capital Group The entity was not subject to an audit. The entity was not subject to an audit. Balance sheet date of the consolidated entity * On 24 January 2013 the Company received a joint-venture termination note from Actavis Group PTC ehf with the registered office in Iceland ( Actavis ). According to contractual terms, BIOTON shall purchase all shares in the JV from Actavis, as a result becoming its sole shareholder. d) Companies excluded from the financial statements for immateriality: Mindar Holdings Ltd 100% subsidiary; Germonta Holdings Ltd 100% subsidiary; TRICEL S.A. 100% subsidiary; Marvel Life Sciences Pvt Ltd. 50 % subsidiary. The Parent preparing the consolidated financial statements has not applied any material simplifications and exceptions to the consolidation principles with respect to the controlled entities. In 2012, the Group sold shares held indirectly and directly in the following companies: SciGen Israel Ltd (on 14 February 2012), Hefei-SciGen- BIOTON Biopharmaceutical Company Ltd (on 13 March 2012) and in Medipolis GMP Oy (on 20 December 2012). As a result, these companies were not subject to consolidation as at. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 9

10 2. Information about the consolidated financial statements for the prior financial year In 2011, the Capital Group incurred a net loss of PLN 83,936 thousand including PLN 44,666 thousand on continued activities and PLN 39,270 thousand on discontinued activities. The consolidated financial statements of the Capital Group for 2011 were audited by a certified auditor. The audit was performed by authorized entity Deloitte Audyt Sp. z o.o. On 27 April 2012, the certified auditor issued an opinion on those financial statements with the following qualification: As at 31 December 2011, the Group held shares in ZAO INDAR, an associate with the registered office in Ukraine, fully impaired in previous reporting periods. Further, in 2011, the Group signed an agreement on the sale of shares in SciGen Israel Ltd., a subsidiary, partially impaired in previous years. In the opinion of the Parent s Management Board, the amount of these assets reflected their net realizable price as at each balance sheet date. In accordance to IAS 36, the Group should have recognized these assets in their recoverable amount. Due to absence of complete information, including that on projected net realizable prices or otherwise determined recoverable amounts, we are unable to evaluate the correctness of measurement of the above assets as at 31 December 2010 and the measurement of ZAO INDAR as at 31 December 2011 and their impact on the profit/loss of the Group for the 2011 financial year. As described in detail in Note 3 to the consolidated financial statements, as at 31 December 2011, the Group recognized receivables and other assets totaling PLN 98 million arising from an exclusive distribution agreement regarding the Chinese market concluded between BIOTON S.A. and Bayer Healthcare Company Limited in The agreement provides for a one-off fee of EUR 31,000 thousand following the fulfillment of conditions precedent defined therein. In 2010, the Company met the above conditions and recognized the corresponding revenue. In 2011 the part of the fee due to BIOTON S.A. totaling EUR thousand was paid by Bayer Healthcare Company Limited. Since negotiations are being held between the parties and other assets totaling EUR 24,800 thousand resulting from the above agreement were not recovered, we are not able to confirm whether an impairment loss on these assets should be recognized and what would its potential realizable amount be, and what the effect of such impairment loss on the profit/loss and equity of the Group would be as at 31 December At the same time, the Management Board of BIOTON S.A. expects that within the next two weeks negotiations with Bayer Healthcare Company Ltd. will be concluded and the parties will sign an annex to the agreement and an immediate payment of the remaining fee totaling EUR 24,800 thousand will follow. and with the emphasis of matter on the following: Without qualifying the correctness and reliability of the audited financial statements, we want to emphasize that the consolidated financial statements present an item of PLN 136 million being an R&D project regarding Beta Interferon. Realization of these assets depends on the positive outcome of the R&D project that requires material outlays in order to be completed. The Group plans to obtain the necessary funds through cooperation with and co-funding by an external investor. The General Shareholders Meeting, which approved the consolidated financial statements for the 2011 financial year, was held on 30 June In accordance with applicable laws, the consolidated financial statements for the 2011 financial year were submitted to the National Court Register (KRS) on 11 July 2012 and filed for publication in Monitor Polski B on 4 July The financial statements were published in Monitor Polski B no on 30 October Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 10

11 3. Details of the authorized entity and the key certified auditor acting on its behalf The audit of the financial statements was conducted based on the agreement of 27 July 2012 concluded between Bioton S.A. and Deloitte Audyt Sp. z o.o. (at present: Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k.) with registered office in Warsaw, al. Jana Pawła II 19, recorded under number 73 on the list of entities authorized to provide audit services kept by the National Council of Statutory Auditors. On behalf of the authorized entity, the audit of the financial statements was conducted under the supervision of Piotr Sokołowski, key certified auditor, (No. 9752), in the registered office of the Company from 12 to 23 November 2012, from 4 to 22 February 2013, and outside the Company s registered office until the opinion date. The entity authorized to audit the consolidated financial statements was appointed by the resolution of the Supervisory Board of 20 July 2012 based on authorization included in Article of the Company s By-Laws. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) and Piotr Sokołowski, key certified auditor, confirm that they are authorized to carry out audits and meet the requirements of Article 56 of the Act on statutory auditors and their selfgoverning body, auditing firms and on public oversight (Journal of Laws of 2009, No. 77, item 649 as amended) to express an unbiased and independent opinion on the financial statements of BIOTON S.A. Capital Group. 4. Availability of data and management s representations Except from issues related to the recoverable amount of assets referred to in the auditor s opinion, the scope of our audit was not limited. During the audit, all necessary documents and data as well as detailed information and explanations were provided to the authorized entity and the key certified auditor, as confirmed e.g. in a written representation of the Management Board of 26 April Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 11

12 II. ECONOMIC AND FINANCIAL POSITION OF THE CAPITAL GROUP Presented below are the main items from the consolidated income statement as well as financial ratios describing the financial performance of the Capital Group and its economic and financial position compared to the prior year. Main items from the profit and loss account (PLN 000) * Sales revenue 406, ,984 Operating expenses 343, ,501 Other operating revenue 9,764 15,496 Other operating expenses 5,303 9,363 Financial revenue 11,432 27,405 Financial expenses 30,342 27,149 Income tax 24,217 (6,137) Profit (loss) on continued activities 23,818 (41,991) Profit (loss) on discontinued activities 13,052 (39,270) Total comprehensive income (34,843) (11,101) Profitability ratios gross profit margin 16% -17% net profit margin 6% -15% net return on equity 2% -3% Effectiveness ratios assets turnover ratio receivables turnover in days liabilities turnover in days inventories turnover in days Liquidity/Net working capital debt ratio 30% 32% equity to fixed assets ratio 70% 68% net working capital (PLN 000) (128,213) 29,015 current ratio quick ratio * Data after adjustments regarding presentation for previous periods. An analysis of the above figures and ratios indicated the following trends in 2012: an increase in sales margins and net return on equity; an increase in the assets turnover ratio; a decrease in receivables, liabilities and inventory turnover; a decrease in the debt ratio; a decrease in the net working capital to a negative figure; a decrease in the liquidity ratios. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 12

13 III. DETAILED INFORMATION 1. Information about the audited consolidated financial statements The audited consolidated financial statements were prepared as at and include: consolidated balance sheet prepared as at, with total assets and liabilities plus equity of PLN 1,915,324 thousand; consolidated income statement for the period from 1 January 2012 to, disclosing a net profit of PLN 36,870 thousand; consolidated statement of comprehensive income for the period from 1 January 2012 to, disclosing a total comprehensive income of PLN 34,843 thousand; the statement of changes in equity for the period from 1 January 2012 to, showing a decrease in equity of PLN 51,948 thousand; consolidated cash flow statement for the period from 1 January 2012 to, showing a cash inflow of PLN 17,751 thousand; notes, comprising a summary of significant accounting policies and other explanatory information. The structure of assets, equity and liabilities as well as items affecting the financial profit or loss has been presented in the consolidated financial statements. The audit covered the period from 1 January 2012 to and focused mainly on: verification of the correctness and fairness of the consolidated financial statements prepared by the Management Board of the Parent; verification of the consolidation documentation; evaluation of the correctness of the consolidation methods and procedures applied during consolidation; review of opinions and reports on audits of financial statements of subsidiaries and associated companies included in consolidation, prepared by other certified auditors. 2. Consolidation documentation The Parent presented the consolidation documentation including: 1) financial statements of entities included in the consolidated financial statements; 2) financial statements of controlled entities, adjusted to the accounting principles (policy) applied during consolidation; 3) financial statements of controlled entities translated into the Polish currency; 4) all consolidation adjustments and eliminations necessary for preparation of the consolidated financial statements; 5) calculation of the fair value of the net assets of controlled entities; 6) calculation of goodwill and negative goodwill as well as their write-downs, also due to impairment; 7) calculation of minority interest; 8) calculation of exchange differences arising from translation of the financial statements of controlled entities denominated in foreign currencies. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 13

14 Basis for the preparation of the consolidated financial statements The consolidated financial statements of the Capital Group for the 2012 financial year have been prepared in accordance with IFRS. Entities in the Capital Group The scope and methods of consolidation as well as the relationship between the entities have been determined based on the criteria specified in IFRS. Financial period The consolidated financial statements have been prepared as of the same balance sheet date and for the same financial year as the financial statements of the Parent BIOTON S.A. Subsidiaries and associated companies included in consolidation prepared their financial statements as at the same balance sheet date as the Parent. The financial year of all subsidiaries and the associated company included in consolidation ended on. Consolidation method The financial statements of the subsidiaries were consolidated using the full method, i.e. full amounts of all relevant items of the financial statements of the Parent and the subsidiaries included in consolidation were summed up. Once the values had been summed up, consolidation adjustments and eliminations were applied to: the cost of shares held by the Parent in subsidiaries and the part of net assets of subsidiaries corresponding to the interest of the Parent in these companies; mutual receivables and liabilities of entities included in consolidation; material revenue and expenses related to transactions between entities included in consolidation. The equity method was applied with respect to associated entities. The value of the Parent s interest in the associated company was adjusted by increases or decreases in the equity of the associated company attributable to the Parent, which occurred in the period covered by consolidation, and decreased by dividends due from such companies. 3. Justification of the opinion issued As at, the Group held shares in ZAO INDAR, an associate with the registered office in Ukraine, fully impaired in previous reporting periods. In accordance to IAS 36, the Group should have recognized these assets in their recoverable amount. Due to absence of full information, including data on projected net realizable price or the recoverable amount determined in another manner, we are unable to evaluate correctness of measurement of the above assets as at the balance sheet date. As at, R&D work in the amount of PLN 130 million was recognized in the consolidated financial statements of the Group. Since the ability to realize the assets is highly dependent on future events, as at the opinion date, we are unable to reliably determine their recoverable value, and therefore correctness of their measurement as at the balance sheet date. The Management Board has initiated measures aimed at commercialization of Beta Interferon; however, the result cannot be reliably estimated as at the balance sheet date. Therefore, we have issued a qualified opinion. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 14

15 4. Completeness and correctness of drawing up the notes and explanations and the report on the activities of the Capital Group The Parent confirmed the validity of the going concern basis in preparation of the consolidated financial statements. The notes to the consolidated financial statements give a correct and complete description of measurement principles regarding assets, liabilities, financial result and principles of preparation of the consolidated financial statements. The Parent prepared notes in the form of tables to individual items of the consolidated statement of financial position and statement of comprehensive income as well as narrative descriptions, in line with the requirements of IFRS. Notes describing property, plant and equipment, intangible assets, investments, liabilities and provisions correctly present increases and decreases as well as their basis during the financial year. Limitations imposed on individual assets disclosed in the consolidated balance sheet arising from security granted to creditors have been described. Individual assets and liabilities as well as revenue and expenses have been correctly presented by the Parent in the consolidated financial statements. The consolidated balance sheet, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows as well as notes which constitute an integral part of the financial statements include all items required for disclosure in the consolidated financial statements under IFRS. The consolidated financial statements have been supplemented with the Management Board s report on the activities of the Company in the 2011 financial year. The report contains information required under Article 49.2 of the Accounting Act and the Ordinance of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and the rules of equal treatment of the information required by the laws of non-member states. We have audited the report with respect to the disclosed information derived directly from the audited consolidated financial statements. Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 15

16 IV. FINAL NOTES Management Board s Representation Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) and the key certified auditor received a representation letter from the Parent s Management Board, in which the Board stated that the Capital Group complied with the laws in force. Piotr Sokołowski Key certified auditor conducting the audit No On behalf of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) an entity authorized to audit financial statements recorded under number 73 on the list of entities authorized to provide audit services kept by the National Council of Statutory Auditors. Piotr Sokołowski Deputy Chairman of the Management Board of Deloitte Polska Sp. z o.o. General Partner of Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (formerly: Deloitte Audyt Sp. z o.o.) Warsaw, 26 April 2013 Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. (dawniej: Deloitte Audyt Sp. z o.o.) 16