SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
July 29, 2015
Albany
Molecular Research, Inc.
(Exact Name of Registrant as Specified in its
Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
000-35622 |
|
14-1742717 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
26 Corporate Circle, Albany, NY |
|
12212 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (518)
512-2000
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 7.01 | Regulation FD Disclosure. |
In connection
with Albany Molecular Research, Inc.’s (the “Company”) acquisition of all of the outstanding shares of Gadea
Grupo Farmaceutico, S.L. (“Gadea”), a description of which was previously included in the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2015, attached to this Current Report on Form 8-K as
Exhibit 99.1 and incorporated herein by reference are the audited 2013 and 2014 year-end consolidated financial statements (the
“Audited Financial Statements”) of Gadea, and attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated
herein by reference is additional financial information regarding Gadea.
The information in this Item 7.01 of this Current
Report on Form 8-K and Exhibits 99.1 and 99.2 attached hereto is intended to be furnished and shall not be deemed "filed"
for purposes of Section 18 of the Securities Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the
liabilities of that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange
Act, except as shall be expressly set forth by specific reference in any such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| 99.1* | Gadea Grupo Farmaceutico, S.L. Consolidated Financial Statements as of and for the fiscal years ended December 31, 2013 and
December 31, 2014 |
| 99.2 | Additional financial information regarding Gadea Grupo Farmaceutico, S.L. |
| * | Represents a translation of audited financial statements originally issued in Spanish and prepared in accordance with
generally accepted accounting principles in Spain. In the event of a discrepancy, the Spanish-language version prevails.
These financial statements are presented on the basis of accounting principles generally accepted in Spain. Certain
accounting practices applied by the Company that conform with generally accepted accounting principles in Spain may not (do
not) conform with generally accepted accounting principles in other countries. |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
ALBANY MOLECULAR RESEARCH, INC. |
|
|
|
|
July 29, 2015 |
|
By: |
/s/ Lori M. Henderson |
|
|
Name: Lori M. Henderson |
|
|
Title: Senior Vice-President, General Counsel & Secretary |
EXHIBIT INDEX
Exhibit Number |
Description |
|
|
99.1* |
Gadea Grupo Farmaceutico, S.L. Consolidated Financial Statements as of and for the fiscal years ended December 31, 2013 and December 31, 2014 |
|
|
99.2 |
Additional financial information regarding Gadea Grupo Farmaceutico, S.L. |
|
|
* |
Represents a translation of audited financial statements originally issued in Spanish and
prepared in accordance with generally accepted accounting principles in Spain. In the event of a discrepancy, the
Spanish-language version prevails. These financial statements are presented on the basis of accounting principles generally
accepted in Spain. Certain accounting practices applied by the Company that conform with generally accepted accounting
principles in Spain may not (do not) conform with generally accepted accounting principles in other countries. |
Exhibit 99.1
GADEA GRUPO
FARMACÉUTICO, S.L. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER
2013 AND 2014 (NOTES 1 TO 5)
(Thousands of Euros)
ASSETS | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
NON-CURRENT ASSETS: | |
| | | |
| | |
Intangible assets (Note 6)- | |
| 2,881 | | |
| 4,879 | |
Goodwill in consolidation | |
| 2,180 | | |
| 2,409 | |
Other intangible assets | |
| 701 | | |
| 2,470 | |
Tangible assets (Note 7)- | |
| 25,016 | | |
| 28,512 | |
Land and buildings | |
| 7,822 | | |
| 8,602 | |
Plant, machinery and others | |
| 15,189 | | |
| 17,229 | |
Assets in course and advance payments | |
| 2,005 | | |
| 2,681 | |
Long-term investments (Note 8)- | |
| 22 | | |
| 1,076 | |
Equity instruments | |
| 9 | | |
| 64 | |
Loans to third parties | |
| - | | |
| 1,000 | |
Other financial assets | |
| 13 | | |
| 12 | |
Deferred tax assets
(Note 17)- | |
| 1,013 | | |
| 1,075 | |
Total non-current
assets | |
| 28,932 | | |
| 35,542 | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Stock (Note 9) | |
| 19,973 | | |
| 20,424 | |
Trade and other receivables (Note 10)- | |
| 22,798 | | |
| 19,977 | |
Client receivables | |
| 18,901 | | |
| 15,633 | |
Sundry debtors | |
| - | | |
| 290 | |
Employees | |
| 6 | | |
| 11 | |
Current tax assets (Note 17) | |
| - | | |
| 962 | |
Tax, Social Security and Public Administrations (Note 17) | |
| 3,891 | | |
| 3,081 | |
Short-term investments in group and
associated entities (Note 8)- | |
| 1,006 | | |
| 151 | |
Loans to companies | |
| - | | |
| 147 | |
Other financial assets | |
| 1,006 | | |
| 4 | |
Short-term accruals | |
| 12 | | |
| 12 | |
Cash and cash equivalents (Note 11)- | |
| 7,995 | | |
| 4,020 | |
Cash resources | |
| 7,925 | | |
| 3,954 | |
Other cash equivalents | |
| 70 | | |
| 66 | |
Total current
assets | |
| 51,784 | | |
| 44,584 | |
TOTAL ASSETS | |
| 80,716 | | |
| 80,126 | |
NET EQUITY AND LIABILITIES | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
NET EQUITY: | |
| | | |
| | |
SHAREHOLDERS' FUNDS (Note
12)- | |
| 46,524 | | |
| 34,431 | |
Capital | |
| 26,189 | | |
| 26,189 | |
Share premium | |
| 1,544 | | |
| 1,544 | |
Reserves and income from previous years | |
| 6,698 | | |
| 5,727 | |
Net income attributable to the Parent
Company- | |
| 13,093 | | |
| 5,321 | |
Dividend paid on account | |
| (1,000 | ) | |
| (4,350 | ) |
VALUATION ADJUSTMENTS (Note 13)- | |
| - | | |
| (15 | ) |
Hedging transactions | |
| - | | |
| (15 | ) |
GRANTS, DONATIONS AND LEGACIES RECEIVED
(Note 14)- | |
| 1,078 | | |
| 2,092 | |
Consolidated companies | |
| 1,078 | | |
| 2,092 | |
Total net equity | |
| 47,602 | | |
| 36,508 | |
| |
| | | |
| | |
NON-CURRENT LIABILITIES: | |
| | | |
| | |
Long-term borrowings (Note 16)- | |
| 13,049 | | |
| 13,480 | |
Borrowings from financial institutions | |
| 6,716 | | |
| 7,537 | |
Other financial liabilities | |
| 6,333 | | |
| 5,943 | |
Deferred tax liabilities (Note 17) | |
| 759 | | |
| 2,422 | |
Long-term accruals | |
| - | | |
| 541 | |
Total non-current
liabilities | |
| 13,808 | | |
| 16,443 | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Short-term borrowings (Note 16)- | |
| 7,956 | | |
| 14,069 | |
Borrowings from financial institutions | |
| 6,071 | | |
| 12,435 | |
Derivatives | |
| - | | |
| 22 | |
Other financial liabilities | |
| 1,885 | | |
| 1,612 | |
Trade and other payables | |
| 11,350 | | |
| 12,785 | |
Suppliers (Note 16) | |
| 6,374 | | |
| 8,846 | |
Tax, Social Security and Public Administrations (Note 17) | |
| 737 | | |
| 527 | |
Current tax liabilities (Note 17) | |
| 1,074 | | |
| - | |
Other creditors (Note 16) | |
| 3,165 | | |
| 3,412 | |
Short-term accruals | |
| - | | |
| 321 | |
Total current
liabilities | |
| 19,306 | | |
| 27,175 | |
TOTAL NET
EQUITY AND LIABILITIES | |
| 80,716 | | |
| 80,126 | |
Notes 1 to 27 included in the Report form an
integral part of the consolidated balance sheet as at 31 December 2014.
GADEA GRUPO
FARMACÉUTICO, S.L. AND SUBSIDIARY COMPANIES
CONSOLIDATED INCOME STATEMENTS
AS AT 31 DECEMBER 2013 AND 2014 (NOTES
1 TO 5)
(Thousands of Euros)
| |
Year | | |
Year | |
| |
2014 | | |
2013 | |
| |
| | |
| |
CONTINUING OPERATIONS: | |
| | | |
| | |
Net turnover (Note 19)- | |
| 73,462 | | |
| 63,061 | |
Sales | |
| 68,204 | | |
| 61,882 | |
Services | |
| 5,258 | | |
| 1,179 | |
Changes in stock of finished goods
and work in progress (Note 9) | |
| (2,094 | ) | |
| 3,193 | |
In-house work on the Group's assets
(Note 6)- | |
| - | | |
| 858 | |
Supplies- | |
| (35,358 | ) | |
| (38,156 | ) |
Raw materials and other consumables | |
| (33,407 | ) | |
| (35,593 | ) |
Other external expenses | |
| (1,951 | ) | |
| (2,563 | ) |
Other operating income- | |
| 369 | | |
| 501 | |
Non-core and other current operating income | |
| 117 | | |
| 400 | |
Income-related grants transferred to income | |
| 252 | | |
| 101 | |
Personnel expenses- | |
| (11,582 | ) | |
| (9,492 | ) |
Salaries, wages and similar | |
| (9,011 | ) | |
| (7,208 | ) |
Social Security and similar costs (Note 19) | |
| (2,571 | ) | |
| (2,284 | ) |
Other operating costs- | |
| (9,166 | ) | |
| (9,381 | ) |
External services and taxes | |
| (8,916 | ) | |
| (9,084 | ) |
Other current operating costs | |
| (114 | ) | |
| (297 | ) |
Loss, impairment and variation in provisions for trade operations | |
| (136 | ) | |
| - | |
Depreciation of fixed assets (Note
6 and 7) | |
| (3,869 | ) | |
| (3,641 | ) |
Allocation to income statement of grants
for non-financial assets and others (Note 14) | |
| 2,382 | | |
| 698 | |
Impairment and income on disposal of
fixed assets | |
| (231 | ) | |
| (282 | ) |
Impairment and losses (Note 6) | |
| (231 | ) | |
| (282 | ) |
| |
| | | |
| | |
INCOME FROM OPERATIONS | |
| 13,913 | | |
| 7,359 | |
| |
| | | |
| | |
Finance income- | |
| 84 | | |
| 106 | |
Marketable securities and other financial instruments Third parties | |
| 84 | | |
| 106 | |
Financial expenses- | |
| (863 | ) | |
| (937 | ) |
Debt with third parties | |
| (863 | ) | |
| (937 | ) |
Exchange rate
differences (Note 21) | |
| 50 | | |
| (192 | ) |
| |
| | | |
| | |
FINANCIAL INCOME
AND EXPENSES | |
| (729 | ) | |
| (1,023 | ) |
| |
| | | |
| | |
Impairment and
gains or losses from significant losses in influence over shares consolidated by the equity method or losses of joint control
of a jointly controlled entity. (Note 2-e) | |
| 3,355 | | |
| - | |
| |
| | | |
| | |
INCOME BEFORE
TAX | |
| 16,539 | | |
| 6,336 | |
| |
| | | |
| | |
Corporation Tax (Note 17) | |
| (3,446 | ) | |
| (1,015 | ) |
| |
| | | |
| | |
INCOME FROM CONTINUING
OPERATIONS | |
| 13,093 | | |
| 5,321 | |
| |
| | | |
| | |
DISCONTINUED OPERATIONS: | |
| | | |
| | |
Income from discontinued
operations (net) | |
| - | | |
| - | |
CONSOLIDATED INCOME
| |
| 13,093 | | |
| 5,321 | |
| |
| | | |
| | |
Income attributed to the Parent Company
(profit) | |
| 13,093 | | |
| 5,321 | |
Income attributed
to Minority Shareholders (Note 15) | |
| - | | |
| - | |
Notes 1 to 27 included in the Report form an
integral part of the consolidated income
statement for the year ended 31 December 2014.
GADEA GRUPO FARMACÉUTICO, S.L. AND
SUBSIDIARY COMPANIES
2013 AND 2014 STATEMENTS OF CHANGES IN
CONSOLIDATED NET EQUITY
(NOTES 1 TO 5)
A) CONSOLIDATED INCOME AND EXPENSES RECORDED
(Thousands of Euros)
| |
Year | | |
Year | |
| |
2014 | | |
2013 | |
| |
| | |
| |
CONSOLIDATED
INCOME FOR YEAR (I) | |
| 13,093 | | |
| 5,321 | |
| |
| | | |
| | |
Income and expenses recorded directly in net equity: | |
| | | |
| | |
- Grants, donations and legacies received (Note 14) | |
| 838 | | |
| 258 | |
- Tax effect (Notes 14 and 17) | |
| (185 | ) | |
| (77 | ) |
| |
| | | |
| | |
TOTAL INCOME AND
EXPENSES RECORDED DIRECTLY IN THE CONSOLIDATED NET EQUITY (II) | |
| 653 | | |
| 181 | |
| |
| | | |
| | |
Transfers to the consolidated income statement: | |
| | | |
| | |
- Cash flow hedges (Note 13) | |
| 21 | | |
| 43 | |
- Tax effect (Notes 13 and 17) | |
| (6 | ) | |
| (13 | ) |
- Grants, donations and legacies received (Note 14) | |
| (2,382 | ) | |
| (698 | ) |
- Tax effect (Notes 14 and 17) | |
| 715 | | |
| 209 | |
| |
| | | |
| | |
TOTAL TRANSFERS
TO THE CONSOLIDATED INCOME STATEMENT (III) | |
| (1,652 | ) | |
| (459 | ) |
CONSOLIDATED STATEMENT
OF INCOME AND EXPENSES (I+II+III) | |
| 12,094 | | |
| 5,043 | |
Total income attributed
to the Parent Company | |
| 12,094 | | |
| 5,043 | |
Total income
attributed to Minority Shareholders | |
| - | | |
| - | |
Notes 1 to 27 included in the Report form an
integral part of
the consolidated income statement for the year ended 31 December 2014.
GADEA GRUPO
FARMACÉUTICO, S.L. AND SUBSIDIARY COMPANIES
2013 AND 2014 STATEMENTS OF CHANGES IN
CONSOLIDATED NET EQUITY (NOTES 1 TO 5)
B) STATEMENT OF TOTAL CHANGES IN CONSOLIDATED
NET EQUITY
| |
Thousands
of Euros | |
| |
| | |
| | |
Reserves | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
Net Income | | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
Prior Years' | | |
Attributed | | |
| | |
| | |
Grants, | | |
| | |
| |
| |
| | |
| | |
| | |
Other | | |
to the | | |
| | |
| | |
Donations & | | |
| | |
| |
| |
| | |
Share | | |
Legal | | |
Reserves and | | |
Parent | | |
Interim | | |
Valuation | | |
Legacies | | |
Minority | | |
| |
| |
Capital | | |
Premium | | |
Reserves | | |
Income | | |
Company | | |
Dividend | | |
Adjustments | | |
Received | | |
Shareholders | | |
TOTAL | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
ENDING
BALANCE 2012 | |
| 26,189 | | |
| 1,544 | | |
| 1,319 | | |
| 2,171 | | |
| 3,237 | | |
| (1,000 | ) | |
| (45 | ) | |
| 2,400 | | |
| - | | |
| 35,815 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Adjustments
due to changes in accounting criteria 2012 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Adjustments
due to errors 2012 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ADJUSTED
BALANCE AT START OF 2013 | |
| 26,189 | | |
| 1,544 | | |
| 1,319 | | |
| 2,171 | | |
| 3,237 | | |
| (1,000 | ) | |
| (45 | ) | |
| 2,400 | | |
| - | | |
| 35,815 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total
recorded consolidated income | |
| - | | |
| - | | |
| - | | |
| - | | |
| 5,321 | | |
| - | | |
| 30 | | |
| (308 | ) | |
| - | | |
| 5,043 | |
Transactions
with shareholders or owners- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interim dividend (Note
4) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,350 | ) | |
| - | | |
| - | | |
| - | | |
| (4,350 | ) |
Distribution
of FY12 profit attributed to the Parent Company | |
| - | | |
| - | | |
| 183 | | |
| 2,054 | | |
| (3,237 | ) | |
| 1,000 | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ENDING
BALANCE 2013 | |
| 26,189 | | |
| 1,544 | | |
| 1,502 | | |
| 4,225 | | |
| 5,321 | | |
| (4,350 | ) | |
| (15 | ) | |
| 2,092 | | |
| - | | |
| 36,508 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Adjustments
due to changes in accounting criteria 2013 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Adjustments
due to errors 2013 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ADJUSTED
BALANCE AT START OF 2014 | |
| 26,189 | | |
| 1,544 | | |
| 1,502 | | |
| 4,225 | | |
| 5,321 | | |
| (4,350 | ) | |
| (15 | ) | |
| 2,092 | | |
| - | | |
| 36,508 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total
recorded consolidated income | |
| - | | |
| - | | |
| - | | |
| - | | |
| 13,093 | | |
| - | | |
| 15 | | |
| (1,014 | ) | |
| - | | |
| 12,094 | |
Transactions
with shareholders or owners- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interim dividend (Note
4) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,000 | ) | |
| - | | |
| - | | |
| - | | |
| (1,000 | ) |
Distribution
of FY13 profit attributed to the Parent Company | |
| - | | |
| - | | |
| 634 | | |
| 337 | | |
| (5,321 | ) | |
| 4,350 | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ENDING BALANCE 2014 | |
| 26,189 | | |
| 1,544 | | |
| 2,136 | | |
| 4,562 | | |
| 13,093 | | |
| (1,000 | ) | |
| - | | |
| 1,078 | | |
| - | | |
| 47,602 | |
Notes 1 to 27 included in the Report form an
integral part of the statement of total changes in consolidated net equity
for the year ended 31 December 2014.
GADEA GRUPO
FARMACÉUTICO, S.L. AND SUBSIDIARY COMPANIES
2013 AND 2014 CONSOLIDATED CASH FLOW STATEMENTS
(NOTES 1 TO 5)
(Thousands of Euros)
| |
Year | | |
Year | |
| |
2014 | | |
2013 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES (I): | |
| | | |
| | |
Consolidated profit before
tax | |
| 16,539 | | |
| 6,336 | |
Adjustments for- | |
| 2,583 | | |
| 4,248 | |
- Depreciation of fixed assets (Notes 6 and 7) | |
| 3,869 | | |
| 3,641 | |
- Impairment losses (Note 6) | |
| 367 | | |
| 282 | |
- Grants received (Note 14) | |
| (2,382 | ) | |
| (698 | ) |
- Finance income | |
| (84 | ) | |
| (106 | ) |
- Finance expenses | |
| 863 | | |
| 937 | |
- Exchange rate differences (Note 21) | |
| (50 | ) | |
| 192 | |
Changes in working capital- | |
| (6,827 | ) | |
| (1,538 | ) |
- Stock | |
| (593 | ) | |
| (3,910 | ) |
- Trade and other receivables | |
| (3,191 | ) | |
| (742 | ) |
- Other current assets | |
| - | | |
| 4 | |
- Trade and other payables | |
| (2,240 | ) | |
| 2,728 | |
- Other current liabilities | |
| (262 | ) | |
| 313 | |
- Other non-current assets and liabilities | |
| (541 | ) | |
| 69 | |
Other cash flows from operating activities | |
| (2,531 | ) | |
| (3,084 | ) |
- Interest paid | |
| (839 | ) | |
| (929 | ) |
- Interest received | |
| 84 | | |
| 106 | |
- Income tax recovered (paid) (Note 17) | |
| (1,776 | ) | |
| (2,020 | ) |
- Other payments | |
| - | | |
| (241 | ) |
Total cash flows
from operating activities | |
| 9,764 | | |
| 5,962 | |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES (II): | |
| | | |
| | |
Payments due to investment- | |
| (7,492 | ) | |
| (8,298 | ) |
- Intangible assets (Note 6) | |
| (20 | ) | |
| (956 | ) |
- Tangible assets (Notes 7 and 16) | |
| (7,469 | ) | |
| (6,194 | ) |
- Other financial assets (Note 8) | |
| (3 | ) | |
| (1,148 | ) |
Divestments | |
| 1,110 | | |
| 1,357 | |
- Jointly controlled entities, net cash in consolidated companies (Note 2-e) | |
| 963 | | |
| - | |
- Other financial assets (Note 8) | |
| 147 | | |
| 1,357 | |
Total cash flows
from investing activities | |
| (6,382 | ) | |
| (6,941 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES (III): | |
| | | |
| | |
Proceeds and payments relating to equity
instruments- | |
| - | | |
| 258 | |
- Grants, donations and legacies received | |
| - | | |
| 258 | |
Proceeds and payments relating to financial
liability instruments- | |
| 1,425 | | |
| 2,760 | |
- Borrowings (refund and amortization) issued by credit institutions (Note 16) | |
| (1,584 | ) | |
| 1,272 | |
- Other borrowings (refund and amortization) issued, net (Note 16) | |
| 3,009 | | |
| 1,488 | |
Dividends and returns on other equity
instruments paid | |
| (1,000 | ) | |
| (4,350 | ) |
- Dividends (Note 4) | |
| (1,000 | ) | |
| (4,350 | ) |
Total cash flows
from financing activities | |
| 425 | | |
| (1,332 | ) |
| |
| | | |
| | |
EFFECT OF EXCHANGE
RATE CHANGES (IV) (Note 21) | |
| 168 | | |
| (120 | ) |
| |
| | | |
| | |
NET INCREASE/DECREASE
IN CASH AND CASH EQUIVALENTS (I+II+III+IV) | |
| 3,975 | | |
| (2,431 | ) |
| |
| | | |
| | |
Cash and cash equivalents at beginning of year | |
| 4,020 | | |
| 6,451 | |
Cash and cash equivalents at end of year (Note 11) | |
| 7,995 | | |
| 4,020 | |
Notes 1 to 27 included in the Report form an
integral part
of the consolidated cash flow statements for the year ended 31 December 2014
Gadea Grupo Farmacéutico, S.L. and Subsidiaries
Notes to Consolidated
Financial Statements for year
ended 31 December 2014
| 1. | Description of the Group |
Parent and the Group’s activities
Gadea Grupo Farmacéutico, S.L. (the
“Parent”) was established on 18 January 2007, with the corporate name “Gadea Pharmaceutical Group, S.L.”.
On 29 June 2011, at the Annual General Meeting, the Board of Directors agreed to change its corporate name to its current name.
Currently, its registered address and headquarters
are at Parque Tecnologico de Boecillo, (Boecillo, Valladolid).
Its corporate purpose includes the following
businesses:
| - | Scientific and technical advisory, as well as the organization and optimization of companies in
the pharmaceutical sector, including the chemical industry. |
| - | Advisory to the Directors for different companies’ internal business lines, including imports
and exports, patents, waste management, and the manufacture and sale of chemical products. |
| - | Manufacture, sale, study, design, programming, acquisition, handling and managing of internal and
external raw materials, intermediate, semi-finished and finished products, for the chemical, pharmaceutical, cosmetic, veterinary,
and food industries, except for those products whose sale, storage or handling is reserved by Law for specific companies. |
| - | Planning, programming, study, sale, investigation and development of chemical, pharmaceutical,
veterinary, cosmetic and food processes, and the sale of related technologies. Scale and implementation of industrial processes
or chemical, pharmaceutical, cosmetic, veterinary and food products in factories. |
| - | Planning, programming, study, sale, packaging and distribution of chemical, pharmaceutical, veterinary,
cosmetic and food products. |
| - | Studies and expert opinions regarding the environmental impact, image and legal technical assessment
of these materials. |
| - | Real estate businesses relating to the acquisition, tenure, sale, promotion, urbanization, division
of land, construction, renovation and operation, for rent or any other means, of any type of real estate. |
| - | Acquisition, tenure, and sale of the real estate assets, including shares in any type of company,
and those that do not have securities, excluding those businesses regulated by legislation. |
Currently, the Parent’s business is focused
on the corporate development of the Group that is in charge of the search, analysis, and selection of new products and potential
investment opportunities for the Group. Simultaneously, its business also includes owning shares in companies that provide services
to the Group’s companies, and acts as a channel and distributor between these companies for the financing obtained by themselves
and other financial entities, depending on the resources required and the projects with each of the financial entities.
Gadea Grupo Farmacéutico, S.L. is the
head of an international Group (“Grupo Gadea”) comprising of companies dedicated to the development and subsequent
manufacture and sale of active ingredients of pharmaceutical products.
During recent years, Grupo Gadea has carried
out a significant investment plan and has incurred significant expenses due to the implementation of new factories and production
lines. Grupo Gadea’s business plan for the future forecasts a significant increase in net revenues, financial resources generated
in transactions as well as profit.
Subsidiary Companies (“Subsidiaries”)
Subsidiaries are classified as those which
the Group has effective control, which is exercised generally, although not exclusively by either direct or indirect ownership
of 50% or more of the voting rights of the investee companies, or if this percentage is lower or zero, where other circumstances
or agreements exist that grant the Group this control. Control is “the ability to govern the financial and operating policies
of a company so as to obtain benefits from its activities”.
The subsidiaries that have been included in
the 2014 consolidated financial statements by the “global integration method” are detailed below:
| |
| |
| |
| | |
€k | |
| |
Registered | |
| |
Parent’s % Shareholding | | |
Parent’s Book Value of Shareholding | |
Corporate Name | |
Address | |
Business | |
Direct | | |
Indirect | | |
Total | | |
31/12/14 | | |
31/12/13 | |
| |
| |
| |
| | |
| | |
| | |
| | |
| |
Crystal Pharma, S.A.U. | |
Boecillo (Valladolid) | |
Chemical pharmaceutical | |
| 100.00 | | |
| - | | |
| 100.00 | | |
| 23,728 | | |
| 23,728 | |
Crystal Pharma, Ltd. | |
Zejtun (Malta) | |
Chemical pharmaceutical | |
| 100.00 | | |
| - | | |
| 100.00 | | |
| 817 | | |
| 817 | |
Gadea Biopharma, S.L.U. | |
León | |
Pharmaceutical and biotechnology | |
| 100.00 | | |
| - | | |
| 100.00 | | |
| 8,800 | | |
| 3,500 | |
Bioraw, S.L.U. (a) | |
Boecillo (Valladolid) | |
Chemical biotechnology | |
| 100.00 | | |
| - | | |
| 100.00 | | |
| 2,100 | | |
| 100 | |
Bionice, S.L.U. (a) | |
León | |
Chemical biotechnology | |
| 100.00 | | |
| - | | |
| 100.00 | | |
| 100 | | |
| 100 | |
| |
| |
| |
| | | |
| | | |
| | | |
| 35,545 | | |
| 28,245 | |
(a) Established
companies as at 31 December 2013. No activity in 2013.
Crystal Pharma, S.A.U. was established in Segovia
on 1 February 1996. Later, in November 1996, they moved their registered address to Parque Tecnológico de Boecillo (Valladolid),
where it also has its production facilities. Currently, Crystal Pharma, S.A.U.’s main business is the investigation, development
and subsequent manufacture and sale of active ingredients for pharmaceutical products. In 2011, they merged with Ragactives, S.L.U
that was established on 23 November 2006. Their main businesses were the investigation, development, and subsequent manufacture
and sale of active ingredients for pharmaceutical products.
On 14 December 2005, Crystal Pharma, S.A.U.
acquired the entire share capital of Crystal Pharma, Ltd. (previously Solea Pharma, Ltd) for €22,673 although this
share was transferred to the Parent in 2009. This subsidiary’s registered address is Zejtun (Malta) and their business consists
of the manufacture of active ingredients for the pharmaceutical industry, with a large part of their production provided to the
Group’s companies. Their 2014 financial statements are being audited by Mark A. Scalpello.
Gadea Biopharma, S.L.U. was established on
14 June 2011, and their registered address is Parque Tecnológico de León. On 26 June 2013, this subsidiary performed
a €2.7m capital increase and in 2013, the Parent contributed €500k equity to the subsidiary. Their main businesses are
the investigation, development and subsequent manufacture and sale of pharmaceutical products. The construction and implementation
of their production plant was completed in the last months of 2013.
Bioraw, S.L.U. and Bionice, S.L.U. were established
on 31 December 2013, and their corporate purpose consists of chemical biotechnical processes. Bioraw, S.L.U.’s production
business of intermediate fermented products began during the last months of 2014 in its production plant located in San Cristóbal
de Entreviñas (Zamora). Bionice, S.L.U. is yet to start its business. On 19 December 2014, the Parent provided a €2m
contribution of its shareholders’ funds to Bioraw, S.L.U.
The information in the table above relates
to 31 December 2013 and 2014, and the financial positions of the subsidiaries are shown in their respective financial statements.
Jointly controlled entities
“Jointly controlled
entities” are defined as companies who are jointly managed by the Parent and/or another of the Group’s companies
and one or more third parties.
During 2013 and 2014 the
only jointly controlled entity was Cyndea Pharma, S.L. that was included by the “proportional integration method”
in the consolidated financial statements for these periods based on the Parent’s 50% shareholding in the company. On 19 September
2014, the Parent Company sold this shareholding to the other partner, which led to the exit of this company from the Group’s
consolidation perimeter (see Note 2-e). Information as at 31 December 2013 relating to the jointly controlled entity is detailed
below:
| |
| |
| |
| | |
€k | |
| |
Registered | |
| |
Parent’s % Shareholding | | |
Parent’s Book Value | |
Corporate Name | |
Address | |
Business | |
Direct | | |
Indirect | | |
Total | | |
of Shareholding | |
| |
| |
| |
| | |
| | |
| | |
| |
Cyndea Pharma, S.L. | |
Ólvega (Soria) | |
Pharmaceutical | |
| 50.00 | | |
| - | | |
| 50.00 | | |
| 2,969 | |
Cyndea Pharma, S.L. (previously Gideon Pharma,
S.L.U) was established in Madrid on 18 May 2005 and its current registered address and production facilities are located at
Polígono Industrial de Ólvega (Soria). This Company develops and manufactures pharmaceutical specialties and provides
analytical services through contract manufacturing.
Once the sale of the shareholding in Cyndea
Pharma, S.L. took place on 31 December 2014, the Group no longer had any “jointly controlled entities”.
Associated Companies
“Associated companies”
are defined as those which the Group has an ability to exercise a significant influence, but not control or joint control. This
is demonstrated by a direct or indirect shareholding equal or greater than 20% of the voting rights of the investee.
As at 31 December 2013 and
2014, the Group had no associated companies.
Financial year of the subsidiaries and jointly controlled entities
The financial year of all the subsidiaries
and jointly controlled entities match that of the Parent, which is the same as the calendar year. The date of its individual financial
statements is therefore 31 December 2014, except for the jointly controlled entity which exited the consolidation perimeter in
2014, and for which the consolidation process only included the proportional part relating to the Group’s income and expenses
from the beginning of the year to the date of exit. The currency used by the Group and in the financial statements of all the companies
is the euro.
Audit of the individual accounts of the subsidiaries and jointly
controlled entities
The 2014 individual financial statements of
Crystal Pharma, S.A.U. and Cyndea Pharma, S.L. are being audited by Deloitte, S.L., whilst the 2014 financial statements of Crystal
Pharma, Ltd. are being audited by Mark A. Scalpello.
| 2. | Basis of Presentation of the Consolidated Financial Statements and Principles of Consolidation |
| a) | Regulatory framework of financial information applicable to the Group |
The consolidated
financial statements have been provided by the Parent’s Directors in accordance with the regulatory framework of financial
information applicable to the Group which is established in:
| · | The Commercial Code and other commercial law |
| · | The regulations for the preparation of consolidated financial statements (approved by the Royal
Decree 1159/2010), Generally Accepted Accounting Principles (approved by the Royal Decree 1514/2007 and subsequent modifications)
and, where appropriate, industry adaptations. |
| · | The regulations approved by the Institute of Accounting and Auditing in developing GAAP and related
legislations. |
| · | The remaining Spanish accounting legislations. |
The 2014 consolidated
financial statements have been prepared from the individual accounting records of Gadea Grupo Farmacéutico, S.L. and of
the companies included in the consolidation (included in Note 1) and show a fair presentation of the Group’s consolidated
equity, balance sheet, income and expenses and cash flows as at 31 December 2014, in accordance with the regulatory framework of
financial information.
The 2014 consolidated
financial statements and individual financial statements of Gadea Grupo Farmacéutico, S.L. have been prepared by the Parent’s
Directors, whilst the 2014 individual financial statements of the subsidiaries were prepared by their respective Directors. All
accounts will be submitted for approval by the shareholders at the Annual General Meeting, where it is expected that they will
be approved without any changes.
The 2013 consolidated
financial statements were approved by the shareholders at the Annual General Meeting held on 18 June 2014.
| c) | Application of non-obligatory accounting principles |
No non-obligatory
accounting principles have been applied. The Parent’s Directors have prepared the consolidated financial statements based
on all the obligatory principles and rules that have a significant effect on the consolidated financial statements.
The 2014 consolidated
financial statements have been prepared on a “going concern” basis.
| d) | Principles of Consolidation |
The 2014 consolidated
accounts have been prepared using a “bottom-up procedure” meaning the Group’s consolidated financial statements
have been obtained from each of the corresponding subgroups, starting with the smallest and moving to the largest until reaching
the Global Group.
Subsidiaries
The consolidation
of the “subsidiaries”, those which the Group has effective control for the majority of votes of its representative
bodies and decisions, has been made under the “global integration method” and therefore the following applies:
| 1. | All significant balances and transactions between the consolidated companies and material gains
or losses on internal operations not carried out with third parties have been eliminated on consolidation. |
| 2. | Certain adjustments and reclassifications have been made to standardize the accounting principles
and valuation criteria used by different companies. |
| 3. | At the time of acquiring a subsidiary, their assets, liabilities and contingent liabilities are
recorded at fair value at the date of acquisition. Positive differences between the price of acquisition and the fair value of
the net assets acquired are recorded as “Goodwill”. Therefore, negative differences are expensed at the date of acquisition. |
| 4. | The minority shareholder´s equity in the income statement and net equity of the subsidiaries
are determined based on the current voting rights at that moment, without including the period of the transfer of potential voting
rights. The equity of minority shareholders is proportionate to the fair value of the assets and liabilities of the recorded minority. |
| 5. | The value of the minority shareholders’ ownership is recorded within equity and in the income
of the subsidiaries which are included within the Group’s consolidated net equity, under the “Minority shareholders”
caption of the consolidated balance sheet, and under “Income from minority shareholders” in the consolidated income
statement. |
| 6. | The consolidation of income generated by subsidiaries that have been acquired is made exclusively
taking into account the income generated between the date of acquisition and the balance sheet dates. Equally, the consolidation
of income generated by disposed subsidiaries is made only by including the income from the start of the period to the date of disposal. |
| 7. | Acquisitions of shares to minority shareholders in subsidiaries that the Group previously had effective
control and, therefore only produced an increase in the Group’s percentage shareholding, are, from a consolidated view point,
equity transactions. In accordance with NRV 9a paragraph 4 of GAAP, this reduces the “Minority shareholders”
balance and the consolidated reserves are restated for the difference between the value of the consideration paid by the Group
and the amount by which the balance under “Minority shareholders” has been changed. No “Goodwill” whatsoever
is recorded for this operation, nor does it include assets or liabilities from the consolidated balance sheet. |
As explained in
Note 1, the annual financial statements of the subsidiaries used in the consolidation process refer to the same reporting date
and cover the same period as those of the Parent.
The currency used
by the only foreign subsidiary is the euro; therefore it is not necessary to convert the balance sheets, income statements, statements
of changes in net equity or the cash flows.
Jointly controlled
entities
In 2013, the consolidation of the
jointly controlled entity, Cyndea Pharma, S.L. was made under the “proportional method” that consisted of the
incorporation of the assets, rights and obligations and the income and expenses of these companies in proportion to the Group’s
shareholding in these companies. In 2014, the income and expenses of this company, whose shareholding was disposed in September
2014, were included in proportion to the corresponding percentage that the Group had in its share capital, only taking into account
those relating to the period between the beginning of the year and 31 August 2014 (the date of the previous month-end
closest to the shareholding’s sale date).
| e) | Changes in the consolidation perimeter |
In 2014, Cyndea Pharma, S.L. exited
the consolidation perimeter as the Group sold its 50% shareholding to a third party.
The sales transaction of the shares
was formalized by a public deed on 19 September 2014, having increased the price for the sale of this shareholding to €3m.
As a result of this transaction, the Group generated a profit of €3.355m which was credited to the 2014 consolidated income
statement under “Impairment and gains or losses from significant losses in influence over shares consolidated by the equity
method or losses of joint control of a jointly controlled entity”. Additionally, the exit of this jointly controlled entity
from the consolidation perimeter led to the write-off of all assets and liabilities, adjustments for changes in value, and the
grants, donations and legacies received by this company from the Group. As at 31 December 2013, the consolidated values were the
following:
| |
€k | |
Item | |
Increase (Decrease) | |
| |
| |
Total assets | |
| 8,537 | |
Total liabilities | |
| (11,241 | ) |
Adjustments for changes in value | |
| - | |
Grants, donations and legacies received (Note 14) | |
| (1,539 | ) |
The effects of including Cyndea Pharma, S.L.
in the 2013 and 2014 consolidated income statements were the following:
| |
€k | |
| |
2014 (a) | | |
2013 | |
| |
| | |
| |
CONTINUING OPERATIONS: | |
| | | |
| | |
Net turnover | |
| 3,821 | | |
| 3,915 | |
Changes in stock of finished goods and work in progress | |
| 7 | | |
| 449 | |
In-house work on the Group’s assets | |
| - | | |
| 267 | |
Supplies | |
| (1,738 | ) | |
| (2,078 | ) |
Other operating income | |
| 82 | | |
| 24 | |
Personnel expenses | |
| (838 | ) | |
| (936 | ) |
Other operating costs | |
| (939 | ) | |
| (1,179 | ) |
Depreciation of fixed assets | |
| (774 | ) | |
| (1,144 | ) |
Allocation to income statement of grants for non-financial assets and others | |
| 320 | | |
| 325 | |
Impairment and income on disposal of fixed assets | |
| - | | |
| (281 | ) |
INCOME FROM OPERATIONS | |
| (59 | ) | |
| (638 | ) |
Finance income | |
| - | | |
| - | |
Financial expenses | |
| (239 | ) | |
| (278 | ) |
Exchange rate differences | |
| (2 | ) | |
| (1 | ) |
FINANCIAL INCOME AND EXPENSES | |
| (241 | ) | |
| (279 | ) |
INCOME BEFORE TAX | |
| (300 | ) | |
| (917 | ) |
Corporation tax | |
| (96 | ) | |
| - | |
INCOME FROM CONTINUING OPERATIONS | |
| (396 | ) | |
| (917 | ) |
DISCONTINUED OPERATIONS: | |
| | | |
| | |
Income from discontinued operations (net) | |
| - | | |
| - | |
CONSOLIDATED
INCOME (Loss) | |
| (396 | ) | |
| (917 | ) |
Income attributed
to the Parent Company (Loss) | |
| (396 | ) | |
| (917 | ) |
| (a) | These income and expenses correspond to the period between 1 January 2014 and 31 August 2014 (the
date of the previous month-end closest to the shareholding’s sale date). |
As at 31 December 2014, the Group did not have
any amount to be received for the sales transaction of the Cyndea Pharma, S.L. shareholding.
In 2014, no new companies entered the Group’s
consolidation perimeter.
In 2013, no significant additions or exits
were made to the consolidation perimeter. The entries as at 31 December 2013 related to the creation of the subsidiaries Bioraw,
S.L.U and Bionice, S.L.U., each having a share capital of €100k. These companies did not carry out any business in 2013.
| f) | Responsibility for information, and key issues in relation to the measurement and estimation of uncertainty |
The information
contained in the consolidated financial statements is the responsibility of the Parent’s Directors.
In preparing the
2014 consolidated financial statements, estimates made by Parent’s Directors have been used on occasion to measure certain
assets, liabilities, income, expenses and commitments that would not be easily determined by other sources. These estimations are
based on historical information and other factors that are considered fair and in accordance with the current situation. These
estimations refer to the following:
| · | The useful life of tangible and intangible assets. |
| · | The assessment of possible impairment losses on certain assets. |
| · | The classification of leases as operating or financial. |
| · | The fair value of certain financial instruments. |
| · | The amount of the provisions. |
| · | The application of deferred tax assets. |
Although these
estimations were made with the best information available as at 31 December 2014, future events may make it necessary to review
these estimates (upwards or downwards) in the coming years. Any such changes would be taken to the consolidated income statement
in the years affected.
| g) | Comparison of information |
The information
relating to 2013 included in these notes is presented solely and exclusively for comparison purposes with that relating to 2014.
Certain items in the consolidated
balance sheet, income statement, statement of changes in shareholders’ equity and statement of cash flows are grouped together
to facilitate their understanding; however, whenever the amounts involved are significant, the information is broken down in the
related consolidated notes to the financial statements.
| i) | Changes in accounting criteria |
There were no significant changes
to the accounting criteria applied between 2013 and 2014.
No significant errors were identified
in the preparation of the 2014 consolidated financial statements that would have led to a restatement of the amounts included in
the 2013 consolidated financial statements.
During 2013 and 2014, the Group did not carry
out any business combinations.
| 4. | Distribution of the Parent’s profit |
The proposed distribution of the Parent’s
2014 profit, calculated by the Directors, will be submitted for approval by the shareholders at the Annual General Meeting, in
the same way the 2013 profits were approved by the shareholders at the Annual General Meeting on 18 June 2014, which is detailed
below:
| |
€k | |
| |
2014 | | |
2013 | |
| |
| | |
| |
Basis of distribution: | |
| | | |
| | |
Profit for the year | |
| 2,224 | | |
| 6,341 | |
| |
| | | |
| | |
Distribution: | |
| | | |
| | |
Legal Reserve | |
| 223 | | |
| 634 | |
Voluntary Reserves | |
| 1,001 | | |
| 1,357 | |
Dividends | |
| 1,000 | | |
| 4,350 | |
| |
| 2,224 | | |
| 6,341 | |
Dividends paid during the year
The 2014 dividends were entirely distributed
during 2014 and the beginning of 2015. On 18 June 2014 and 2 March 2015, the Parent’s Board of Directors agreed to the distribution
of €1m and €1.9m dividends of the 2014 profit. The first was recorded under “Interim dividend” in the consolidated
balance sheet as at 31 December 2014 and was deducted from the “Shareholders’ funds” caption (see Note 12). On
2 March 2015, the Parent distributed a €21.2m interim dividend of the 2015 profits.
On 27 June 2013, the Parent’s Board of
Directors agreed to the distribution of an interim dividend of the 2013 profit which amounted to €4.350m.
The mandatory temporary financial statements
prepared by the Parent’s Board of Directors, in accordance with Article 277 of the Consolidated Companies Law, evidencing
the existence of sufficient liquidity for the distribution of the aforementioned interim dividend were the following:
Cash statement for the distribution of the | |
€k | |
Interim Dividend | |
02/03/15 | | |
18/06/14 | | |
27/06/13 | |
| |
| | |
| | |
| |
Trade and other receivables | |
| 89 | | |
| 1,592 | | |
| 1,936 | |
Cash and cash equivalents | |
| 875 | | |
| 146 | | |
| 228 | |
Short-term investments in Group companies and associates and other current assets | |
| 28,721 | | |
| 5,122 | | |
| 6,791 | |
Total current assets | |
| 29,685 | | |
| 6,860 | | |
| 8,955 | |
| |
| | | |
| | | |
| | |
Short-term debt | |
| (303 | ) | |
| (1,598 | ) | |
| (1,003 | ) |
Payables to Group companies and associates | |
| (1,123 | ) | |
| - | | |
| - | |
Accounts and other payables | |
| (1,279 | ) | |
| (111 | ) | |
| (523 | ) |
Total current liabilities | |
| (2,705 | ) | |
| (1,709 | ) | |
| (1,526 | ) |
Available cash | |
| 26,980 | | |
| 5,151 | | |
| 7,429 | |
The 2013 and 2014 amounts distributed did not
exceed the profits generated, once the estimated income tax was deducted from the profits.
| 5. | Accounting principles and policies and applied valuation criteria |
The main accounting and valuation criteria
used by Grupo Gadea for the preparation of the 2014 consolidated financial statements were the following:
| a) | Consolidated goodwill or negative difference between consolidated companies |
At the date of
acquiring a subsidiary, the assets and liabilities acquired (including contingent liabilities, if applicable) are (always)
recorded at fair value, and when the fair value can be measured reliably. The assets and liabilities recorded by the acquiring
company are those that they have received, as a result of the transaction. These assets and liabilities are recorded irrespective
of whether they had been previously recorded in the financial statements of the acquired company, for failing to meet the recognition
criteria.
Goodwill
At the date of
acquisition, the positive difference between the cost of the Group’s shareholdings in the capital of the subsidiary, and
the proportion of the fair value of assets and liabilities from the shares acquired are recorded under “Intangible assets
– consolidated goodwill” on the consolidated balance sheet.
Goodwill is only
recorded when it has been acquired for consideration, is assigned to one or more cash generating items, and represents advanced
payments made by the acquiring company for the future economic benefits deriving from the assets and liabilities of the acquired
company that would not be recorded or identified individually.
Goodwill is not
amortized. In accordance with the Spanish National Chart of Accounts approved by Royal Decree 1514/2007, 16 November, the Group
valued all assets and liabilities at the opening balance, in accordance with the existing principles prior to the introduction
of Law 16/2007, 4 July, that reformed Commercial Law to harmonize with international law and European Union regulations, with the
exception of financial instruments which are valued at their fair value. Therefore, “Goodwill” acquired by good and
valuable consideration prior to 1 January 2008 (date of transition to new GAAP) was recorded net of amortization until 31
December 2007.
Calculation of impairments of intangible and tangible
assets
At each accounting
closing, goodwill is reviewed for impairments that would reduce its recoverable amount to an amount below its book value. In this
case, impairment losses are recorded but they cannot be reversed in subsequent periods.
The “impairment
test” of goodwill of intangible and tangible assets (See Notes 5-b and 5-c) carried out by the Parent’s
Directors is the following:
| · | The recoverable amounts are calculated for each cash generating unit, although for intangible assets,
where possible, the impairment calculations are performed individually for each asset. |
| · | The Parent’s Directors annually prepare a business plan by market and business for each cash
generating unit, typically covering a period of 5 years. The main components of this plan include the following: |
| - | Income and expenses forecast. |
| - | Investment and Working Capital forecasts. |
| · | Other variables influencing the calculation of recoverable value are the following: |
| - | The discount rate to be applied, meaning the weighted average of the cost of capital, which is
affected by the cost of liabilities and the specific risk of the assets. |
| - | The growth rate applied to cash flows to extrapolate them beyond the period covered by budgets
and forecasts. |
The forecasts
are made based on previous results and the best estimates available, in line with externally obtained information.
The Business Plans
prepared have been reviewed and approved by Directors of the respective companies.
If there is an
impairment loss from a cash generating unit which had been assigned all, or part, of goodwill, the book value of goodwill is decreased
by this amount. However, if the impairment exceeds this amount, the remaining assets of this cash generating unit will be reduced
in proportion to their book value, by the higher value of the following: their fair value minus the cost of sale, their current
value, or zero.
Where an impairment
loss subsequently reverses (this is not permitted in specific cases relating to goodwill), the book value of the asset,
or cash generating unit, is increased to the reviewed estimate of its recoverable value. However, this book value must not exceed
the book value that would have existed if no impairment loss had occurred in previous years. This impairment loss reversal is recorded
as income.
Negative consolidation difference
If, at the date
of acquiring a subsidiary, there is a negative difference between the cost of capital share of the subsidiary, and the proportion
of the fair value of assets and liabilities from the shares acquired, the difference is recorded as an income in the consolidated
income statement for the period in which the transaction took place, under the caption “Negative consolidation difference
of consolidated subsidiaries”.
Intangible
assets are valued initially at their acquisition price or cost of production, and following their initial valuation they are adjusted
by the respective accumulated amortization, and, where appropriate, by the impairment losses recorded, that are determined in accordance
with the criteria detailed in Note 5-a.
In particular,
the Group uses the following accounting criteria for intangible assets:
| 1. | Consolidated goodwill. Described in detail in Note 5-a. |
| 2. | Development. The costs incurred in developing each project are capitalized when the following
conditions are met: |
| a. | The cost of developing the project can be measured reliably. |
| b. | The costs are individualized for each project and relate to an asset that can be identified. |
| c. | The Group can demonstrate the technical feasibility of the project. |
| d. | The project is likely to generate profits in the future. |
The development
expenses incurred through their own means are recorded in the consolidated income statement (according to their different nature)
and, the total expenses that relate to projects that meet these conditions are transferred to the consolidated balance sheet
under the “Development” caption, and under “Work carried out by the Group on assets” on the consolidated
income statement.
The capitalized
development expenses are amortized on a straight line basis over their useful life, which is estimated between 4 and 5 years. However,
when there are reasonable doubts regarding the technical success or profitability of a project, these expenses will be recorded
directly in the income statement, for the year in which the doubts occur.
The capitalized
development costs at year end are separated by project, and their cost and the year in which they were incurred can be clearly
identified. The Parent’s Directors believe in the technical success and the profitability of these projects.
Investigation
expenses are directly expensed to the income statement in the period in which they are incurred.
| 3. | Patents, licenses, trademarks and similar. Patents and licenses are recorded at their book
value and were affected by the capital increase made in 2011 by the acquired company Ragactives, S.L.U. (see Note 1) or by amounts
paid to third parties by the Group for the acquisition of ownership or rights to use the related items. They are amortized over
a period of six years from the date they began to generate profits from the manufacture and subsequent sale of active ingredients
protected by patents, and in proportion to the estimated profit, used to calculate the value of these assets. |
| 4. | Computer software relates to the costs incurred from the acquisition and development of
computer programs that are amortized on a straight line basis over a period of 4 to 5 years, from the date they of their first
use. The computer software maintenance costs are recorded in the consolidated income statement in the year in which they are incurred. |
Tangible assets
are initially recorded at their acquisition price, or cost of production. The cost of tangible assets acquired through business
combinations are recorded at their fair value at the date of acquisition. Certain assets from mergers are recorded at the contribution
value to the Group, or at values attributed to the Group’s consolidated financial statements, if the Group’s companies
were acquired by the Company.
The initial valuation
is adjusted by the respective accumulated depreciation, and where applicable, by impairment losses. Therefore, in case of loss
of value, the Group is able to estimate these through “impairment tests” (see Note 5-a), the possible loss of
value that reduces the recoverable value of these assets by an amount less than their book value, which is shown under “Impairment
of intangible and tangible assets” in the same Note. The recoverable value is determined as the highest level between the
fair value minus the cost of sales, or their current value.
When there
is a recovery in the value of an impaired tangible asset, the Group records the reversal of the impairment loss in previous years,
in the consolidated income statement, and are consequently adjusted by future depreciation charges. This reversal can never exceed
the increase in the book value that would have occurred if no impairment losses were had been recorded in previous years.
The work the
Group carries out on their own tangible assets includes the accumulated cost of external and internal costs, determined by the
consumption of materials and the staff costs which are applied using hourly rates calculated on the basis of the actual costs of
these personnel. As at 31 December 2014, there were no amounts recorded in tangible assets.
For certain
assets that require a period of over one year to be in a state ready for use, the capitalized costs include financial expenses
that were accrued before the associated assets began operating or were delivered by the supplier. Financial expenses also correspond
to loans and other types of external financing, specific or generic, directly attributable to the acquisition or manufacturing
of assets. During 2013 and 2014, the Group did not capitalize interests in assets.
The repair and
maintenance expenses incurred during the year are expensed to the consolidated income statement. However, the costs of expanding,
upgrading and improvements as capitalized as they represent an increase in productivity, capacity and efficiency, or an extension
of useful life of the assets.
Retired assets,
whether those produced as a result of an upgrading process or any other cause, are written off at their gross value, accumulated
depreciation, and, if applicable, impairment provisions.
The Group follows
a policy to transfer the tangible assets in progress to operating assets at the moment they are available, and depreciation begins
at this moment.
The operating
tangible assets are depreciated using the linear method, using the acquisition cost, cost of production of assets, or if applicable,
the current value minus its residual value as a base. Note that the land where the buildings and facilities are located has an
indefinite useful life, and therefore is not subject to depreciation.
Annual depreciation
provisions of tangible assets are made under “Tangible asset depreciation” in the consolidated income statement, by
the estimated years useful life of the assets which is outlined below:
Asset Nature | |
Estimated Years Useful Life | |
| |
| |
Buildings | |
| 33 | |
Machinery and installations | |
| 6.67 to 8.33 | |
Tools | |
| 3.33 | |
Furniture | |
| 10 | |
Transport elements | |
| 8.33 | |
Information processing software | |
| 4 | |
The estimated
useful life of tangible assets are frequently reviewed to identify any significant changes. If identified, the depreciation expense
will be prospectively adjusted in the income statement using the new useful life of these assets.
| | Leases are always classified as “financial leases” when the risks and benefits
from ownership of the assets are substantially transferred to the lessee. Other leases are classified as “operating leases”. |
Financial
leases
During 2013 and
2014 the Group had not signed, as a lessor or lessee, any contract that could be classified as a financial lease.
The assets recorded
for these type of operations are depreciated using similar criteria as those applied to tangible assets, by nature.
Operating
leases
Under operating
leases, the ownership of rented assets and, all associated risks and benefits are held by the lessor.
The Group
can act as lessor or lessee, and the corresponding income and expenses from the lease are expensed to the income statement in the
period in which they are accrued.
Any collection
or payment arising from the signature of an operating lease is treated either as a prepayment, if it is a payment, or as a deferred
income, if it is a collection. Both will be amortized over the length of the lease contract, as the benefits from the lease are
transferred or received.
A “financial
instrument” is a contract between a financial asset in one company, and a financial liability or equity security in another.
An “equity
instrument” is any contract that involves a residual interest in the assets of the issuing entity after deducting all
of its liabilities.
A “financial
derivative” is a financial instrument whose value changes in line with visible market variable changes (interest rate,
exchange rate, price of a financial instrument or market index).
Financial
Assets
The financial
assets that the Group owns are classified in the following categories:
| 1. | Loans and accounts receivable comprise of financial assets from the sale of assets or services
provided from the Group’s ordinary course of business, or those assets that do not have a sales origin, are not fixed assets,
or derivatives whose fees are fixed, and are not traded on the market. |
These financial
assets are initially recorded at their fair value, plus any additional directly attributable transaction costs. Subsequently, they
are valued at their amortized cost, calculated using the “effective interest rate method”, that is the rate
that entirely matches the initial value of the financial instrument to all its estimated cash flows throughout its remaining life.
For financial instruments with a fixed interest rate, the effective interest rate coincides with the interest rate established
at the moment of acquisition, and is adjusted, where applicable, by commissions and other transaction costs that can be included
in the calculation of this effective interest. For financial instruments with a variable interest rate, the effective interest
rate is estimated similarly to the fixed interest rate, and is recalculated at each date of review for the contractual interest
rate of the transaction, taking into account future cash flow changes of financial instruments.
At year end,
the Group carries out an “impairment test” on these financial assets. An impairment is required if the recoverable
value of the asset is less than the book value. In this case, the impairment is expensed to the consolidated income statement.
Regarding accounts
and other receivables, as at 31 December 2013 and 2014, Crystal Pharma, S.A.U. had credit guarantee insurance policies, to ensure
the payment of part of the individual customer balances, within the risk limits previously approved by them. For certain customer
balances that are not covered by these policies, valuation adjustments are made based on an individual analysis of each of the
clients and the corresponding provisions are also made based on the risk of possible insolvency regarding the collection of different
assets.
| 2. | Financial assets available for sale relate to debt and equity instruments of other companies
that have not been classified into another category and are recorded at their fair value, within “Equity”, until the
asset is sold or suffers a loss in value (temporary or permanent), at which stage these transactions, previously recorded
within “Equity”, are recorded to the consolidated income statement. The investments in equity instruments whose reasonable
value cannot be reliably calculated, are valued at cost, minus, the accumulated adjustments for the loss of value. |
| 3. | Other financial assets mainly comprised of fixed-term deposits granted that are recorded
in the balance sheet at their nominal value, as the effect of not discounting the future cash flows is insignificant. |
The Group writes-off financial assets
when they expire, or when they have transferred the cash flow rights of the corresponding financial asset, or they have transferred
the inherent risks or benefits to their property.
Financial
liabilities
Financial liabilities are debits
and accounts payable from the purchase of assets and services in the ordinary course of business. Liabilities with no commercial
nature cannot be considered as financial instrument derivatives.
Debits and accounts payable are
initially valued at their fair value of consideration received, adjusted by any directly attributable transaction costs. These
liabilities are then valued at their amortized cost, which is calculated under the “effective interest rate” method.
The Group writes-off financial liabilities
when the obligations they generated no longer exist.
Equity instruments
Equity instruments issued by the
Parent are recorded under “Net equity” on the consolidated balance sheet by the amount received, net of the issuing
costs.
Derivative
instruments
The Group uses financial derivatives,
“Interest Rate Swap” (IRS) to reduce exposure to interest rates. When these transactions meet certain requirements,
they are considered as “covered”. As at 31 December 2014, the Group had no financial derivatives as the only contract
of this type that the Group had signed with a financial institution expired in June 2014. As at 31 December 2013, this derivative
met the requirements to be classified as a “cash flow hedge”, and therefore, the variations in the fair value of this
derivative from 2013 were recorded in “Adjustments for changes in value” included in “Net Equity” in the
2013 consolidated balance sheet (see Notes 13 and 16).
The Group uses
the following criteria to value their stock::
| · | Raw materials, other supplies and commodities are valued at their price of acquisition using
their average weighted cost, or at their net realizable value, if the latter is lower. Trade and other discounts are deducted from
the price of acquisition. |
| · | Finished, semi-finished and work in progress products are valued at the lower amount of
either the actual average cost of production, which is subject to regular analysis and review, or the net realizable value. |
| · | The net realizable value represents the sale price, minus all estimated costs to complete the manufacture
of these products, and the costs incurred in the sales and distribution processes. |
| · | The valuation of obsolete, damaged or slow moving products have been reduced to their possible
realizable value. In cases where the net realizable value is lower than the price of acquisition or cost of production, valuation
adjustments are made, and are recorded as an expense in the consolidated income statement for that year. |
| g) | Grants, donations and legacies received |
The Group accounts for grants, donations
and legacies received as follows:
| · | Non-refundable grants, donations or legacies are recorded in the caption “income recorded
directly in net equity” (at the moment they are expected to meet conditions before they are granted, and when there are
no doubts regarding their payment). They are measured at the fair value of the amount or asset received, based on whether or
not they are monetary grants, and they are transferred to income in proportion of that period’s depreciation on the assets
for which the grants were received. Alternatively, where appropriate, on disposal of the asset or on the recognition of an impairment
loss, with the exception of the grants received from the Parent’s shareholders which are recorded directly in “Shareholders’
funds” and do not give rise to the recognition of income of any kind. |
| · | Refundable grants while they are refundable, they are recorded as liabilities. |
| · | Operating subsidies are credited to income the moment they are granted, except if they are
used to finance an operating deficit of future periods, in which case they would be deferred to this period. If they are granted
to finance specific expenses, they would be recorded as the expenses are incurred. |
| h) | Provisions and contingencies |
To prepare the
consolidated financial statements, the Parent’s Directors differentiate between the following:
| a) | Provisions: creditor balances that cover current obligations from previous events, the nature
of which is clearly specified, but the amount and/or reversal date are uncertain, and the reversal is likely to lead to an outflow
of resources. |
| b) | Contingent liabilities: possible obligations that arise from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the control of the Group. |
The consolidated
balance sheet records all provisions whose probability that the obligation will have to be settled is more likely than unlikely.
The contingent liabilities not recorded in the balance sheet are included in the consolidated notes.
The provisions
are valued at their current value using the best possible estimate of the amount required to settle or transfer the obligation,
using the information available regarding the event and its consequences. Adjustments made to provisions are recorded as a financial
expense on an accrual basis.
The compensation
to be received from a third party on settlement of the obligation is recorded as an asset, provided that there are no doubts that
the reimbursement will take place, unless there is a legal relationship whereby a portion of the risk has been externalized as
a result of which the Company is not liable; in this situation, the compensation will be taken into account for the purpose of
estimating the amount of the related provision that should be recorded.
Lawsuits and/or claims in
process
As at 31 December
2014, there were no outstanding lawsuits or claims against the consolidated companies that could significantly affect the 2014
consolidated financial statements.
| i) | Commitments to personnel |
Multi-annual remuneration
plan
In 2013 Gadea
Grupo Farmacéutico, S.L.’s Directors approved a multi-annual remuneration plan to certain Grupo Gadea employees. The
plan consisted of payments of determined amounts during 2014, 2015 and 2016, which are accrued between 2013 and 2015, provided
that the employees remain in the Group, and certain strategic objectives are met. The total amount for all the Group’s companies
amounted to €360k. The amount accrued by the Group as at 31 December 2014 for this item amounted to €120k, and has been
recorded under “Accounts and other payables – Personnel” in the 2014 consolidated balance sheet, and under “Personnel
expenses – balances, salaries and similar” in the 2014 consolidated income statement.
In accordance
with the current working legislations, the consolidated companies must pay severance payments, under certain circumstances, to
employees whose employment is terminated. Severance payments are recorded as an expense in the period in which the Parent’s
Directors decide to terminate the employment. The 2014 consolidated financial statements did not record a provision for this concept,
as no situations of this nature are expected to arise.
Tax expense or
income tax comprises of current tax expenses and deferred tax income.
The current income
tax is the amount payable by the Group as a result of the income tax settlements for a given year. Tax credits and other tax benefits,
excluding tax withholdings, tax prepayments and tax loss carry forwards from previous years effectively offset in the current year
reduce the current income tax.
The deferred tax
expense or income relates to the recognition or derecognition of deferred tax assets and liabilities. These include temporary differences
measured at the amount expected to be payable or recoverable on differences between the book value of the assets and liabilities
and their tax bases, and tax loss / credit carry forwards. These amounts are recorded by applying the temporary difference or credit
corresponding to the tax rate that is expected to be recovered or settled.
Deferred tax liabilities
are recorded for all taxable temporary differences, except for those arising from the initial recognition of goodwill and other
assets and liabilities in a transaction that is not a business combination, and will not affect the taxable profit or accounting
profit.
However, deferred
tax assets are only recorded to the extent that the Company believes it is likely to have sufficient taxable profits in the future
to recover them.
Deferred tax assets
and liabilities from transactions charged or credited directly to equity are also recorded directly in net equity.
At each accounting
close, the deferred tax assets recorded are reviewed and appropriate adjustments are made where there are doubts as to their future
recoverability. At each accounting close the deferred tax assets that have not been recorded in the consolidated balance sheet
are assessed and recorded to the extent that their recovery against future taxable profits is likely.
Gadea Grupo Farmacéutico,
S.L. and their Spanish consolidated subsidiaries (Crystal Pharma, S.A.U., Gadea Biopharma, S.L.U., Bioraw, S.L.U. and Bionice,
S.L.U.) are charged income tax under the consolidated regime, as part of tax Group 0075/09, whose Parent is Gadea Grupo Farmacéutico,
S.L. (Notes 1 and 17)
The Institute
of Accounting and Auditing and the Group’s policies establish that for each of the companies within the tax Group, the income
tax or expense is determined based on the profit before taxes. This amount can be increased or decreased, where applicable, by
the permanent differences from the taxable profit, which is understood as the tax base, minus deductions and credits that correspond
to each company of the tax Group in the consolidated tax regime.
Income and expenses
are recorded on an accrual basis, i.e. when the actual flow of the related goods and services occurs, regardless of when the resulting
monetary or financial flow occurs. Income is measured at the fair value of the consideration received, net of discounts and taxes.
Income is recorded
when the significant risks and rewards of ownership of goods sold have been transferred to the buyer, and the Company no longer
continues to manage the goods, or retain effective control over them.
Income from the
services provided are proportionally recognized in the income statement using the percentage of completion method, provided the
outcome of the transaction can be reliably estimated.
The sale and transfer
of pharmaceutical “dossiers” are recorded when the compensation received is non-refundable, and relates to the compensation
of costs carried out before the sale or transfer, when there are no future obligations assumed by the Group under different market
conditions, and the risks and benefits are transferred to the asset. Otherwise, the payment is recorded as a deferred income in
the current period, for the remaining life of the product, or the remainder of the period, depending on the specific circumstances
of the agreements.
Interest income
from the financial assets is recorded using the “effective interest rate” method. In any case, the interest
accrued by financial assets after the moment of acquisition is recorded as income in the consolidated income statement.
| m) | Classification of current assets and liabilities |
Assets and liabilities are classified
as either current or non-current in the consolidated balance sheet. Current assets and liabilities are those that the Group hopes
to sell, use, or pay in the ordinary course of business, within 12 months. All other assets and liabilities are classified as non-current,
except those that are expected to be recovered, used, or settled within 12 months from the date of the consolidated balance sheet.
If, after the year end, the liability does not have an unconditional right for the Group to defer its settlement for at least twelve
months from the date of the consolidated balance sheet, this liability would be classified as current.
| n) | Transactions in foreign currency |
Assets and liabilities
whose price is stated in foreign currency are converted to the national currency using the current exchange rate at the date of
the transaction, or at the date when the assets were included in the Group’s equity.
The conversion
of credits and debits into the national currency from foreign currency is made by applying the exchange rate at the time of carrying
out the transaction, valued at the year end, according to the exchange rate at that time. Any profits or losses are directly expensed
to the consolidated income statement for the corresponding year.
| o) | Transactions with related parties |
The Group carries
out transactions with related parties at market value. The transfer pricing is adequately supported, and therefore the Parent’s
Directors believe that there are no associated risks that could give rise to potential liabilities in the future.
Assets of environmental
nature
Assets of environmental
nature consist of goods that are permanently used in the Group’s business, to minimize the Group’s environmental impact,
and protect and improve the environment, including the reduction or elimination of future pollution. These assets are recorded
under “Tangible assets” in the consolidated balance sheet.
To record these
assets, the price of acquisition or cost of production is determined in accordance with the valuation principles outlined in Note
5-c.
Environmental expenses
Environmental
expenses relate to accruals for the Directors of the environmental effects of the Group’s operations, and amounts from current
environmental agreements that are considered to have an environmental nature. This includes occasional expenses for the prevention
of pollution relating to current business, waste treatment, decontamination, and environmental management and audit.
The environmental
expenses from these activities are included as operating expenses in the period in which they are accrued and are recorded in the
consolidated income statement by nature.
| q) | Discontinued operations |
A discontinued
operation is a business line that has ended or been transferred, whose assets, liabilities and profits can be distinguished physically,
operationally or for financial accounting purposes. The income and expenses from discontinued operations are presented separately
in the consolidated income statement.
During 2013 and
2014, the Group had no discontinued operations.
Below are definitions
of the terms used in the cash flow statement:
| · | Cash flows: cash inflows or outflows, understood as short-term, highly liquid investments,
subject to low risk of changes in value. |
| · | Operating activities: the Group’s typical activities that cannot be classified as
investing or financing activities. |
| · | Investment activities: relate to the acquisition, sale or disposal of long term assets and
other investments classified as cash and cash equivalents. |
| · | Financing activities: activities that result in changes in the size and composition of equity
and liabilities. |
| · | As cash and cash equivalents are included in cash in hand, the current accounts, deposits and the
temporary acquisition of assets meet the following criteria: |
| – | They will convert to cash |
| – | At the point of acquisition, their maturity will not be more than three months. |
| – | They are not subject to a significant risk of change in value. |
| – | They form part of the Company’s cash Directors policy. |
| s) | Statement of changes in consolidated equity |
Changes in the consolidated equity
included in the consolidated financial statements show the changes during that period. This information is broken down in two statements:
by income and expenses recorded, and the total changes in consolidated equity. The main characteristics of both are explained below:
Income and expenses
Income and expenses generated by
the Group from the normal course of business during the period are recorded in the statement of changes in consolidated equity,
distinguished between those recorded as income in the consolidated income statement of the period, and other income and expenses
recorded directly in consolidated net equity, in accordance with the regulatory framework.
The income and expenses statement
includes the following:
| a) | The profit for the period. |
| b) | The net amount of income and expenses recorded directly in consolidated net equity (the amount
of income, net of expenses from that period which are directly recorded in net equity. These expenses remain in this caption,
even though they would be recorded in the consolidated income statement for the same period, or would be reclassified to a different
caption). |
| c) | The amount transferred to the consolidated income statement from consolidated net equity (valuation
of income and expenses and investment grants previously recorded in consolidated net equity, although they are recorded in the
consolidated income statement for the same period). |
| d) | The total income and expenses recorded, calculated as the sum of the above. |
The amounts of these items are recorded
at their gross amount, showing their corresponding tax effect under the heading “Tax effect”.
Changes in the consolidated net equity
Changes in consolidated net equity,
includes all changes to net equity including those that originate from changes in accounting criteria and from the correction of
errors. Therefore, it shows a reconciliation between the opening and closing book value of all items that form net equity, grouping
movements based on their nature into the following items:
| a) | Adjustments due to changes in accounting policies and the correction of errors that includes changes
in net equity as a result of the restatement of the balances in the financial statements due to changes in accounting policies
or the correction of errors. |
| b) | Income and expenses recorded in the period: includes the aggregated total of all items recorded
in the aforementioned consolidated income statement. |
Other variations
in net equity: includes the remaining items recorded in consolidated net equity, such as increases or decreases in the Parent’s
capital, the distribution of income, operations with own equity instruments, payments with equity instruments, transfers between
consolidated net equity items, and any other increase or decrease in consolidated net equity.
The table below shows the variations between
the 2013 and 2014 costs, accumulated amortization, and impairment losses of intangible assets:
| |
€k | |
| |
Balance as
at 31/12/12 | | |
Additions
or charges | | |
Transfers to
tangible assets (Note 7) | | |
Balance as
at 31/12/13 | | |
Additions
or charges | | |
Exits due to
changes in the consolidation perimeter (Note 2-e) | | |
Balance as
at 31/12/14 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Consolidated goodwill | |
| 2,409 | | |
| - | | |
| - | | |
| 2,409 | | |
| - | | |
| (229 | ) | |
| 2,180 | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| 5,029 | | |
| 858 | | |
| - | | |
| 5,887 | | |
| - | | |
| (1,434 | ) | |
| 4,453 | |
Patents, licenses and trademarks | |
| 15,956 | | |
| - | | |
| - | | |
| 15,956 | | |
| - | | |
| - | | |
| 15,956 | |
Computer software. | |
| 150 | | |
| 98 | | |
| 34 | | |
| 282 | | |
| 20 | | |
| (53 | ) | |
| 249 | |
| |
| 23,544 | | |
| 956 | | |
| 34 | | |
| 24,534 | | |
| 20 | | |
| (1,716 | ) | |
| 22,838 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated amortization | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| (3,561 | ) | |
| (275 | ) | |
| - | | |
| (3,836 | ) | |
| (126 | ) | |
| 114 | | |
| (3,848 | ) |
Patents, licenses and trademarks | |
| (15,060 | ) | |
| (370 | ) | |
| - | | |
| (15,430 | ) | |
| (318 | ) | |
| - | | |
| (15,748 | ) |
Computer software | |
| (89 | ) | |
| (18 | ) | |
| - | | |
| (107 | ) | |
| (44 | ) | |
| 21 | | |
| (130 | ) |
| |
| (18,710 | ) | |
| (663 | ) | |
| - | | |
| (19,373 | ) | |
| (488 | ) | |
| 135 | | |
| (19,726 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Impairment losses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other intangible assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| - | | |
| (282 | ) | |
| - | | |
| (282 | ) | |
| (231 | ) | |
| 282 | | |
| (231 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Consolidated goodwill | |
| 2,409 | | |
| | | |
| | | |
| 2,409 | | |
| | | |
| | | |
| 2,180 | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| 1,468 | | |
| | | |
| | | |
| 1,769 | | |
| | | |
| | | |
| 374 | |
Patents, license and trademarks | |
| 896 | | |
| | | |
| | | |
| 526 | | |
| | | |
| | | |
| 208 | |
Computer software. | |
| 61 | | |
| | | |
| | | |
| 175 | | |
| | | |
| | | |
| 119 | |
| |
| 4,834 | | |
| | | |
| | | |
| 4,879 | | |
| | | |
| | | |
| 2,881 | |
Consolidated goodwill
The breakdown of this caption
of the balance sheet as at 31 December 2013 and 2014 was the following:
| |
€k | |
Company | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Crystal Pharma, S.A.U. | |
| 2,046 | | |
| 2,046 | |
Crystal Pharma, Ltd. | |
| 134 | | |
| 134 | |
Cyndea Pharma, S.L. | |
| - | | |
| 229 | |
| |
| 2,180 | | |
| 2,409 | |
On 24 April 2007 the Parent
acquired shares representing 100% of the share capital of Crystal Pharma, S.A.U. and Ragactives, S.L.U., through a contribution
in kind. The latter company was acquired in 2011 by Crystal Pharma, S.A.U. (see Note 1). To calculate the consolidated goodwill
from this acquisition, the Group previously assigned a portion of the positive goodwill to patents and the ownership of certain
active ingredients (based on the current value of the gross margin of these active ingredients being redeveloped), to the
finished products and work in progress stock at that date (based on the margin applied to the stock at the date of acquisition),
and to a credit for R&D deductions, and those yet to be applied by the acquired companies at the end of 2006.
On 14 December 2005 Crystal
Pharma, S.A.U. acquired shares representing 100% of the share capital of Crystal Pharma, Ltd., with a registered address in Malta,
and previously named Solea Pharma, Ltd (see Note 1). To calculate the consolidated goodwill, the Group previously assigned a portion
of the positive goodwill, the tangible assets of this company, based on a technical study (appraisal) made at the time of
acquisition.
Additions and disposals in 2012 and 2013
In 2014, the goodwill relating to Cyndea Pharma,
S.L. was written-off as the Parent sold its shareholding in this company, and it exited the consolidation perimeter (see Note 2-e).
There were no changes in
“Consolidated goodwill” during 2014, nor was any part of its value reassigned to the Group’s other assets (in
2013, there were no movements on this account). According to the Group’s Directors, no goodwill suffered an impairment
loss during 2014.
Impairment tests
The Parent used the “Discounted
cash flow” method to determine the recoverable amount of both the goodwill recorded as at 31 December 2014, and the remaining
intangible and tangible assets associated with the cash generating units. The main assumptions used were the following:
| · | The Business Plan, approved by the Group’s Directors and the Board of Directors of Gadea
Grupo Farmacéutico, S.L., which is used as a starting point for the Group’s budget for the next period, has been used
to prepare the Group’s financial projections for the following years and the cash generating units under review. |
Apart from the
forecast results, investment forecasts (that would remain constant from 2015) and non-cash working capital variations (that
would increase annually) have also been prepared.
| · | The Parent’s Directors annually prepare a business plan for each cash generating unit, covering
a period typically of 5 years. The main components of this plan are the following: |
| - | Investment and non-cash working capital projections. |
| · | These projections cover a period of 5 years. |
| · | The most significant assumptions used for 2014 onwards, which have been considered as “moderate”
by the Parent’s Directors based on the Group’s historical information, are the following: |
| |
Discount rate (WACC) | | |
Annual growth in sales | | |
Gross margin growth | |
Residual growth rate (b) | |
| |
| | |
| | |
| |
| |
Crystal Pharma, S.A.U. | |
| 10 | % | |
| 5 | % | |
Constant | |
| 0 | % |
Crystal Pharma, Ltd. | |
| 10 | % | |
| 5 | % | |
Constant | |
| 0 | % |
Gadea Biopharma, S.L.U. (a) | |
| 10 | % | |
| 5 | % | |
Constant | |
| 0 | % |
| (a) | This consolidated subsidiary started business in 2013 and will reach its optimal production rate
in future years. |
| (b) | Zero growth rate of normalized cash flows from the fifth year onwards (consistent with the International
Accounting Standards). |
Based on the latest financial
projections prepared for the future years, the Parent’s Directors expects that the forecast profit and cash flows regarding
each consolidated subsidiary strongly support the value of the goodwill and remaining intangible (except certain development
expenses) and tangible assets. They also believe that no impairments are required. They have also carried out a sensitivity
analysis of the goodwill for the impairment tests, which conclude that reasonable changes in the main assumptions will not require
impairment losses to be recorded.
Development
Development expenses as at 31 December 2013
and 2014 mainly related to expenses incurred by the Group through various projects to develop new products.
There were no additions in 2014; however the
2013 additions mainly related to the external costs incurred by Cyndea Pharma, S.L. for the pharmaceutical and clinical development
of oral contraceptives, and the external costs incurred by Gadea Biopharma, S.L.U. for the development of new ophthalmic and injectable
medication, and to obtain intermediate active ingredients through biotechnical processes.
The cash outflows recorded
in 2014 relate to the write-off of the development expenses attributable to Cyndea Pharma, S.L. due to its exit from the consolidation
perimeter (see Note 2-e).
At 2014 year end, the Parent’s
Directors identified reasonable doubts regarding certain development projects (given that in the current market conditions,
they were not profitable, and/or their product was postponed until the economic situation of the country improved to enhance success),
as their estimated recoverable value was lower than the value at which they were recorded. Therefore, an impairment loss of
€231k was recorded under “Impairment and gains on disposal of fixed assets – Impairments and losses” in
the 2014 consolidated income statement.
Patents, licenses and trademarks
As at 31 December 2014, the majority of this
balance related to the valuation of the rights of Crystal Pharma, S.A.U.’s main products, as a result of joining the Group,
and the cost of a right of a pharmaceutical ingredient, that was acquired in 2010 by the related company, Gentec, S.A. for €2m.
As at 31 December 2014, the Parent´s
Directors estimated the recoverable value of these intangible assets. The recoverable amount is the greater amount between the
fair value minus the costs of sales, or the current value. To perform the “impairment test” Directors uses the
“discounted cash flow” method to calculate the value of their patents, licenses and trademarks, including both forecasts
of profits and cash flows from the sale of certain products under these patents and licenses, and future investment requirements.
Based on the analysis carried out, their current value was greater than the book value as at 31 December 2014, and therefore no
impairment was required.
Fully amortized items
Certain assets belonging to the Group (mostly
patents, trademarks, and development expenses) were fully amortized as at 31 December 2014, whose total cost value and amortization
together amounted to €17.700m (€17.257m as at 31 December 2013).
The table below shows the variations between
the 2013 and 2014 costs, accumulated depreciation, and impairment losses of tangible assets:
2014
| |
€k | |
| |
Opening balance | | |
Additions or charges | | |
Cash outflows due to changes in the consolidation perimeter (Note 2-e) | | |
Transfers between accounts | | |
Final balance | |
| |
| | |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 9,894 | | |
| 1,099 | | |
| (1,995 | ) | |
| 66 | | |
| 9,064 | |
Production equipment & other tangible assets | |
| 37,216 | | |
| 5,411 | | |
| (9,687 | ) | |
| 1,243 | | |
| 34,183 | |
Tangible assets in progress and advances | |
| 2,681 | | |
| 633 | | |
| - | | |
| (1,309 | ) | |
| 2,005 | |
| |
| 49,791 | | |
| 7,143 | | |
| (11,682 | ) | |
| - | | |
| 45,252 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation- | |
| | | |
| | | |
| | | |
| | | |
| | |
Buildings | |
| (1,292 | ) | |
| (225 | ) | |
| 275 | | |
| - | | |
| (1,242 | ) |
Production equipment & other tangible assets | |
| (19,987 | ) | |
| (3,156 | ) | |
| 4,149 | | |
| - | | |
| (18,994 | ) |
| |
| (21,279 | ) | |
| (3,381 | ) | |
| 4,424 | | |
| - | | |
| (20,236 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 8,602 | | |
| | | |
| | | |
| | | |
| 7,822 | |
Production equipment & other tangible assets | |
| 17,229 | | |
| | | |
| | | |
| | | |
| 15,189 | |
Tangible assets in progress and advances | |
| 2,681 | | |
| | | |
| | | |
| | | |
| 2,005 | |
| |
| 28,512 | | |
| | | |
| | | |
| | | |
| 25,016 | |
2013
| |
€k | |
| |
Opening balance | | |
Additions or charges | | |
Transfers between accounts | | |
Transfers to intangible assets (Note 6) | | |
Final balance | |
| |
| | |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 7,069 | | |
| 457 | | |
| 2,368 | | |
| - | | |
| 9,894 | |
Production equipment & other tangible assets | |
| 30,189 | | |
| 3,880 | | |
| 3,147 | | |
| - | | |
| 37,216 | |
Tangible assets in progress and advances | |
| 6,719 | | |
| 1,511 | | |
| (5,515 | ) | |
| (34 | ) | |
| 2,681 | |
| |
| 43,977 | | |
| 5,848 | | |
| - | | |
| (34 | ) | |
| 49,791 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation- | |
| | | |
| | | |
| | | |
| | | |
| | |
Buildings | |
| (1,096 | ) | |
| (196 | ) | |
| - | | |
| - | | |
| (1,292 | ) |
Production equipment & other tangible assets | |
| (17,205 | ) | |
| (2,782 | ) | |
| - | | |
| - | | |
| (19,987 | ) |
| |
| (18,301 | ) | |
| (2,978 | ) | |
| - | | |
| - | | |
| (21,279 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 5,973 | | |
| | | |
| | | |
| | | |
| 8,602 | |
Production equipment & other tangible assets | |
| 12,984 | | |
| | | |
| | | |
| | | |
| 17,229 | |
Tangible assets in progress and advances | |
| 6,719 | | |
| | | |
| | | |
| | | |
| 2,681 | |
| |
| 25,676 | | |
| | | |
| | | |
| | | |
| 28,512 | |
Land and buildings
As at 31 December 2014, land and buildings
mainly related to the production plants that the Group owns in Parque Tecnológico de Boeillo (Valladolid), Parque Tecnológico
de León and San Cristóbal de Entreviñas (Zamora) which was acquired in 2014. As at 31 December 2013, this
account also included a proportional part of the production plant that Cyndea Pharma, S.L had in Polígono Industrial Emiliano
Revilla de Ólvega (Soria). Cyndea Pharma, S.L’s shareholding in this production plant was sold in 2014.
As at 31 December 2014, the net value of the
land included within “Land and buildings” amounted to €1.992m (€1.925m as at 31 December 2013).
Additions in 2013 and 2014
2014
The most significant additions recorded during
2014 related to Bioraw, S.L.U. acquiring a production plant in San Cristóbal de Entreviñas (Zamora), and the investments
made for adapting, refurbishing and improving this plant in order to obtain intermediate active ingredients through biotechnical
processes. The most significant additions also included the investments made to expand the Crystal Pharma, S.A.U. steroids production
plant which is located in Parque Tecnológico de León, and other investments made to refurbish and improve the Crystal
Pharma, Ltd production plant in Malta.
2013
The most significant additions recorded during
2013 relate to investments made to complete the construction and equipment in the Gadea Biopharma, S.L.U. production plant in Parque
Tecnológico de Leon. This process began in previous years, and the plant began operating in the last months of 2013. During
2013, the jointly controlled entity Cyndea Pharma, S.L. also made investments for a weighing balance enclosure, and laboratory
equipment. As at 31 December 2013 tangible assets in progress also included investments made by Crystal Pharma, S.A.U. for the
acquisition various reactors, and different equipment ranging from a centrifuge and vacuum rotary drum pre-coating machine, whose
implementation had not been completed at 31 December 2013, but are expected to begin operating during 2014.
Transfers from “Tangible assets - Tangible
assets in progress and advances” to other tangible items, relate mostly to the investments in the Boecillo factory (Valladolid),
which began operating in 2013.
2012 and 2013 withdrawals
The cash outflows recorded in 2014 were due
to the write-off of the Group’s proportional part of Cyndea Pharma, S.L’s tangible assets (the production plant
in Ólvega, Soria) as a result of the sale of the Group’s shareholding in this jointly controlled entity and its
subsequent exit from the consolidation perimeter (see Note 2-e)
No fixed asset retirements took place during
2013.
Mortgage loans and other charges
The land and buildings of the production plant
at Parque Tecnológico de León were mortgaged as a guarantee for the payment of a loan granted to the Parent whose
outstanding principal to be repaid as at 31 December 2013 and 2014 amounted to €2.717m (see Note 16).
Loans granted
The acquisition of some of the Group’s
tangible assets has been partially financed through investment grants received from public bodies (see Note 14).
Capitalized financial expenses
The Group did not capitalize financial expenses
in “Tangible assets” in 2013 or 2014.
Operating rental expenses
In their capacity as lessee, Grupo Gadea’s
most significant operating rental contracts as at 31 December 2013 and 2014 related to transport, furniture and machinery. The
total contracted rental expenses during 2014 amounted to €120k (€133k in 2013) that was recorded under “Other
operating expenses- Exterior services” in the consolidated income statement (see Note 19). These rental payments relate to
the contractually agreed minimum payments. There are no contingent payments.
As at 31 December 2014, and in accordance with
the Group’s rental agreements, the minimum payments that the Group had with their lessors were not significant.
Assets located abroad
The Group’s tangible assets located outside
of Spain as at 31 December 2013 were those owned by Crystal Pharma, Ltd., whose net value at this date amounted to €1.089m
(€882k as at 31 December 2013).
Fully depreciated assets
As at 31 December 2013 and 2014, the Group
had fully depreciated assets whose total cost value and accumulated depreciation amounted to €9.606m and €10.554m, respectively,
and is outlined below:
| |
€k | |
Nature of assets | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Machinery and equipment | |
| 10,011 | | |
| 8,151 | |
Other installations, tools and furniture | |
| 159 | | |
| 88 | |
Other fixed assets | |
| 384 | | |
| 1,370 | |
| |
| 10,554 | | |
| 9,609 | |
Insurance policy
The Group has insurance policies to cover
the possible risks relating to tangible assets. According to the Parent’s Directors, the contracted policies are adequate.
“Long-term financial investments”
and “Short-term financial investments” on the consolidated balance sheet as at 31 December 2013 and 2014 consisted
of the following:
| |
€k | |
Item | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Long-term financial investments- | |
| | | |
| | |
Third party loans | |
| - | | |
| 1,000 | |
Equity instruments | |
| 9 | | |
| 64 | |
Long-term deposits and guarantees | |
| 13 | | |
| 12 | |
| |
| 22 | | |
| 1,076 | |
| |
| | | |
| | |
Short-term financial investments | |
| | | |
| | |
Third party loans | |
| - | | |
| 147 | |
Other financial assets | |
| 1,006 | | |
| 4 | |
| |
| 1,006 | | |
| 151 | |
Long-term financial investments – equity instruments
As at 31 December 2014, the balances under
this caption related to minority shareholdings in other companies, such as Iberaval, S.G.R. (mutual guarantee company of Castilla
y León). These investments were recorded at their acquisition cost.
Long-term third party loans
As at 31 December 2013, long-term third party
loans related to part of a participating loan amounting to €2m, which was granted by the Parent to the jointly controlled
entity Cyndea Pharma, S.L. that was not eliminated from the consolidation process, and would remain to be collected by another
partner of Cyndea Pharma, S.L. This loan has a maturity date of 1 January 2019, and bears a fixed interest rate of 4%, and a variable
interest rate up to 2% (depending on the operating profits of Cyndea Pharma, S.L.).
The deed of sale for the Group’s shareholding
in Cyndea Pharma, S.L., which was granted on 19 September 2014 (see Note 2-e), states that this loan was repaid in advance before
the 2014 year end.
As at 31 December 2014, the Group did not have
any outstanding loan or credit payments to be collected relating to Cyndea Pharma, S.L., or any of its current partners.
Other short-term financial assets
As at 31 December 2014, this item included
in the balance sheet mainly related to a fixed-term deposit with a financial entity that amounted to €1m with market interest
rates and a final contractual maturity in 2016.
Although the maturity of this deposit is due
in 2016, the signed contract includes the possibility of the Group canceling this maturity at certain intermediate dates with no
subsequent penalties. Therefore, given that this deposit is available in practice in the short-term, the Parent’s Directors
have decided to include the deposit’s amount in “Current Assets” within the consolidated balance sheet dated
31 December 2014.
As at 31 December 2013 and 2014, the Group’s
stock comprised of the following:
| |
€k | |
Item | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Raw materials and other supplies | |
| 7,446 | | |
| 5,170 | |
Work in progress | |
| 6,766 | | |
| 7,059 | |
Finished products | |
| 5,738 | | |
| 8,175 | |
Prepayments to suppliers | |
| 23 | | |
| 20 | |
| |
| 19,973 | | |
| 20,424 | |
Commitments to buy and sell stock
As at 31 December 2014, the Group had contracted
firm purchase commitments for raw materials amounting to $5.443m (approximately €4.498m) whose delivery is scheduled
for the first months of 2015 (€7.912m as at 31 December 2013, whose delivery was scheduled for the first months of 2014).
At year-end 2014, the Group also had firm sales commitments for finished products amounting to €14.224m and $10.439m (approximately
€22.815m) whose delivery is also scheduled for the first months of 2015 (€7.547m and $11.611m as at 31 December
2013, whose delivery was scheduled for the first months of 2014).
Insurance policy
The Group has insurance policies to cover the
possible risks relating to stock. According to the Parent`s Directors, the contracted policies are adequate.
Client receivables as at 31 December 2013 and
2014 comprised of the following:
| |
€k | |
Item | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Client receivables | |
| 16,606 | | |
| 13,554 | |
Client receivables, related parties (Note 20) | |
| 2,295 | | |
| 2,079 | |
| |
| 18,901 | | |
| 15,633 | |
The group has credit guarantee policies to
ensure the collection of a significant part of the individual customer balances, within the risk limits previously approved. As
at 2013 and 2014 year-end, there were no impairments to correct the fair value of “Customer receivables for sales and services”.
| 11. | Cash and cash equivalents |
Cash
As at December 2013 and 2014, the cash item
of the consolidated balance sheet almost entirely comprised of amounts deposited in Grupo Gadea’s current accounts with financial
entities, which are almost entirely in euros or US dollars, freely available and paid at market rates.
Other cash equivalents
“Other cash equivalents” in the
consolidated balance sheet comprised of highly liquid financial investments (time deposits) that are easily converted to
cash and with a maturity no greater than three months. They do not have significant risks in changing value and form part of the
Group’s normal cash Directors.
As at 31 December 2014, the Group had a fixed
term deposit with a financial entity, with a maturity date greater than 3 months from the date of the transaction, which amounted
to €70k. The accrued interest rate for this investment is 2%.
The balance as at 31 December 2013 related
to a fixed-term deposit with a financial entity which amounted to €66k and had a market yield of 2%.
Foreign cash and cash equivalents
As at 31 December 2014 Crystal Pharma, Ltd.
had balances in Maltese bank accounts, under Article 2 bis 4 b) of RD 1558/2012 which are outlined below:
| - | Current account number MT33MMEB44428000000042111989001 with a balance of €468k as at 31 December
2014 which was opened in HSBC Bank (Malta) PLC, Operations Center, Mill Street. Qormi QRM 3103, Malta (the balance as at 31
December 2013 amounted to €123k). |
| - | Deposit number MT55VALL22013000000040018825266 with a balance of €70k as at 31 December 2014,
which was opened in Bank of Valletta PLC, Wignacourt Centre, Triq II Kbira San Guzepp, Santa Venera SVR 1011, Malta (the balance
as at 31 December 2013 amounted to €66k). |
Capital
As at 31 December 2012 and 2013, Gadea Grupo
Farmacéutico, S.L.’s share capital comprised of 2,618,923,039 shares, each with a nominal value of €0.01, that
were fully subscribed and paid. All shares have the same voting and dividend rights.
The Gadea Grupo Farmacéutico, S.L.’s
share structure as at 31 December 2013 and 2014 was the following:
Partner | |
Percentage ownership | |
| |
| |
Tendeña XXI, S.L. | |
| 38.22 | |
Gentec, S.A. | |
| 18.35 | |
3-Gutinver, S.L. (a) | |
| 13.68 | |
Other Partners | |
| 29.75 | |
| |
| 100.00 | |
| (a) | 3-Gutinver, S.L. directly owned a shareholding of 13.68%, and indirectly owned 25.49% through Tendeña
XXI, S.L. (affiliated company of 3-Gutinver, S.L. of 66.70%) and 0.71% indirectly through Antartis Pharma, S.L. (affiliated
company of 3-Gutinver, S.L. of 11.49%). |
In March 2015, an amendment of the Parent’s
shareholding was made. As a consequence, Gentec, S.A. was no longer a partner and its shareholding was acquired by the majority
of the Parent’s remaining partners.
Share premium
Current sales legislation allows the use
of share premium to increase the capital, and does not establish any type of restriction regarding the availability of this balance.
Reserves
Parent’s reserves
The table below shows the Parent’s
reserves and their distribution as at 31 December 2013 and 2014:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
| |
Distributable | | |
Non- distributable | | |
Total | | |
Distributable | | |
Non- distributable | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Legal reserves | |
| - | | |
| 2,136 | | |
| 2,136 | | |
| - | | |
| 1,502 | | |
| 1,502 | |
Other reserves | |
| 2,426 | | |
| - | | |
| 2,426 | | |
| 1,069 | | |
| - | | |
| 1,069 | |
Consolidated reserves | |
| - | | |
| (1,844 | ) | |
| (1,844 | ) | |
| - | | |
| 6,900 | | |
| 6,900 | |
| |
| 2,426 | | |
| 292 | | |
| 2,718 | | |
| 1,069 | | |
| 8,402 | | |
| 9,471 | |
Legal reserve
Under the Consolidated Spanish Companies
Law, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least
20% of the share capital (see Note 4). As at 31 December 2013 and 2014, the legal reserve did not reach 20% of the Parent’s
share capital.
The legal reserve can be used to increase
capital provided that the remaining reserve does not fall below 10% of the increased share capital.
Otherwise and until the legal reserve exceeds
20% of share capital, it can only be used to offset losses, provided that no other reserves are available for that same purpose.
Other reserves
Other reserves relate to voluntary reserves
recorded in the Parent’s accounts as at 31 December 2013 and 2014 that were freely available.
Reserves in consolidated
companies
The breakdown by company of the reserves
in the consolidated balance sheet as at 31 December 2013 and 2014 was the following:
| |
€k | |
Company | |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Reserves in consolidated subsidiaries - | |
| | | |
| | |
Crystal Pharma, S.A.U. | |
| 5,672 | | |
| 177 | |
Crystal Pharma, Ltd. | |
| 596 | | |
| 159 | |
Gadea Biopharma, S.L.U. | |
| (2,288 | ) | |
| (754 | ) |
| |
| 3,980 | | |
| (418 | ) |
Reserves in jointly controlled entities - | |
| | | |
| | |
Cyndea Pharma, S.L. (a) | |
| - | | |
| (3,326 | ) |
| |
| 3,980 | | |
| (3,744 | ) |
| (a) | As a result of this company exiting the consolidation perimeter in 2014, the reserves invested
by the latter have been allocated to the Parent, who was the previous owner of the Cyndea Pharma, S.L. shareholding. |
The consolidated subsidiary Crystal Pharma,
S.A.U. prohibits the distribution of voluntary reserves while the development expenses that are capitalized in intangible assets
have not been fully amortized, unless the amount of available reserves is at least equal to the amounts of the non-amortized balances.
Therefore, the €45k recorded as at 31 December 2014 was not available (€140k were unavailable as at 31 December 2013).
In accordance with Article 273 of the Consolidated
Spanish Companies Law, Crystal Pharma, S.A.U. must provide an unavailable reserve equivalent to at least 5% of the goodwill recorded
in the assets of the balance sheet. If there are no profits, or the profits are insufficient, they should use available reserves.
Therefore, and awaiting the approval of the distribution of 2014 profits, Crystal Pharma, S.A.U. recorded €105k of unavailable
reserves as at 31 December 2014 (€70k as at 31 December 2013).
Contribution of the consolidated companies to the Parent’s
2013 and 2014 profits
The breakdown, by company, of “Profits
of the year attributed to Parent” in the consolidated balance sheet as at 31 December 2013 and 2014, was the following:
| |
€k | |
Company | |
2014 | | |
2013 | |
| |
| | |
| |
Gadea Grupo Farmacéutico, S.L. | |
| 4,464 | | |
| (559 | ) |
Crystal Pharma, S.A.U. | |
| 10,880 | | |
| 7,895 | |
Crystal Pharma, Ltd. | |
| 141 | | |
| 436 | |
Cyndea Pharma, S.L. | |
| (396 | ) | |
| (917 | ) |
Gadea Biopharma, S.L.U. | |
| (1,555 | ) | |
| (1,534 | ) |
Bioraw, S.L.U. | |
| (439 | ) | |
| - | |
Bionice, S.L.U | |
| (2 | ) | |
| - | |
| |
| 13,093 | | |
| 5,321 | |
| 13. | Adjustments for changes in value |
Changes made during 2013 and 2014 in this
item on the consolidated balance sheet were the following:
| |
€k | |
| |
| |
Balance as at 31 December 2012 | |
| (45 | ) |
Transfers to the 2013 income statement | |
| 43 | |
Tax effect (Note 17) | |
| (13 | ) |
Balance as at 31 December 2013 | |
| (15 | ) |
Transfers to the 2014 income statement | |
| 21 | |
Tax effect (Note 17) | |
| (6 | ) |
Balance as at 31 December 2014 | |
| - | |
As at 31 December 2013, all balances related
to changes in the fair value of financial hedging instruments.
Grupo Gadea uses financial hedging derivatives
to mitigate and reduce their exposure to changes in interest rates (see Note 16). These derivatives were named “cash flow
hedges”, to meet all requirements in Spanish GAAP to be recorded as “hedging” (see Note 5-e).
| 14. | Grants, Donations and Legacies Receives |
Information on the non-refundable investment
grants received by Grupo Gadea (which as at 31 December 2014 related entirely to the consolidated subsidiaries in which there are
no minority shareholders) is included in “Net Equity”, and the income from these grants recorded in the 2013 and 2014
consolidated income statements was the following:
2014
| |
| |
€k | |
Consolidated Company | |
Year Recorded | |
Balance as
at 31/12/13 | | |
Additions | | |
Tax Effect | | |
Recorded in
2014 Income | | |
Tax Effect
of the Charges | | |
Adjustments | | |
Balance as
at 31/12/14 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Crystal
Pharma, S.A.U. | |
1997 a 2012 | |
| 347 | | |
| - | | |
| - | | |
| (48 | ) | |
| 15 | | |
| 21 | | |
| 335 | |
Gadea Biopharma, S.L.U. | |
2012 y 2013 | |
| 206 | | |
| 838 | | |
| (251 | ) | |
| (135 | ) | |
| 40 | | |
| 45 | | |
| 743 | |
Cyndea Pharma, S.L.:
(a) | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
MINECO / Regional Incentives | |
2007 | |
| 358 | | |
| - | | |
| - | | |
| (512 | ) | |
| 154 | | |
| - | | |
| - | |
ADE / Special Interest Incentives | |
2006 | |
| 1.003 | | |
| - | | |
| - | | |
| (1.433 | ) | |
| 430 | | |
| - | | |
| - | |
Others | |
2007 y 2012 | |
| 178 | | |
| - | | |
| - | | |
| (254 | ) | |
| 76 | | |
| - | | |
| - | |
Non-refundable
investment grants | |
| |
| 2.092 | | |
| 838 | | |
| (251 | ) | |
| (2.382 | ) | |
| 715 | | |
| 66 | | |
| 1.078 | |
| (a) | Cyndea Pharma, S.L.’s grants have been allocated to the 2014 income following its exit from
the consolidation perimeter (see Note 2-e). |
2013
| |
| |
Miles de Euros | |
Consolidated Company | |
Year Recorded | |
Balance as
at
31/12/12 | | |
Additions | | |
Tax Effect | | |
Recorded in
2014 Income | | |
Tax Effect
of
the Charges | | |
Balance as
at
31/12/13 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| |
Crystal
Pharma, S.A.U. | |
1997 a 2012 | |
| 592 | | |
| - | | |
| - | | |
| (349 | ) | |
| 104 | | |
| 347 | |
Gadea Biopharma, S.L.U. | |
2012 y 2013 | |
| 41 | | |
| 258 | | |
| (77 | ) | |
| (23 | ) | |
| 7 | | |
| 206 | |
Cyndea Pharma, S.L.: | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
MINECO / Regional Incentives | |
2007 | |
| 412 | | |
| - | | |
| - | | |
| (77 | ) | |
| 23 | | |
| 358 | |
ADE / Special Interest
Incentives | |
2006 | |
| 1.154 | | |
| - | | |
| - | | |
| (215 | ) | |
| 64 | | |
| 1.003 | |
Others | |
2007 y 2012 | |
| 201 | | |
| - | | |
| - | | |
| (34 | ) | |
| 11 | | |
| 178 | |
Non-refundable
investment grants | |
| |
| 2.400 | | |
| 258 | | |
| (77 | ) | |
| (698 | ) | |
| 209 | | |
| 2.092 | |
These grants were to mainly finance the
acquisition of tangible assets (mainly investments in new production lines and technological improvements of the facilities)
and to finance research and development projects.
The addition made in 2014 related to a grant of €838k received
from the Castilla y León Business Innovation, Financing, and Internationalization Agency (ADE) for Special Interest Incentives
to fund investments relating to buildings, technical installations, machines and equipment for information processes in Gadea Biopharma
S.L.U.’s plant in Parque Tecnologica de León. As at 31 December 2014 this grant was yet to be collected and was recorded
in “Trade and other receivables - Tax, Social Security and Public Administrations” of the consolidated balance sheet
(see Note 17), as the Parent’s Directors expect to collect this amount during 2015.
In 2014 the capital grants relating to Cyndea Pharma, S.L. were
written off, due to its exit from the consolidation perimeter. (See Note 2-e).
Complying with the grants’ terms and conditions
For the grants recorded at 31 December
2014, which form part of “Net Equity”, the Parent’s Directors believe that they have complied and will continue
to fully comply with the terms and conditions established in the Individual Grant Award Decisions for the corresponding grants
and funding.
This caption’s balance recorded in
the consolidated balance sheet, includes the value of the minority shareholders’ shareholding in the consolidated companies
which is calculated using the “full consolidation method”. The balance of the “Income attributed to Minority
Shareholders” in the consolidated income statement includes the year’s income from these minority shareholders.
However, as at 31 December 2013 and 2014, this balance was zero
as there were no minority shareholders.
| 16. | Financial liabilities, suppliers and other creditors |
Long and short-term borrowings
The breakdown of the “long-term borrowings”
and “short-term borrowings” balances included in the consolidated balance sheets as at 31 December 2014 and 2013 was
the following:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
Description | |
Current Liability | | |
Non- Current Liability | | |
Total | | |
Current Liability | | |
Non- Current Liability | | |
Total | |
Borrowings from Financial Institutions- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans | |
| 5,548 | | |
| 6,716 | | |
| 12,264 | | |
| 7,846 | | |
| 7,537 | | |
| 15,383 | |
Discount facilities and funding for foreign operations | |
| 509 | | |
| - | | |
| 509 | | |
| 4,545 | | |
| - | | |
| 4,545 | |
Interest payments | |
| 14 | | |
| - | | |
| 14 | | |
| 44 | | |
| - | | |
| 44 | |
| |
| 6,071 | | |
| 6,716 | | |
| 12,787 | | |
| 12,435 | | |
| 7,537 | | |
| 19,972 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivatives | |
| - | | |
| - | | |
| - | | |
| 22 | | |
| - | | |
| 22 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other financial liabilities- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans granted by public bodies | |
| 949 | | |
| 5,071 | | |
| 6,020 | | |
| 863 | | |
| 5,314 | | |
| 6,177 | |
Minus implicit interest | |
| (21 | ) | |
| (163 | ) | |
| (184 | ) | |
| (78 | ) | |
| (371 | ) | |
| (449 | ) |
Capex suppliers | |
| 499 | | |
| - | | |
| 499 | | |
| 674 | | |
| - | | |
| 674 | |
Other financial liabilities | |
| 458 | | |
| 1,425 | | |
| 1,883 | | |
| 153 | | |
| 1,000 | | |
| 1,153 | |
| |
| 1,885 | | |
| 6,333 | | |
| 8,218 | | |
| 1,612 | | |
| 5,943 | | |
| 7,555 | |
| |
| 7,956 | | |
| 13,049 | | |
| 21,005 | | |
| 14,069 | | |
| 13,480 | | |
| 27,549 | |
As at 31 December 2013 and 2014 the maturity
schedule of the Group’s financial debt was the following:
| |
€k | |
| |
Year of Maturity | | |
| |
| |
2014 | | |
2015 | | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 and onwards | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
At 31/12/14 | |
| 7,956 | | |
| 7,956 | | |
| 7,113 | | |
| 2,877 | | |
| 954 | | |
| 607 | | |
| 1,498 | | |
| 21,005 | |
At 31/12/13 | |
| 14,069 | | |
| 5,039 | | |
| 3,587 | | |
| 1,615 | | |
| 2,021 | | |
| 375 | | |
| 843 | | |
| 27,549 | |
Borrowings from financial institutions
Loans
As at 31 December 2013 and 2014 the Group
had been granted the following loans by various financial institutions:
| |
€k | |
| |
At 31/12/14 | | |
At 31/12/13 | |
| |
Maturity | | |
| | |
Maturity: | | |
| |
Consolidated Company | |
Short-term | | |
Long-term | | |
Total | | |
Short-term | | |
Long-term | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Crystal Pharma, S.A.U. (a) | |
| - | | |
| - | | |
| - | | |
| 610 | | |
| - | | |
| 610 | |
“ (b) | |
| 500 | | |
| 750 | | |
| 1,250 | | |
| 500 | | |
| 1,250 | | |
| 1,750 | |
“ (c) | |
| 1,000 | | |
| 584 | | |
| 1,584 | | |
| 1,000 | | |
| 1,583 | | |
| 2,583 | |
“ (d) | |
| 374 | | |
| 592 | | |
| 966 | | |
| 359 | | |
| 967 | | |
| 1,326 | |
“ (e) | |
| 681 | | |
| 350 | | |
| 1,031 | | |
| 652 | | |
| 1,031 | | |
| 1,683 | |
“ (f) | |
| - | | |
| - | | |
| - | | |
| 1,764 | | |
| - | | |
| 1,764 | |
“ (g) | |
| 1,000 | | |
| 1,500 | | |
| 2,500 | | |
| - | | |
| - | | |
| - | |
“ (h) | |
| 662 | | |
| 904 | | |
| 1,566 | | |
| - | | |
| - | | |
| - | |
“ (i) | |
| 824 | | |
| 1,203 | | |
| 2,027 | | |
| - | | |
| - | | |
| - | |
Cyndea Pharma, S.L. | |
| - | | |
| - | | |
| - | | |
| 2,470 | | |
| 1,367 | | |
| 3,837 | |
Gadea Biopharma, S.L.U. (i) | |
| 507 | | |
| 833 | | |
| 1,340 | | |
| 491 | | |
| 1,339 | | |
| 1,830 | |
| |
| 5,548 | | |
| 6,716 | | |
| 12,264 | | |
| 7,846 | | |
| 7,537 | | |
| 15,383 | |
| (a) | This loan was granted by Banco de Castilla, S.A. on 18 November 2010 for an initial amount of €2.5m, and is being repaid
through regular instalments, whose final payment matured on 18 November 2014. |
| (b) | This loan was granted by Banco Santander, S.A. on 5 June 2012 for an initial amount of €2m.
This loan’s principal is being repaid through 16 quarterly repayments with a one year grace period (maturity of the final
repayment is set for 5 June 2017). |
| (c) | This loan was granted by Bankia, S.A. on 12 June 2013 under the protection of the “2013 ICO-Companies
and Entrepreneurs” Financing Agreement, for an initial amount of €3m. This loan was granted to fund investments in fixed
production assets, the acquisition of Companies or to fund the business’ launch. The loan’s principal is being repaid
through 36 monthly repayments (maturity of the final repayment is set for 10 July 2016). |
| (d) | This loan was granted by Banco Santander, S.A. on 19 June 2013 under the protection of the “2013
EIB-SME-Medium-Sized Enterprises” Financing Agreement for an initial amount of €1.5m. The principal is being repaid
through 48 monthly repayments (maturity of the final repayment is set for 19 June 2017). |
| (e) | This loan was granted by Banco Bilbao Vizcaya Argentaria, S.A. on 19 June 2013 under the protection
of the “ICO-Companies and Entrepreneurs” Financing Agreement and totaled €2m. This loan was granted to update
Crystal Pharma, S.A.U.’s equipment. The principal is being repaid through 36 quarterly repayments (maturity of the final
repayment is set for 16 June 2016). |
| (f) | This loan was granted by Banco Popular Español, S.A. on 18 June 2013 under the protection
of the “ICO- Empresas circulante 2013” Financing Agreement for an initial amount of €3m. This loan was granted
to finance investments in Crystal Pharma, S.A.U.’s working capital and its principal was repaid through 12 monthly repayments
(maturity of the final repayment was 10 July 2014). |
| (g) | This loan was granted by Bankia, S.A. on 22 May 2014 under the protection of the “ICO-Empresas
y emprendedores 2014” Financing Agreement for an initial amount of €3m. This loan was granted to fund investments in
fixed production assets or to finance the Company’s liquidity. The principal of this loan is being repaid through 36 monthly
repayments (the maturity of the final repayment is expected to be 20 June 2017). |
| (h) | This loan was granted by Banco Bilbao Vizcaya Argentaria, S.A. on 30 April 2014 under the protection
of the “ICO-Empresas y emprendedores 2014” Financing Agreement for an initial amount of €2m. The principal of
this loan is being repaid through 36 monthly repayments (the maturity of the final repayment is expected to be 30 April 2017). |
| (i) | This loan was granted by Banco Santander, S.A. on 22 May 2014 under the protection of the “BEI-PYMES-Empresas
medianas 2014” Financing Agreement for an initial amount of €2.5m. This loan was granted to fund investments in fixed
production assets. The principal of this loan is being repaid through 36 monthly repayments (the maturity of the final repayment
is expected to be 22 May 2017). |
| (j) | This loan was granted by Banco Bilbao Vizcaya Argentaria, S.A. on 6 July 2012 for an initial amount
of €2.5m and was to fund the investments made in Gadea Biopharma, S.L.U. production plant. The loan’s final maturity
will occur in July 2017 and is being repaid through 60 monthly repayments (maturity of the final repayment is set for July 2017). |
All these loans bear an annual interest
rate equivalent to Euribor plus a market spread.
Short-term discount facilities and funding for foreign
transactions (imports and exports)
As at 31 December 2014, the Group had been
granted various short-term discounting facilities and funding for foreign transactions that had been granted by various Financial
Institutions and had a combined total limit of €10.5m. As at this date, the Group had a combined total of €509k available
(as at 31 December 2013 the limit of this funding amounted to €10.25m and the available balance totaled €4.545m).
Derivatives
During 2014 the Group had one derivative
financial instrument, and its maturity during June 2014 was the following:
Derivative | |
Notional value (€k) | | |
Contract Date | |
Contract Expiry Date | |
Interest Payable | |
Interest Rate Receivable |
| |
| | |
| |
| |
| |
|
Classified as “hedging” - | |
| 1,500 | | |
4/06/2009 (a) | |
09/06/2014 | |
Euribor at 3 months variable | |
Euribor at 3 months CAP 3.90% rate |
| |
| | | |
| |
| |
| |
|
Interest Rate Swap | |
| | | |
| |
| |
(1.75% and 3.75%)
| |
|
| (a) | The effective start date was 8 June 2009. |
Grupo Gadea uses an
in-house IRS valuation model, where the inputs are the Euribor market curves and long-term swap rates, to establish the fair value
of the interest rate derivative structures.
The fair value of this derivative financial instrument as at
31 December 2013 amounted to €22k and was recorded, in accordance with the maturity date established in the contract, in “Short-term
borrowings – Derivatives” of the consolidated balance sheet.
In 2013 and 2014, relating to derivative financial instruments,
the Group recorded payments for current settlements in a year for €22k and €43k, respectively.
Other financial liabilities
The breakdown of these items in the consolidated
balance sheets as at 31 December 2013 and 2014 was the following:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
Item | |
Current Liabilities | | |
Non-current Liabilities | | |
Total | | |
Current Liabilities | | |
Non-current Liabilities | | |
Total | |
Loans granted by public bodies | |
| 949 | | |
| 5,071 | | |
| 6,020 | | |
| 863 | | |
| 5,314 | | |
| 6,177 | |
Minus implicit interest | |
| (21 | ) | |
| (163 | ) | |
| (184 | ) | |
| (78 | ) | |
| (371 | ) | |
| (449 | ) |
Remaining financial liabilities | |
| 957 | | |
| 1,425 | | |
| 2,382 | | |
| 827 | | |
| 1,000 | | |
| 1,827 | |
| |
| 1,885 | | |
| 6,333 | | |
| 8,218 | | |
| 1,612 | | |
| 5,943 | | |
| 7,555 | |
Loans granted by public
bodies
As at 31 December 2013,
the most significant loans granted by public bodies to Grupo Gadea were the following:
| – | A loan granted by the European Investment Bank (EIB) through the Castilla y León Business
Innovation, Financing, and Internationalization Agency (ADE) |
In 2012, the Parent received
a €2.998m mortgage secured loan, with the mortgaged assets being the land and buildings owned by Gadea Biopharma, S.L.U.,
and Pharma, S.A.U. acting as guarantor. This loan, whose principal amount yet to be repaid as at 31 December 2014 amounted to €2.713m
(€2.998m as at 31 December 2013) accrues an annual interest rate equivalent to the Euribor plus a market spread, was granted
to finance the investment project for the production plant located in León Technology Park (See Note 7). The amortization
of this loan is made over 32 quarterly payments, with each repayment amounting to €93,700, that will mature between 9 May
2014 (the date of the first repayment) and 7 February 2022 (maturity of the last repayment).
| – | A loan granted by the Centre for the Development of Industrial Technology (CDTI) |
| · | In 2010, the Centre for the Development of Industrial Technology granted Crystal Pharma, S.A.U.
a €1.851m loan to finance the investment project for the construction and launch of the highly active potent ingredients (HAPI)
plant and to finance the development expenses necessary for the subsequent production of these active ingredients. This loan, which
does not have a set contractual interest rate, is recorded as a liability in the consolidated balance sheets as at 31 December
2013 and 2014 at “amortized cost. |
The amortization of this loan,
whose principal amount to be repaid as at 31 December 2014 amounted to €142k (€426k as at 31 December 2013), is being
carried out through 13 biannual repayments, with each repayment amounting to €142,400 and maturing between 15 April 2009 (the
date of the first repayment) and 15 April 2015 (maturity of the last repayment).
| · | The consolidated subsidiary Gadea Biopharma, S.L.U. was granted two grants by the Centre for the
Development of Industrial Technology (CDTI) to fund two Research & Development projects. The following grants were received
in 2013 and were available during 2014: |
| Ø | A partially repayable grant of €476k (with a repayable tranche
of €413k, and a non-repayable tranche of €63k) that was fully available as at 31 December 2014. This grant was used for
the project named “Development of biotechnology processes for steroid bioconversion”. The repayable tranche bears a
fixed annual interest rate, and its amortization will be made over 15 biannual repayments of €28k, that are expected to mature
between 16 July 2016 (the date of the first repayment) and 16 July 2023 (maturity of the last repayment). |
| Ø | A partially repayable grant of €634k (with a repayable tranche
of €550k and a non-repayable tranche of €84k). As at 31 December 2014, €233k of the total amount were available
(€202k repayable, and €31k non-repayable) that was used for the project named “Medication for the treatment of
schizophrenia”. The repayable tranche bears a fixed annual interest rate, and its amortization will be made over 15 biannual
repayments of €37k, that will mature between 9 September 2017 (the date of the first repayment) and 9 September 2024 (maturity
of the last repayment). |
As the first project and part of the second project
were carried out prior to 31 December 2014, the Group recorded the non-repayable parts of the grants in proportion to the expenses
incurred in these projects until 31 December 2014 in the caption “Other operating income – operational grants”
in the 2014 consolidated income statement (€63k and €31k, respectively).
| – | Repayable grant from the Agency of Innovation, Financing and Business Internationalization (ADE) |
In 2013, the Agency of Innovation, Financing and
Business Internationalization (ADE) granted Crystal Pharma, S.A.U. a repayable loan with a nominal value of €900k within the
scope of “R&D Projects” to fund the project named “Development of processes to acquire pharmaceutical active
ingredients”. This loan was fully available during 2014, and has a fixed annual interest rate. The loan is expected to amortize
over 12 biannual repayments of €75k that will mature between 17 February 2016 (the date of the first repayment) and 17 August
2021 (maturity of the last repayment).
| – | A loan granted by the Ministry of Economy and Competitiveness |
This loan was granted to Gadea
Biopharma, S.L.U. in two instalments. The first instalment was made in 2012 for a nominal amount of €347k and the second was
made in 2013 for a nominal amount of €1.387m. This loan was granted to finance the “Research and development of lyophilized
sterile products and pioneering steroid hormones for biotransformation processes” project. The total budget amounted to approximately
€462k and €1.849m in 2012 and 2013, respectively. This long-term loan, whose principal amount yet to be repaid as at
31 December 2014 amounted to €1.649m (€1.732k as at 31 December 2013), does not have a set contractual interest rate
and was recorded at its amortized cost. The existing positive difference between the loan’s nominal amount and actual value,
which is calculated by using the “effective interest rate method” was recorded as “capital grant”, see
Note 14. As at 31 December 2013 and 2014, the Parent had met all of the loan’s technical and economic terms and conditions.
As at December 2013 and 2014 the maturity
schedule of funding granted to the Group by public bodies was the following:
| |
€k | |
| |
Year of Maturity: | | |
| |
| |
2014 | | |
2015 | | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 and onwards | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
At 31/12/14 | |
| - | | |
| 949 | | |
| 986 | | |
| 1,026 | | |
| 953 | | |
| 606 | | |
| 1,500 | | |
| 6,020 | |
At 31/12/13 | |
| 863 | | |
| 1,068 | | |
| 927 | | |
| 927 | | |
| 840 | | |
| 796 | | |
| 756 | | |
| 6,177 | |
Remaining financial
liabilities
As at 31 December 2014, the balances of these items included
the debt from the purchase of Bioraw, S.L.U.’s production plant, in accordance with the deed of sale granted on 14 March
2014. As at 31 December 2014, the outstanding debt relating to this transaction amounted to €1.545m and the repayment (of
the principal and the corresponding interest) will be made as follows:
| - | €240k will be paid through 24 monthly instalments of €10k; the last of which will mature
on 5 February 2016. |
| - | €1.405m must be paid by 14 March 2016. |
This financing has been recorded at its nominal value as it
did not differ significantly from its actual value as at 31 December 2014.
However, as at 31 December 2013, these balances also included
€1m that related to a participating loan granted to Cyndea Pharma, S.L. by one of their shareholders. This loan is expected
to mature on 1 January 2019 and bears a fixed interest rate of 4% and a variable interest rate of up to 2% (depending on the
operating income).
The remaining liabilities
included in these balances as at 31 December 2013 and 2014 mainly related to debts with fixed asset suppliers.
Suppliers and other creditors
The breakdown of these
items as at 31 December 2013 and 2014 was the following:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
Suppliers | |
| 6,198 | | |
| 8,770 | |
Suppliers, Group companies and associated companies (Note 20) | |
| 176 | | |
| 76 | |
| |
| 6,374 | | |
| 8,846 | |
Various creditors | |
| 1,818 | | |
| 1,949 | |
Personnel (remuneration yet to be paid) | |
| 1,292 | | |
| 741 | |
Client advances | |
| 55 | | |
| 722 | |
| |
| 3,165 | | |
| 3,412 | |
| 17. | Public Administrations and the Group’s Tax Position |
Balances with Public Administrations
As at 31 December 2013 and 2014, Grupo
Gadea had the following balances with Public Administrations:
| |
€k | |
Item | |
31/12/14 | | |
31/12/13 | |
DEBIT BALANCES: | |
| | | |
| | |
Deferred tax assets | |
| 1,013 | | |
| 1,075 | |
Current tax assets | |
| - | | |
| 962 | |
Other receivables from Public Administrations- | |
| | | |
| | |
Tax receivables: | |
| | | |
| | |
Corporation tax from the previous year | |
| 976 | | |
| 1,034 | |
Value Added Tax (VAT) | |
| 1,628 | | |
| 1,559 | |
Value Added Tax (foreign) | |
| 11 | | |
| - | |
Other items | |
| 2 | | |
| - | |
| |
| 2,617 | | |
| 2,593 | |
Other public body receivables: | |
| | | |
| | |
Operating subsidies yet to be collected (Note 14) | |
| 343 | | |
| 393 | |
Grants yet to be collected (Note 14) | |
| 838 | | |
| - | |
Other items (Maltese Tax Authorities) | |
| 93 | | |
| 95 | |
| |
| 1,274 | | |
| 488 | |
| |
| 3,891 | | |
| 3,081 | |
| |
| | | |
| | |
CREDIT BALANCES: | |
| | | |
| | |
Deferred tax liabilities | |
| 759 | | |
| 2,422 | |
Current tax liabilities | |
| 1,074 | | |
| - | |
Other debt with Public Administrations- | |
| | | |
| | |
Tax payables: | |
| | | |
| | |
| |
| | | |
| | |
Withholding taxes of Personal Income Tax (IRPF) | |
| 222 | | |
| 128 | |
Value Added Tax | |
| 28 | | |
| 5 | |
| |
| 250 | | |
| 133 | |
Social Security creditors | |
| 487 | | |
| 394 | |
| |
| 737 | | |
| 527 | |
Corporation Tax
As described in Note 5-k, for Corporation
Tax purposes, the Spanish Parent and the consolidated subsidiary Companies pay Corporation Tax by filing consolidated tax returns
as a Tax Group. Gadea Grupo Farmacéutico, S.L. is the Parent of this Tax Group.
For each consolidated Company, Corporation
Tax is calculated on the basis of the accounting profit which is calculated by applying generally accepted accounting principles.
This however does not necessarily coincide with taxable profit, which is considered as the tax assessment basis.
Reconciliation of the 2013 and 2014 consolidated
accounting profit and the consolidated tax base from the corporate income tax was the following:
2014
| |
€k | |
Item | |
Increase | | |
(Decrease) | | |
Total | |
| |
| | |
| | |
| |
Consolidated profit before tax | |
| | | |
| | | |
| 16,539 | |
Permanent differences- | |
| | | |
| | | |
| | |
From individual companies (a) | |
| 48 | | |
| - | | |
| 48 | |
From consolidation adjustments (b) | |
| 651 | | |
| (3,355 | ) | |
| (2,704 | ) |
From Crystal Pharma, Ltd. | |
| - | | |
| (25 | ) | |
| (25 | ) |
Temporary differences- | |
| | | |
| | | |
| | |
From individual differences: | |
| | | |
| | | |
| | |
Non-deductible fixed asset depreciation (Law 16/12, 27 December) | |
| 789 | | |
| - | | |
| 789 | |
Other increases (decreases) | |
| 3,515 | | |
| (2,201 | ) | |
| 1,314 | |
| |
| | | |
| | | |
| | |
Applied tax loss carry forwards from previous years (c) | |
| | | |
| | | |
| (178 | ) |
Consolidated tax base (accounting profit) | |
| | | |
| | | |
| 15,783 | |
Tax rate (30% in Spain and 35% in Malta) | |
| | | |
| | | |
| 4,734 | |
Minus the deductions applied | |
| | | |
| | | |
| (773 | ) |
Estimated tax expense | |
| | | |
| | | |
| 3,961 | |
Minus withholding tax and tax prepayments | |
| | | |
| | | |
| (2,887 | ) |
Corporation Tax receivable | |
| | | |
| | | |
| 1,074 | |
| (a) | This amount does not include the individual permanent differences relating to dividends from the
consolidated Tax Group as they have not been included in the consolidation process. |
| (b) | These permanent differences mainly relate to Cyndea Pharma, S.L.’s contribution to the Group’s
consolidated income in 2014, until its exit from the consolidation perimeter (see Note 2-e), as well as the income included in
the 2014 consolidated income statement following the Group’s loss of control of this jointly controlled entity. |
| (c) | Relate to tax loss carry forwards that were generated in previous years by the consolidated subsidiary
Crystal Pharma, Ltd. for which the Group recorded corresponding tax credits in the consolidated balance sheet as at 31 December
2014. |
2013
| |
€k | |
Item | |
Increase | | |
(Decrease) | | |
Total | |
| |
| | |
| | |
| |
Consolidated profit before tax | |
| | | |
| | | |
| 6,336 | |
Losses of multigroup companies for which no tax credits have been recorded | |
| 919 | | |
| - | | |
| 919 | |
Permanent differences- | |
| | | |
| | | |
| | |
From individual companies (a) | |
| 48 | | |
| - | | |
| 48 | |
Temporary differences- | |
| | | |
| | | |
| | |
From individual differences: | |
| | | |
| | | |
| | |
Non-deductible fixed asset depreciation (Law 16/12, 27 December)) | |
| 616 | | |
| - | | |
| 616 | |
Other increases (decreases) | |
| 339 | | |
| (547 | ) | |
| (208 | ) |
Decreases from Crystal Pharma, Ltd. | |
| - | | |
| (24 | ) | |
| (24 | ) |
| |
| | | |
| | | |
| | |
Applied tax loss carry forwards from previous years | |
| - | | |
| (635 | ) | |
| (635 | ) |
Consolidated tax base (accounting profit) | |
| | | |
| | | |
| 7,052 | |
Tax rate (30% in Spain and 35% in Malta) | |
| | | |
| | | |
| 2,115 | |
Minus the deductions applied | |
| | | |
| | | |
| (1,057 | ) |
Estimated tax expense | |
| | | |
| | | |
| 1,058 | |
Minus withholding tax and tax prepayments | |
| | | |
| | | |
| (2,020 | ) |
Corporation tax receivable | |
| | | |
| | | |
| (962 | ) |
| (a) | This amount does not include the individual permanent differences relating to dividends from the
consolidated Tax Group as they have not been included in the consolidation process. |
Corporation Tax expenses
The 2013 and 2014 Corporation Tax expenses
were calculated as follows:
| |
€k | |
Item | |
2014 | | |
2013 | |
| |
| | |
| |
Consolidated profit before tax | |
| 16,539 | | |
| 6,336 | |
Losses incurred by certain consolidated companies for which a tax credit has not been recorded | |
| - | | |
| 919 | |
Permanent differences- | |
| (2,681 | ) | |
| 48 | |
| |
| 13,858 | | |
| 7,303 | |
Tax rate (30% in Spain and 35% in Malta) | |
| 4,168 | | |
| 2,215 | |
Deductions applied to companies that the Group had not applied tax credits | |
| (701 | ) | |
| (1,058 | ) |
Deferred tax assets and liabilities adjustments (a) | |
| (79 | ) | |
| - | |
Other adjustments | |
| 58 | | |
| - | |
Corporation Tax expenses recorded in the consolidated income statement | |
| 3,446 | | |
| 1,015 | |
| (a) | This amount relates to the effects generated due to the current difference between the nominal
tax rate of the Corporation Tax effective in Spain until 31 December 2014 (30%) and the nominal tax rate effective during
the years in which tax loss carry forwards or the reversal of temporary differences are expected, and that at 31 December 2014
generated deferred tax assets and liabilities (28% for 2015, and 25% onwards). |
The breakdown of the 2013 and 2014 Corporation
tax expenses was the following:
| |
€k | |
Item | |
2014 | | |
2013 | |
| |
| | |
| |
Current tax- | |
| | | |
| | |
For ongoing operations | |
| 3,961 | | |
| 1,058 | |
Deferred tax- | |
| | | |
| | |
For ongoing operations | |
| (515 | ) | |
| (43 | ) |
Corporation Tax expenses recorded in the consolidated income statement | |
| 3,446 | | |
| 1,015 | |
Deferred taxes
The “Deferred tax assets” and
“Deferred tax liabilities” balances included within the consolidated balance sheets as at 31 December 2013 and 2014,
and the variation in these headings as at the aforementioned dates were the following:
| |
Miles
de Euros | |
| |
Balance
at 31/12/12 | | |
Increases | | |
Decreases | | |
Balance
at 31/12/13 | | |
Increases | | |
Decreases | | |
Adjustments | | |
Variation
in the
Consolidation Perimeter (Note 2-e) | | |
Balance
at 31/12/14 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Deferred
tax assets- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deduction
rights yet to be applied | |
| - | | |
| 143 | | |
| - | | |
| 143 | | |
| - | | |
| (85 | )(b) | |
| (58 | ) | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Crystal
Pharma, Ltd. tax credits. | |
| 875 | | |
| - | | |
| (222 | ) | |
| 653 | | |
| - | | |
| (62 | ) | |
| - | | |
| - | | |
| 591 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-deductible
tangible asset depreciation for the year (Law 16/12, 27 December | |
| - | | |
| 196 | | |
| - | | |
| 196 | | |
| 237 | | |
| - | | |
| - | | |
| (11 | ) | |
| 422 | |
Tax
effect of the variation in the fair value of the hedging instruments (Note 13 and 16) | |
| 19 | | |
| - | | |
| (13 | ) | |
| 6 | | |
| - | | |
| (6 | ) | |
| - | | |
| - | | |
| - | |
Other
deductible temporary differences | |
| 11 | | |
| - | | |
| (11 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Other
items (a) | |
| 77 | | |
| - | | |
| - | | |
| 77 | | |
| - | | |
| (77 | ) | |
| - | | |
| - | | |
| - | |
| |
| 982 | | |
| 339 | | |
| (246 | ) | |
| 1,075 | | |
| 237 | | |
| (230 | ) | |
| (58 | ) | |
| (11 | ) | |
| 1,013 | |
Deferred
tax liabilities - | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-refundable
capital grants (Note 14) | |
| (1,029 | ) | |
| (77 | ) | |
| 209 | | |
| (897 | ) | |
| (251 | ) | |
| 55 | | |
| 66 | | |
| 660 | | |
| (367 | ) |
Tax
impairments | |
| (891 | ) | |
| - | | |
| - | | |
| (891 | ) | |
| - | | |
| 891 | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization
and other items | |
| (571 | ) | |
| (164 | ) | |
| 101 | | |
| (634 | ) | |
| - | | |
| 163 | | |
| 79 | | |
| - | | |
| (392 | ) |
| |
| (2,491 | ) | |
| (241 | ) | |
| 310 | | |
| (2,422 | ) | |
| (251 | ) | |
| 1,109 | | |
| 145 | | |
| 660 | | |
| (759 | ) |
| (a) | As at 31 December 2013 the Group recorded a balance receivable of €77k following the request
to return undue income from certain deductions of previous periods, which had been collected during 2014. |
| (b) | These decreases include €14k that relate to deductions that were made as at 31 December 2013,
but were not implemented until July 2014, when the final settlement of the 2013 Corporation Tax of the consolidated tax Group in
Spain took place. |
Deferred tax assets
As at 31 December 2014,
“Deferred tax assets” related to the following:
| · | Tax credits from tax loss carry forwards, deductions yet to be applied and temporary differences
due to the subsidiary Crystal Pharma, Ltd. |
| · | The tax effect of the temporary differences between the moment in which the expense for certain
tangible asset depreciation is recorded and the moment in which it is recorded as a tax expense. |
These deferred tax assets
were recorded in the consolidated balance sheets, as the Parent’s Directors have stated that collecting these assets is reasonably
assured based on the recent estimates prepared for the expected development in the consolidated Companies’ tax base, and
where applicable, in the consolidated Tax Group to which the Company belongs.
Deferred tax liabilities
As at 31 December 2014, “Deferred
tax liabilities” mainly related to the following:
| · | The tax effect from the non-refundable capital grant recorded as “Net Equity” (see
Note 14). |
| · | The tax effect generated by the different economic and tax criteria used in the amortization of
intangible asset once the Group accepts the freedom to amortize incentive which is established in the Revised Text of the Corporate
Tax Law in its various versions. |
The deferred tax liabilities relating to
the capital grants will be recorded in the income statement once the corresponding grant is recorded.
Tax recorded as net
equity
As at 31 December 2013 and 2014, the tax
balances directly recorded in “Net Equity” and their movement during 2013 and 2014 were the following:
| |
€k | |
| |
Balance
at 31/12/12 | | |
Asset (Liabilities) | | |
Reversal of
the Current Tax | | |
Balance
at 31/12/13 | | |
Assets
(Liabilities) | | |
Reversal of
the Current Tax | | |
Adjustments | | |
Balance
at 31/12/14 | |
Non-refundable
capital grant liabilities recorded as “Net Equity” (Note 14) | |
| (1,029 | ) | |
| (77 | ) | |
| 209 | | |
| (897 | ) | |
| (251 | ) | |
| 715 | | |
| 66 | | |
| (367 | ) |
Assets
due to variation in the fair value of the hedging instruments (Note 13) | |
| 19 | | |
| - | | |
| (13 | ) | |
| 6 | | |
| - | | |
| (6 | ) | |
| - | | |
| - | |
| |
| (1,010 | ) | |
| (77 | ) | |
| 196 | | |
| (891 | ) | |
| (251 | ) | |
| 709 | | |
| 66 | | |
| (367 | ) |
Tax loss carry forwards yet to be applied
As at 31 December 2014, the subsidiaries
did not have any tax loss carry forwards to be offset.
Deductions
The current Corporation Tax legislation
includes various tax incentives. The deductions generated in a year which are more than the applicable legal limit, may be applied
to the reduction of Corporation Tax payments of the following year, in line with the limits and deadlines set by the applicable
tax legislation.
The Group took advantage of the tax benefits
provided by this legislation by deducting €773k when calculating the 2014 Corporation Tax payments, according to the following
breakdown:
Item | |
Year Generated | | |
€k | |
| |
| | |
| |
Crystal Pharma, S.A.U.: | |
| | | |
| | |
Research and Development | |
| 2014 | | |
| 250 | |
Research and Development | |
| 2013 | | |
| 69 | |
Innovation | |
| 2014 | | |
| 106 | |
Various items | |
| 2013-2014 | | |
| 12 | |
Contributions | |
| 2014 | | |
| 1 | |
Gadea Biopharma, S.L.U.: | |
| | | |
| | |
Research and Development | |
| 2014 | | |
| 300 | |
Research and Development | |
| 2013 | | |
| 2 | |
Innovation | |
| 2014 | | |
| 15 | |
Contributions | |
| 2014 | | |
| 13 | |
Gadea Grupo Farmacéutico, S.L.: | |
| | | |
| | |
Contributions | |
| 2014 | | |
| 1 | |
Reinvestment of extraordinary profit | |
| 2014 | | |
| 4 | |
| |
| | | |
| 773 | |
Consolidated Spanish
subsidiaries’ tax credits yet to be applied
As at 31 December 2014 the Spanish consolidated
companies had no other deductions to be applied. However, as at 31 December 2014 within “Deferred Tax Assets” the Group
recorded tax credits relating to deductions and tax loss carry forwards that were either credited or yet to be applied at this
date due to Crystal Pharma, Ltd. which amounted to €591k (€873k as at 31 December 2013 under rights for deductions
yet to be applied by the tax Group in Spain – see Note 5-k – and by Crystal Pharma, Ltd. in Malta). This application
is reasonably assured according to the Parent’s Directors, and based on the recent estimations made by Grupo Gadea’s
Management regarding the forecast development of the tax loss carry forwards of Crystal Pharma, Ltd.
Years open to inspection
Under the current legislation, taxes cannot
be considered as settled until the tax returns filed have been inspected by the Tax Authorities or the four year limitation period
has ended.
In February 2015, the Tax Agency began
an audit and inspection of taxes and periods relating to the following Group’s companies:
Company |
|
Tax |
|
Period |
|
|
|
|
|
Gadea Grupo Farmacéutico, S.L. |
|
Value Added Tax |
|
01/2011 to 12/2012 |
Crystal Pharma, S.A.U. |
|
Value Added Tax |
|
01/2011 to 12/2012 |
Consolidated Tax Group 0075/09 led by Grupo Gadea Farmacéutico, S.L. (See Note 5-k) |
|
Corporation Tax |
|
2011 and 2012 |
As at the date of preparing these consolidated financial statements,
these inspections remain ongoing.
As at 31 December 2014, the consolidated companies had from
2011 to 2014, inclusive, open to inspection for all taxes that had been applied. In addition, 2010 was also open to inspection
relating to Corporation Tax. Furthermore, as at 31 December 2014 Crystal Pharma, Ltd. also had 2009 and 2010 open to tax inspection
regarding VAT.
The Parent’s Directors believe they
have made sufficient tax payments. Although certain discrepancies may arise from the interpretation of applicable regulations for
the tax treatment of certain transactions, the resulting liabilities from current inspections carried out by the Tax Authorities
relating to the years open to inspection would not significantly affect the 2014 consolidated financial statements.
| 18. | Guarantees Provided to Third Parties and Other Contingent Liabilities |
As at 31 December 2013 and 2014, the Group
had provided guarantees to third parties, granted by various financial institutions, for an amount of €1.741m and €1.758m,
respectively. These guarantees mainly related to guarantees to ensure compliance with utilities payment obligations, to guarantee
repayment of certain subsidized loans and other obligations to Local Authorities, and various advances paid on grants. The Parent’s
Directors believe that any unexpected liabilities which may have arisen as at 31 December 2014 from the guarantees provided and
relating to the commitments and obligations, were not significant.
Net turnover
Distribution by business and geographical
market of Grupo Gadea’s 2013 and 2014 net turnover was the following:
| |
€k | |
| |
2014 | | |
2013 | |
| |
| | |
| |
By business- | |
| | | |
| | |
Biotechnology | |
| 300 | | |
| 158 | |
Active ingredients | |
| 70,726 | | |
| 58,997 | |
Pharmaceuticals | |
| 2,436 | | |
| 3,906 | |
| |
| 73,462 | | |
| 63,061 | |
| |
| | | |
| | |
By geographical market- | |
| | | |
| | |
National | |
| 15,330 | | |
| 10,731 | |
International | |
| 58,132 | | |
| 52,330 | |
| |
| 73,462 | | |
| 63,061 | |
Supplies
The breakdown of this item included in
the 2013 and 2014 consolidated income statement was the following:
| |
€k | |
Item | |
2014 | | |
2013 | |
| |
| | |
| |
Raw materials and other consumables- | |
| | | |
| | |
Purchases: | |
| | | |
| | |
National purchases | |
| 9,095 | | |
| 4,688 | |
Intra-community acquisitions | |
| 1,755 | | |
| 7,386 | |
Imports | |
| 25,469 | | |
| 24,286 | |
Stock variations | |
| (2,912 | ) | |
| (767 | ) |
| |
| 33,407 | | |
| 35,593 | |
Outsourced production | |
| 1,951 | | |
| 2,563 | |
| |
| 35,358 | | |
| 38,156 | |
Social contributions
The breakdown of these social contributions
in the 2013 and 2014 consolidated income statement was the following:
| |
€k | |
Item | |
2014 | | |
2013 | |
| |
| | |
| |
Social security | |
| 2,236 | | |
| 2,017 | |
Other social contributions | |
| 335 | | |
| 267 | |
| |
| 2,571 | | |
| 2,284 | |
External services and charges
The breakdown of this item in the 2013
and 2014 consolidated income statement was the following:
| |
€k | |
| |
2014 | | |
2013 | |
Research and development expenses | |
| 1,622 | | |
| 1,844 | |
Operating lease (Note 7) | |
| 120 | | |
| 133 | |
Repair and maintenance | |
| 743 | | |
| 777 | |
Independent professional services | |
| 2,165 | | |
| 2,526 | |
Transport | |
| 780 | | |
| 733 | |
Insurance premiums | |
| 298 | | |
| 311 | |
Bank services | |
| 109 | | |
| 116 | |
Advertising | |
| 110 | | |
| 133 | |
Supplies | |
| 1,493 | | |
| 1,478 | |
Other items | |
| 466 | | |
| 975 | |
Tax | |
| 79 | | |
| 58 | |
Other external services and charges | |
| 931 | | |
| - | |
| |
| 8,916 | | |
| 9,084 | |
| (a) | The expenses included in the 2014 consolidated income statement relate to Cyndea Pharma, S.L. and
were accrued until its exit from the consolidation perimeter (see Note 2-e). |
| 20. | Transactions with related parties |
Transactions with related parties
The transactions carried out by Grupo Gadea
with related parties during 2013 and 2014 were the following:
| |
€k | |
| |
2013 | | |
2013 | |
Company | |
Sales and services provided | | |
Sales and services provided | | |
Sales and services provided | | |
Sales and services provided | |
| |
| | |
| | |
| | |
| |
Gentec, S.A. (b) | |
| 8,219 | | |
| 221 | | |
| 7,436 | | |
| 113 | |
3-Gutinver, S.L. (a) | |
| - | | |
| 353 | | |
| - | | |
| 192 | |
GBB Pharminvest 99, S.L. (b) | |
| - | | |
| 2 | | |
| - | | |
| 2 | |
Muggio Holding, S.L. (a) | |
| - | | |
| 2 | | |
| - | | |
| 2 | |
Antartis Pharma, S.L. (a) | |
| - | | |
| 2 | | |
| - | | |
| 2 | |
| |
| 8,219 | | |
| 580 | | |
| 7,436 | | |
| 311 | |
| (a) | These Companies are Directors of the Parent. |
| (b) | These companies were the Parent’s shareholders during 2013 and 2014 until its exit from Gadea
Grupo Farmacéutico, S.L.’s share capital in March 2015. |
These aforementioned transactions were
carried out within Grupo Gadea’s ordinary course of business under market conditions.
Transactions and balances with other related
parties (Partners, Directors, and the Group’s Senior Directors) are indicated in the following sections.
Related party balances
As a result of these transactions, as at
31 December 2013 and 2014, Grupo Gadea had the following balance receivables and payables with related parties:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
Clients (Note 10)- | |
| | | |
| | |
Gentec, S.A. (b) | |
| 2,295 | | |
| 2,079 | |
| |
| | | |
| | |
Suppliers (Note 16)- | |
| | | |
| | |
Gentec, S.A. (b) | |
| (92 | ) | |
| (76 | ) |
3-Gutinver, S.L. | |
| (78 | ) | |
| - | |
GBB Pharminvest 99, S.L. (b) | |
| (2 | ) | |
| - | |
Muggio Holding, S.L. (a) | |
| (2 | ) | |
| - | |
Antartis Pharma, S.L. (a) | |
| (2 | ) | |
| - | |
| |
| (176 | ) | |
| (76 | ) |
| (a) | These companies are the Parent’s Directors. |
| (b) | These companies were the Parent’s shareholders during 2013 and 2014 until its exit from Gadea
Grupo Farmacéutico, S.L.’s share capital in March 2015. |
Payments to the Parent’s Directors
In 2014, through the Company that represents
3-Gutinver, S.L., the Parent paid the Managing Director €353k (€192k in 2013) for services provided. Additionally,
in 2014, remuneration through wages and salaries paid by the Group to two employees of Crystal Pharma, S.A.U., who were also Directors
(one of whom was working for a third party acting on behalf of a legal entity) of the Parent amounted to €189k (€195k
in 2013). During 2013 and 2014 the Group carried out other transactions with other Parent Directors. Please refer to the “Transactions
with related parties” section for more information on these transactions.
As at 31 December 2013 and 2014, Grupo
Gadea did not have any pension or life insurance obligations relating to the Parent’s current Directors.
As at 31 December 2013 and 2014, Grupo
Gadea had accounts receivables with certain Parent Directors. The amounts of these accounts receivables have been included in the
“Related party balances” section.
Payments to the Group’s Senior Directors
Remuneration through wages and salaries
in their entirety to Grupo Gadea’s Senior Directors in 2014 amounted to €145k (€518k in 2013). This amount excludes
the remuneration relating to three of the aforementioned Parent Directors.
Grupo Gadea does not have any pension obligations
with Key Personnel, nor has the Group awarded any credits or guarantees to them.
Director conflicts of interest
In accordance with Article 229 “To
avoid situations of conflicts of interest” of the Revised Text of Corporation Law, approved by the Royal Legislative Decree
1/2010 of 2 July, and modified on 4 September 2014, there are no direct or indirect situations of conflicts of interest between
members of the Parent’s Board of Directors, and between related parties and companies that form the Group. However, potential
situations of conflicts of interest have been identified by José Luis Stampa Jäger, Director of Muggio Holding, S.L.
Under Article 231 of the Corporations Law of 31 December 2014, he identified certain related parties who owned shares and/or worked
in other companies at this date with respect to Gadea Grupo Farmacéutico, S.L. These companies are outlined below:
Affiliated Company | |
Shareholding | | |
Position / Tasks carried out |
Medichem, S.A.U. | |
| 100.00 | % (I) | |
Individual representing Sole Director |
Medichem Manufacturing (Malta), Ltd. | |
| 100.00 | % (I) | |
Director |
Medichem Tradex, S.A. | |
| 100.00 | % (I) | |
Director |
Nanjing Medichem Biopharmaceutical Development Co., Ltd. | |
| 100.00 | % (I) | |
Director |
Chizhou Ruick Pharmaceutical Co., Ltd. | |
| 33.33 | % (I) | |
N/A |
Combino Pharm, S.L. | |
| 100.00 | % (I) | |
N/A |
Combino Pharm (Malta) Ltd. | |
| 100.00 | % (I) | |
Director |
Combino Pharm Portugal, Unipessoal, Lda. | |
| 100.00 | % (I) | |
N/A |
| (I) | % indirect shareholding. |
| 21. | Transactions in Foreign Currency |
In 2013 and 2014, Grupo Gadea carried out
the following transactions in a foreign currency (mainly in US Dollars):
| |
€k | |
| |
2014 | | |
2013 | |
| |
| | |
| |
Sales and services provided | |
| 43,930 | | |
| 30,752 | |
Fixed asset purchases | |
| 418 | | |
| - | |
Purchases and services received | |
| 27,338 | | |
| 28,491 | |
The exchange rate differences recorded
by financial instrument in the 2013 and 2014 consolidated income statements were the following:
| |
€k | |
| |
2014 | | |
2013 | |
| |
| | |
| |
Foreign currency in cash | |
| 168 | | |
| (120 | ) |
Accounts receivable collected- | |
| | | |
| | |
Transactions collected throughout the year | |
| 552 | | |
| (336 | ) |
Transactions yet to be collected at year-end | |
| 55 | | |
| 72 | |
Accounts payable- | |
| | | |
| | |
Transactions paid throughout the year | |
| (712 | ) | |
| 98 | |
Transactions yet to be paid at year-end | |
| (13 | ) | |
| 94 | |
| |
| 50 | | |
| (192 | ) |
The assets and liabilities recorded in
the Group’s consolidated balance sheets as at 31 December 2013 and 2014, in a foreign currency (all in US dollars) were
the following:
| |
€k | |
| |
31/12/14 | | |
31/12/13 | |
| |
| | |
| |
ASSETS: | |
| | | |
| | |
Cash | |
| 1,782 | | |
| 1,149 | |
Loans and accounts receivable- | |
| | | |
| | |
Sales and services provided to clients | |
| 2,650 | | |
| 5,559 | |
| |
| 4,432 | | |
| 6,708 | |
LIABILITIES: | |
| | | |
| | |
Short-term debt- | |
| | | |
| | |
Debt with Financial Institutions and liabilities with suppliers | |
| 636 | | |
| 5,495 | |
| 22. | Nature and level of risk |
Financial risks
The Group’s policies for managing
risk are established by the Financial Risk Directors Committee which have been approved by the Parent’s Directors. Based
on these policies, the Group’s Financial Department have established a number of procedures and controls which allow for
the identification, measure and Directors of the risks generated by financial instruments.
Credit risk
Credit risk arises from the possible loss
caused by breaching the contractual obligations of the Group’s opposing parties, i.e. by the possibility of not recovering
the financial assets for the amount accounted and established in the time frame.
To manage credit risk, the Group distinguishes
between financial assets generated by operational activities and financial assets generated by investment activities.
The sales and finance departments set limits
for each client, which are calculated based on the information provided by a Company which specializes in analyzing business’
solvency. In certain countries which are considered a greater risk due to political and geographical reasons, the Group uses collection
instruments as documentary credits as they guarantee greater security.
Periodically, information of each account
receivable’s seniority is prepared to manage its collection. Overdue accounts are claimed monthly in order for them to be
collected. Therefore, given the Group’s past experiences and the sector in which it operates, the Parent’s Directors
do not expect significant non-payment problems. Credit limits with payment delays are reviewed on a monthly basis.
Credit risk of the cash funds is limited
as Group Gadea generally maintains its cash and cash equivalents in Financial Institutions with a high level of solvency.
As at 31 December 2014, the Parent’s
Directors stated that no impairment of the assets subject to being recorded were present.
Liquidity risk
Liquidity risk is caused by the possibility
of the Group not having available cash funds or not being able to access a sufficient amount and in a cost effective manner to
meet their payment obligations at all times. The Group’s aim is to maintain a sufficient level of available funds, which
is achieved through their policies that establish the minimum amount of cash to be available at all times. The Group’s finance
department has established policies to carry out continuous monitoring of the consolidated balance sheet structure by maturity
date. This enables the department to anticipate the possible need for cash in the short and medium term and adopt a strategy that
stabilizes the financial sources. These procedures are always carried out in conjunction with the Group’s general financial
policies.
In order to secure cash and meet all payment commitments from
their business, at the 2014 year-end Grupo Gadea had sufficient available cash and credit facilities. In March 2015, the Group
signed various financing granted by national financial entities for €32.5m that was used to cancel financing held at 31 December
2014, to finance investments to be made in 2015, and to obtain sufficient cash for the payment of dividends in March 2015 (see
Note 4).
The Group continues to generate cash throughout
its normal course of business. Therefore, it does not forecast any difficulties in meeting debt maturities.
Market risk (including interest rates, exchange rates
and other price risks)
Market risk is the risk associated with
the fair value or future cash flows of a financial instrument varying due to interest rates, exchange rates or other price risks.
Interest rate risk arises due to
the possible loss caused by variations in the fair value or future cash flows of a financial instrument due to changes in the market’s
interest rates. The Group’s exposure to the risk of changes in interest rates is mainly due to its long-term loans and credit
which have variable interest rates.
The Group manages its interest rate risk
by taking out loans with variable interest rates and using a fixed interest rate. To achieve this aim, the Group carries out interest
rate swaps that are established as hedging transactions for the corresponding loans. Variable interest rate funding is linked to
the Euribor.
The Group has carried out a sensitivity
analysis of the financial debt at a variable rate as at 31 December 2014, considering that the contractual conditions of the current
loans at this date, and a variation of 1% in the yield curve would not have a significant effect on the consolidated income for
2015.
The Parent’s Directors believe that
there are no significant differences between the book value and fair value of the financial assets and liabilities.
Exchange rate risk arises due to
the possible loss caused by variations in the fair value or future cash flows of a financial instrument due to fluctuations in
exchange rates. The Group’s exposure to the risk of fluctuating exchange rates is mainly due to sales and purchases being
carried out in currencies different to that used by the Group (see Note 21). While the Group does not have a policy relating to
exchange rate hedging instruments, the Parent’s Directors believe that they sufficiently cover a large part of the Group’s
exposure to this risk due to its consolidated companies’ sales being offset by purchases in US dollars.
The accounts receivable and payable, and
the current accounts and financing are items in the Group’s assets and liabilities that include balances in a foreign currency.
Note 22 includes the balances in a foreign currency which were exposed to the exchange rate risk as at 31 December 2014.
Other price risks relates to Grupo
Gadea’s exposure to the risk of fluctuations in the price of basic raw materials. Grupo Gadea continually monitors the price
of these raw materials in order to make appropriate decisions at all times according to the market development observed and expected
and the Group’s strategy, although given its nature, the rotation of these raw materials is very high. Grupo Gadea addresses
the effect of raw material price fluctuations by changing the sale prices of their products in a manner that does significantly
impact the Group’s income statement.
| 23. | Environmental Aspects and Greenhouse Gas Emissions Rights |
An environmental activity
is any operation whose main purpose is to minimize environmental impacts and protect and improve the environment.
As at 31 December 2013,
the Group’s most significant systems, teams and facilities (entirely owned by Cyndea Pharma, S.L. and hereinafter, the
proportional consolidation method is 50%- see Note 1) relating to environmental activities were the following:
| |
€k | |
Description | |
Cost | | |
Accumulated amortization | |
| |
| | | |
| | |
Purifiers | |
| 249 | | |
| 106 | |
Expenses relating to the protection and
improvement of the environment were directly expensed to the 2014 income statement and amounted to €598k (€469k in 2013).
They mainly related to the cost of treatment and storage of industrial residues from the production processes of the consolidated
companies.
Grupo Gadea does not have any other environmental
responsibilities, assets, provisions or contingencies that could significantly affect the Group’s equity, financial situation
or profit. During 2012 and 2013, Grupo Gadea did not receive any environmental grants or obtain income from environmental related
business.
According to the National Allocation Plan,
and given the nature of the Group’s business, the Spanish consolidated subsidiaries of the Group were not allocated any greenhouse
gas emission rights. Therefore, as at 31 December 2014, the Group had not recorded any balance in “Greenhouse gas emissions
rights” included in the consolidated balance sheet, had not recorded any cash flow in this item or any value correction of
an impairment in 2014. During 2014, the Group did not incur any expenses or record any provisions relating to this item. The Group
has not drawn up any future contracts relating to emissions rights, has not received any environmental grants or created any contingencies
relating to greenhouse gas emissions
In March 2015 the sale and purchase of
various Parent’s shares took place between their shareholders which led to the redistribution and amendment of their percentage
ownership. Refer to Note 12 for a breakdown of these shares. There have been no other significant events after the 2014 year-end
that have been included in the Notes to this Report.
Average number of employees
The average number of people employed by
Grupo Gadea during 2013 and 2014, by professional category, was the following:
| |
Average number of employees | |
Professional Category | |
2014 | | |
2013 | |
| |
| | |
| |
Senior executives | |
| 4 | | |
| 11 | |
Managers | |
| 7 | | |
| | |
Engineers and technicians | |
| 106 | | |
| 139 | |
Administrative assistants | |
| 9 | | |
| 15 | |
Production personnel | |
| 133 | | |
| 90 | |
Sales and distribution personnel | |
| 12 | | |
| 11 | |
| |
| 271 | | |
| 266 | |
During 2012 and 2013, Grupo Gadea did not
contract anyone with a legally recognized disability equal to or greater than 33%.
Distribution of functions by gender
Grupo Gadea’s distribution of functions
by gender of their employees as at 31 December 2013 and 2014 was the following:
At 31 December 2014
| |
Number of employees | |
Professional category | |
Male | | |
Female | | |
Total | |
| |
| | |
| | |
| |
Senior executives | |
| 4 | | |
| - | | |
| 4 | |
Managers | |
| 4 | | |
| 3 | | |
| 7 | |
Engineers and technicians | |
| 54 | | |
| 53 | | |
| 107 | |
Administrative assistants | |
| - | | |
| 9 | | |
| 9 | |
Production personnel | |
| 115 | | |
| 26 | | |
| 141 | |
Sales and distribution personnel | |
| 4 | | |
| 11 | | |
| 15 | |
| |
| 181 | | |
| 102 | | |
| 283 | |
At 31 December 2013
| |
Number of employees | |
Professional category | |
Male | | |
Female | | |
Total | |
| |
| | |
| | |
| |
Senior executives | |
| 9 | | |
| 2 | | |
| 11 | |
Managers | |
| 51 | | |
| 65 | | |
| 116 | |
Engineers and technicians | |
| 3 | | |
| 13 | | |
| 16 | |
Administrative assistants | |
| 103 | | |
| 28 | | |
| 131 | |
Production personnel | |
| 5 | | |
| 7 | | |
| 12 | |
| |
| 171 | | |
| 115 | | |
| 286 | |
As at 31 December 2014, the Parent’s
Board of Directors consisted of 3 legal entities and 2 natural people, all of which were male (4 legal entities and 5 natural people,
all of which were male at 31 December 2013).
Audit fees
During 2013 and 2014, fees relating to
auditing accounts and other services provided by the Group’s main auditor or any company linked to it by control, common
ownership or Directors, were the following:
| |
€k | |
Description | |
2014 | | |
2013 | |
| |
| | |
| |
Audit services: | |
| | | |
| | |
Audit of the consolidated financial statements of Gadea Grupo Farmacéutico, S.L. | |
| 12 | | |
| 11 | |
Audit of the individual financial statements of the consolidated Spanish Companies | |
| 43 | | |
| 45 | |
Other verification services: | |
| | | |
| | |
Audit services: | |
| 11 | | |
| 2 | |
Tax advisory services to Crystal Pharma, Ltd. | |
| 1 | | |
| 1 | |
Total audit and associated services | |
| 67 | | |
| 59 | |
The fees relating to other auditors in
2013 and 2014 for auditing Crystal Pharma, Ltd. amounted to €4k each year.
| 26. | Deferred payments to suppliers |
In compliance with Law 15/2012, 5 July
(an amendment of Law 3/2004, 29 December), which enforces measures to avoid late payments in business transactions that have been
established in the Accounting and Auditing Institute’s Resolution of 29 December 2010, and taking into account stipulations
in the Second Transitory Provision of this Resolution, deferred payments made by the Group to service and trading suppliers (including,
where appropriate, the Group companies located in Spain) during 2013 and 2014 were the following:
| |
2014 | | |
2013 | |
| |
Amount (€k) | | |
% over Total | | |
Amount (€k) | | |
% over Total | |
| |
| | |
| | |
| | |
| |
Payments made during the year- | |
| | | |
| | | |
| | | |
| | |
Payments made within the maximum legal period (*) | |
| 2,714 | | |
| 18.15 | | |
| 3,443 | | |
| 17.09 | |
Other payments made | |
| 12,238 | | |
| 81.85 | | |
| 16,710 | | |
| 82.91 | |
Total payments made | |
| 14,952 | | |
| 100.00 | | |
| 20,153 | | |
| 100.00 | |
Excess of weighted DPO (in days) | |
| 67.09 | | |
| - | | |
| 74.4 | | |
| - | |
Deferments that surpass the maximum legal period as at year-end (*) | |
| 2,187 | | |
| 13.65 | | |
| 799 | | |
| 9.03 | |
| (*) | In each case, the legal period has been determined according
to the corresponding nature of the goods or services received by the Group in accordance with Law 3/2004, 29 December, which establishes
measures to prevent delinquency in business transactions and Law 11/2013, 26 July, which includes measures to support entrepreneurs
and stimulate growth and the creation of jobs. |
In accordance with the applicable aforementioned
regulations, the information presented relates exclusively to the Group’s suppliers and companies located in Spain.
Article 84 of Royal Decree 1159/2010, 24
September, which approved the regulations for preparing consolidated financial statements, states that the consolidated Annual
Account’s memorandum must present the Group’s business by business area, including which components are the Group’s
operating business areas, which business areas generate income and incur costs, and which income and expenses are subject to inspection,
discussion and evaluation by the entity’s highest authority on a regular basis. In particular, any component that accrues
10% or more of the turnover generated by all of the entity’s business areas, including both intragroup and external sales,
or the business areas that accrue 10% of more the of the entity’s total amount of assets must be included.
Given the nature of the business carried
out by the Group, the only business area recorded relates to the strategic business unit (and not to the product lines offered).
This business area is uniquely managed given that to date, it does not have specific markets and regulations. Therefore, there
is no need to include a further breakdown by business area in the consolidated financial statements).
The only client that the Group carried
out sales with and/or provided services to that accounted for more than 10% of the turnover generated by all of the entity’s
business areas was Gentec, S.A. (11.3% in 2014 and 11.8% in 2013).
Gadea Grupo Farmacéutico, S.L. and Subsidiaries
Consolidated Management
Report for the year ended
31 December 2014
2014
Turnover and profit
The Group’s net turnover in 2014 was €73.5m, an increase
of approximately 16.5% compared to 2013, whilst the consolidated profit after tax amounted to €13.1m, an increase of approximately
90% compared to the previous year.
The Group’s business
Crystal Pharma, S.A.U. was the subsidiary that accounted for
most of the Group’s turnover, contributing €66.3m to the net turnover and €10.9m to the consolidated profit.
Gadea Biopharma, S.L.U. began its business in the technical
development center and pharmaceutical specialties production plant in Parque Tecnológico de León in the second quarter
of 2013. In 2014 they received approval from the Spanish Medicines Agency (AEMPS) to be a pharmaceutical laboratory for the manufacture
of finished injectable products. Gadea Biopharma, S.L.U. continued its commitment to development, with 7 products at different
stages of development which are intended to be sold as generic medication on the American market. Gadea Biopharma, S.L.U. also
has various co-development and supply contracts with significant multinational laboratories.
Bioraw, S.L.U. and Bionice, S.L.U. were established on 31 December
2013. Bioraw, S.L.U. began its production business of intermediate fermented products in the last months of 2014 in the production
facilities located at San Cristóbal de Entreviñas (Zamora). Bionice, S.L.U. has still not begun business.
Finally, during 2015 Cyndea Pharma, S.L. exited the consolidation
perimeter as the Parent sold its 50% shareholding that it previously owned.
2015 forecast development
The Parent’s Directors forecast that
the 2015 business will grow at a similar rate as in previous years. The Group’s 2015 consolidated budget forecasts a net
turnover of approximately €80m, and a profit after tax of €12.2m.
Investigation, development, the environment, and personnel
The Group continues to follow its clear commitment of enhancing
business in investigation and development to sustain projects which enable the future production and sale of new products.
Protecting, improving and minimizing the impact on the environment,
which includes reducing or eliminating future pollution is considered when each of the Group’s businesses are planned.
Grupo Gadea believes that its employees
are its main asset, and therefore developing the workforce’s talent is one of the most important aspects for growth and operational
efficiencies. A number of annual and strategic objectives always focus on eliminating accidents that could affect the Group’s
employees. Additionally, the Group offers all its employees the option to become a shareholder in the corporate structure and also
distributes bonuses to all employees according to the Group’s profit.
Derivative financial instruments
As at 31 December 2014, the Group had not
contracted and did not have any derivative financial instruments. However, during 2014 Crystal Pharma, S.A.U. contracted a derivative
financial instrument for a notional amount of €1.5m to cover possible pressures regarding the interest rate. This consisted
of swaps from variable to fixed interest rates, whose main characteristics coincide with those included in this Report.
The risks and uncertainties faced by the Group
The main risks that may affect the future
development of our business and the measures implemented to reduce these risks are the following:
| - | In the current international market, the sale price pressure on pharmaceutical products is increasing.
In order to maintain competitiveness in the sector, Grupo Gadea is implementing efficiency programs and tools to reduce the cost
of production processes as well as policies that control and restrict expenses incurred by the Group. |
| - | Due to the impact that variations in interest rates may have on the Group’s profit, the Group
uses derivative instruments for certain financial transactions. Information regarding other financial risks is included in this
Report. |
Deferred payments to suppliers
In accordance with Law 15/2012 of 5 July,
an amendment of Law 3/2004 of 29 December, that establishes measures to avoid late payments in business transactions, in the Resolution
of 29 December 2010 of the Accounting and Auditing Institute, and considering account stipulations in the Second Transitory Provision
of this Resolution, deferred payments made by the Group to service and trading suppliers (including, where appropriate, the
Group’s companies located in Spain) during 2013 and 2014 were the following:
| |
2014 | | |
2013 | |
| |
Amount (€k) | | |
% over Total | | |
Amount (€k) | | |
% over Total | |
| |
| | |
| | |
| | |
| |
Payments made during the year- | |
| | | |
| | | |
| | | |
| | |
Payments made within the maximum legal period (*) | |
| 2,714 | | |
| 18.15 | | |
| 3,443 | | |
| 17.09 | |
Other payments made | |
| 12,238 | | |
| 81.85 | | |
| 16,710 | | |
| 82.91 | |
Total payments made | |
| 14,952 | | |
| 100.00 | | |
| 20,153 | | |
| 100.00 | |
Excess of weighted DPO (in days) | |
| 67.09 | | |
| - | | |
| 74.4 | | |
| - | |
Deferments that surpass the maximum legal period as at year-end (*) | |
| 2,187 | | |
| 13.65 | | |
| 799 | | |
| 9.03 | |
| (*) | In each case, the legal period has been determined according
to the corresponding nature of the goods or services received by the Group in accordance with Law 3/2004 of 29 December, which
establishes measures to prevent delinquency in business transactions and Law 11/2013 of 26 July, which includes measures to support
entrepreneurs and stimulate growth and the creation of jobs. |
In accordance with the applicable aforementioned regulations,
the information presented relates exclusively to the Group’s suppliers and companies located in Spain.
The Group is currently evaluating the possibility
of implementing new measures in the next financial year to reduce the payment periods in cases where the payment exceeds its due
date. These measures will be focused on reducing the processing periods for receiving, testing, accepting, and accounting for the
invoices (using electronic and technological devices), as well as improving the resolution process, with the aim of establishing
payment orders that could be carried out at monthly dates established by the Group, that will not exceed the maximum limit established
by delinquency regulations.
Parent Shareholdings
During 2013 and 2014, neither the Parent
nor its subsidiaries acquired shares in the Parent, nor did they acquire shares in Gadea Grupo Farmacéutico, S.L., as at
31 December 2014.
Events after year-end
In March 2015, the Group received new funding from financial
entities amounting to a total of €32.5m, which was primarily used to cancel the debt held at 31 December 2014, and to finance
future investments made by the Group.
From the financial year-end until the preparation
of the consolidated financial statements, there were no other significant events that could have impacted these consolidated financial
statements.
DIRECTOR’S SIGNATURES
The Directors of Gadea Grupo Farmacéutico,
S.L. sign the consolidated financial statements and consolidated notes to the financial statements for the year ended 31 December
2014.
Boecillo (Valladolid), 26 March 2015
/s/ D. Luis Gerardo Gutiérrez Fuentes |
|
/s/ D. Francisco Javier Gallo Nieto |
D. Luis Gerardo Gutiérrez Fuentes |
|
D. Francisco Javier Gallo Nieto |
On behalf of 3-Gutinver, S.L. |
|
Board Member |
Chairman |
|
|
|
|
|
/s/ D. José Antonio Gutiérrez Fuentes |
|
/s/ D. José Luis Stampa Jäger |
D. José Antonio Gutiérrez Fuentes |
|
D. José Luis Stampa Jäger |
Board Member |
|
On behalf of Muggio Holding, S.L. |
|
|
Board Member |
|
|
|
/s/ D. Samuel Alonso Martínez |
|
|
D. Samuel Alonso Martínez |
|
|
On behalf of Antartis Pharma, S.L. |
|
|
Board Member |
|
|
DISCLAIMER: This is to certify that
the 2014 Consolidated Financial Statements and Consolidated Management Report attached, are those prepared by the Board of Directors
at their meeting on 26 March 2015. The signatures of the Directors of Gadea Grupo Farmacéutico contained in this document
are legitimate.
|
/s/ D. José Luis Vecilla Camazón |
|
D. José Luis Vecilla Camazón |
|
Secretary non-Board Member |
Gadea Grupo Farmacéutico, S.L. and Subsidiaries
Notes to Consolidated
Financial Statements for year
ended 31 December 2013
| 1. | Description of the Group |
Parent and the Group’s activities
Gadea Grupo Farmacéutico, S.L. (the
“Parent”) was established on 18 January 2007, with the corporate name “Gadea Pharmaceutical Group, S.L.”.
On 29 June 2011, at the Annual General Meeting, the Board of Directors agreed to change its corporate name to its current name.
Currently, its registered address and headquarters
are at Parque Tecnologico de Boecillo, (Boecillo, Valladolid).
Its corporate purpose includes the following
businesses:
| - | Scientific
and technical advisory, as well as the organization and optimization of companies in
the pharmaceutical sector, including the chemical industry. |
| - | Advisory
to the Directors for different companies’ internal business lines, including imports
and exports, patents, waste management, and the manufacture and sale of chemical products. |
| - | Manufacture,
sale, study, design, programming, acquisition, handling and managing of internal and
external raw materials, intermediate, semi-finished and finished products, for the chemical,
pharmaceutical, cosmetic, veterinary, and food industries, except for those products
whose sale, storage or handling is reserved by Law for specific companies. |
| - | Planning,
programming, study, sale, investigation and development of chemical, pharmaceutical,
veterinary, cosmetic and food processes, and the sale of related technologies. Scale
and implementation of industrial processes or chemical, pharmaceutical, cosmetic, veterinary
and food products in factories. |
| - | Planning,
programming, study, sale, packaging and distribution of chemical, pharmaceutical, veterinary,
cosmetic and food products. |
| - | Studies
and expert opinions regarding the environmental impact, image and legal technical assessment
of these materials. |
| - | Real
estate businesses relating to the acquisition, tenure, sale, promotion, urbanization,
division of land, construction, renovation and operation, for rent or any other means,
of any type of real estate. |
| - | Acquisition,
tenure, and sale of the real estate assets, including shares in any type of company,
and those that do not have securities, excluding those businesses regulated by legislation. |
Currently, the Parent’s business is
focused on the corporate development of the Group that is in charge of the search, analysis, and selection of new products and
potential investment opportunities for the Group. Simultaneously, its business also includes owning shares in companies that provide
services to the Group’s companies, and acts as a channel and distributor between these companies for the financing obtained
by themselves and other financial entities, depending on the resources required and the projects with each of the financial entities.
Gadea Grupo Farmacéutico, S.L. is the
head of an international Group (“Grupo Gadea”) comprising of companies dedicated to the development and subsequent
manufacture and sale of active ingredients of pharmaceutical products.
During recent years, Grupo Gadea has carried
out a significant investment plan and has incurred significant expenses due to the implementation of new factories and production
lines. Grupo Gadea’s business plan for the future forecasts a significant increase in net revenues, financial resources
generated in transactions as well as profit.
Subsidiary Companies (“Subsidiaries”)
Subsidiaries are classified as those which
the Group has effective control, which is exercised generally, although not exclusively by either direct or indirect ownership
of 50% or more of the voting rights of the investee companies, or if this percentage is lower or zero, where other circumstances
or agreements exist that grant the Group this control. Control is “the ability to govern the financial and operating
policies of a company so as to obtain benefits from its activities”.
The subsidiaries that have been included in
the 2013 consolidated financial statements by the “global integration method” are detailed below:
| |
| |
| |
| | |
€k | |
| |
Registered | |
| |
Parent’s % Shareholding | | |
Book Value of Shareholding | |
Corporate Name | |
Address | |
Business | |
Direct | | |
Indirect | | |
Total | | |
31/12/13 | | |
31/12/12 | |
| |
| |
| |
| | |
| | |
| | |
| | |
| |
Crystal Pharma, S.A.U. | |
Boecillo (Valladolid) | |
Chemical pharmaceutical | |
| 100,00 | | |
| - | | |
| 100,00 | | |
| 23,728 | | |
| 23,728 | |
Crystal Pharma, Ltd. | |
Zejtun (Malta) | |
Chemical pharmaceutical | |
| 100,00 | | |
| - | | |
| 100,00 | | |
| 817 | | |
| 817 | |
Gadea Biopharma, S.L.U. | |
León | |
Pharmaceutical and biotechnology | |
| 100,00 | | |
| - | | |
| 100,00 | | |
| 3,500 | | |
| 3,000 | |
Bioraw, S.L.U. (a) | |
Boecillo (Valladolid) | |
Chemical biotechnology | |
| 100,00 | | |
| - | | |
| 100,00 | | |
| 100 | | |
| - | |
Bionice, S.L.U. (a) | |
León | |
Chemical biotechnology | |
| 100,00 | | |
| - | | |
| 100,00 | | |
| 100 | | |
| - | |
| |
| |
| |
| | | |
| | | |
| | | |
| 28,245 | | |
| 27,545 | |
| (a) | Established companies as at
31 December 2013. No activity in 2013. |
Crystal Pharma, S.A.U. was established in
Segovia on 1 February 1996. Later, in November 1996, they moved their registered address to Parque Tecnológico de Boecillo
(Valladolid), where it also has its production facilities. Currently, Crystal Pharma, S.A.U.’s main business is the investigation,
development and subsequent manufacture and sale of active ingredients for pharmaceutical products. In 2011, they merged with Ragactives,
S.L.U that was established on 23 November 2006. Their main businesses were the investigation, development, and subsequent manufacture
and sale of active ingredients for pharmaceutical products.
On 14 December 2005, Crystal Pharma, S.A.U.
acquired the entire share capital of Crystal Pharma, Ltd. (previously Solea Pharma, Ltd) for €22,673 although this
share was transferred to the Parent in 2009. This subsidiary’s registered address is Zejtun (Malta) and their business consists
of the manufacture of active ingredients for the pharmaceutical industry, with a large part of their production provided to the
Group’s companies. Their 2013 financial statements are being audited by Mark A. Scalpello.
Gadea Biopharma, S.L.U. was established on
14 June 2011, and their registered address is Parque Tecnológico de León. On 26 June 2013, this subsidiary performed
a €2.7m capital increase and in 2013, the Parent contributed €500k equity to the subsidiary. Their main businesses are
the investigation, development and subsequent manufacture and sale of pharmaceutical products. The construction and implementation
of their production plant was completed in the last months of 2013.
Bioraw, S.L.U. and Bionice, S.L.U. were established
on 31 December 2013, and their corporate purpose consists of chemical biotechnical processes, although their businesses have not
yet started.
The information in the table above relates
to 31 December 2012 and 2013, and the financial positions of the subsidiaries are shown in their respective financial statements.
Jointly controlled entities
“Jointly controlled
entities” are defined as companies who are jointly managed by the Parent and/or another of the Group’s companies
and one or more third parties.
During 2012 and 2013 the
only jointly controlled entity was Cyndea Pharma, S.L. that was included by the “proportional integration method”
in the consolidated financial statements for these periods based on the Parent’s 50% shareholding in the company. Information
relating to the jointly controlled entity is detailed below:
| |
| |
| |
| | |
€k | |
| |
Registered | |
| |
Parent’s % Shareholding | | |
Book Value of Shareholding | |
Corporate Name | |
Address | |
Business | |
Direct | | |
Indirect | | |
Total | | |
31/12/13 | | |
31/12/12 | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cyndea Pharma, S.L. | |
Ólvega (Soria) | |
Pharmaceutical | |
| 50,00 | | |
| - | | |
| 50,00 | | |
| 2,969 | | |
| 2,969 | |
Cyndea Pharma, S.L. (previously
Gideon Pharma, S.L.U) was established in Madrid on 18 May 2005 and its current registered address and production facilities
are located at Polígono Industrial de Ólvega (Soria). Their shares were purchased by the Parent in January 2007.
Following the design and construction of a new specialized pharmaceutical factory, which began operating at the end of 2009, the
company has been developing products in their factory and providing analytical services and working in “contract manufacturing”.
Associated Companies
“Associated companies”
are defined as those which the Group has an ability to exercise a significant influence, but not control or joint control.
This is demonstrated by a direct or indirect shareholding equal or greater than 20% of the voting rights of the investee.
As at 31 December 2012 and
2013, the Group had no associated companies.
Financial year of the subsidiaries and jointly controlled
entities
The financial year of all the subsidiaries
and jointly controlled entities match that of the Parent, which is the same as the calendar year. The date of its individual financial
statements is therefore, 31 December 2013. The currency used by the Group and in the financial statements of all the companies
is the euro.
Audit of the individual accounts of the subsidiaries and jointly
controlled entities
The 2013 individual financial statements of
Crystal Pharma, S.A.U. and Cyndea Pharma, S.L. are being audited by Deloitte, S.L., whilst the 2013 financial statements of Crystal
Pharma, Ltd. are being audited by Mark A. Scalpello.
| 2. | Basis of Presentation of the Consolidated Financial Statements
and Principles of Consolidation |
| a) | Regulatory framework of financial information applicable to the
Group |
The consolidated
financial statements have been provided by the Parent’s Directors in accordance with the regulatory framework of financial
information applicable to the Group which is established in:
| · | The
Commercial Code and other commercial law |
| · | The
regulations for the preparation of consolidated financial statements (approved by the
Royal Decree 1159/2010), Generally Accepted Accounting Principles (approved by the Royal
Decree 1514/2007 and subsequent modifications) and, where appropriate, industry adaptations. |
| · | The
regulations approved by the Institute of Accounting and Auditing in developing GAAP and
related legislations. |
| · | The
remaining Spanish accounting legislations. |
| | The 2013 consolidated financial statements
have been prepared from the individual accounting records of Gadea Grupo Farmacéutico,
S.L. and of the companies included in the consolidation (included in Note 1) and
show a fair presentation of the Group’s consolidated equity, balance sheet, income
and expenses and cash flows as at 31 December 2013, in accordance with the regulatory
framework of financial information. |
| | The 2013 consolidated financial statements
and individual financial statements of Gadea Grupo Farmacéutico, S.L. have been
prepared by the Parent’s Directors, whilst the 2013 individual financial statements
of the subsidiaries were prepared by their respective Directors. All accounts will be
submitted for approval by the shareholders at the Annual General Meeting, where it is
expected that they will be approved without any changes. |
| | The 2012 consolidated financial statements
were approved by the shareholders at the Annual General Meeting held on 27 June 2013. |
| c) | Application of non-obligatory accounting principles. |
| | No non-obligatory accounting principles
have been applied. The Parent’s Directors have prepared the consolidated financial
statements based on all the obligatory principles and rules that have a significant effect
on the consolidated financial statements. |
| | The 2013 consolidated financial statements
have been prepared on a “going concern” basis. |
| d) | Principles of Consolidation |
| | The 2013 consolidated accounts have been
prepared using a “bottom-up procedure” meaning the Group’s consolidated
financial statements have been obtained from each of the corresponding subgroups, starting
with the smallest and moving to the largest until reaching the Global Group. |
The consolidation
of the “subsidiaries”, those which the Group has effective control for the majority of votes of its representative
bodies and decisions, has been made under the “global integration method” and therefore the following applies:
| 1. | All significant balances and transactions
between the consolidated companies and material gains or losses on internal operations
not carried out with third parties have been eliminated on consolidation. |
| 2. | Certain adjustments and reclassifications
have been made to standardize the accounting principles and valuation criteria used by
different companies. |
| 3. | Items on the balance sheets and
income statements of the foreign subsidiaries included in the consolidation perimeter
whose currency is different to the euro (in particular those relating to the Chinese
company Hunan Norchem Pharmaceutical Co., Ltd. until it was removed from the consolidation
perimeter in 2012 – see Note 2-e) have been converted to euros using
the “closing rate method”. |
| a. | Assets and liabilities were converted
to euros at the year-end exchange rates. |
| b. | Equity items, including the net
profit of the period, were converted using the Historical exchange rate. |
| c. | The net difference between assets
and liabilities and equity is included under the “Adjustments for changes in value
– conversion differences”, if applicable, net of tax, and after subtracting
this difference relating to minority shareholders. |
The Historical exchange rate is
considered as the following:
| a. | For existing equity items at the
date the consolidated shares are acquired, the exchange rate at the date of the transaction
is used. |
| b. | For income and expenses, including
those recorded within net equity: the exchange rate at the date of the transaction is
used. |
| c. | Reserves generated after the transaction
as a result of the non-distributed income: the exchange rate from the conversion of income
to expenses from these reserves is used. |
Consolidated goodwill and fair
value adjustments of assets and liabilities from the acquisition method are considered to belong to the acquired Company, and
are therefore converted at the closing exchange rate.
The minority shareholders use
the Historical exchange rate, and the conversion difference, if any, net of any tax effect, is recorded under “Minority
shareholders” on the balance sheet.
The conversion differences in
the consolidated income statement are recorded in the period in which they are disposed or settled by other investments in the
consolidated company.
The cash flows use the exchange
rate at the date each transaction occurs, or by using a weighted average exchange rate (such as the monthly maximum) so
there are no significant variations.
| 4. | At the time of acquiring a subsidiary,
their assets, liabilities and contingent liabilities are recorded at fair value at the
date of acquisition. Positive differences between the price of acquisition and the fair
value of the net assets acquired are recorded as “Goodwill”. Therefore, negative
differences are expensed at the date of acquisition. |
| 5. | The minority shareholder´s
equity in the income statement and net equity of the subsidiaries are determined based
on the current voting rights at that moment, without including the period of the transfer
of potential voting rights. The equity of minority shareholders is proportionate to the
fair value of the assets and liabilities of the recorded minority. |
| 6. | The value of the minority shareholders’
ownership is recorded within equity and in the income of the subsidiaries which are included
within the Group’s consolidated net equity, under the “Minority shareholders”
caption of the consolidated balance sheet, and under “Income from minority shareholders”
in the consolidated income statement. |
| 7. | The consolidation of income generated
by subsidiaries that have been acquired is made exclusively taking into account the income
generated between the date of acquisition and the balance sheet dates. Equally, the consolidation
of income generated by disposed subsidiaries is made only by including the income from
the start of the period to the date of disposal. |
| 8. | Acquisitions of shares to minority
shareholders in subsidiaries that the Group previously had effective control and, therefore
only produced an increase in the Group’s percentage shareholding, are, from a consolidated
view point, equity transactions. In accordance with NRV 9a paragraph 4 of
GAAP, this reduces the “Minority shareholders” balance and the consolidated
reserves are restated for the difference between the value of the consideration paid
by the Group and the amount by which the balance under “Minority shareholders”
has been changed. No “Goodwill” whatsoever is recorded for this operation,
nor does it include assets or liabilities from the consolidated balance sheet. |
As explained
in Note 1, the annual financial statements of the subsidiaries used in the consolidation process refer to the same reporting date
and cover the same period as those of the Parent.
Jointly controlled
entities
The consolidation
of the jointly controlled entity, Cyndea Pharma, S.L. was made under the “proportional method” that consisted
of the incorporation of the assets, rights and obligations and the income and expenses of these companies in proportion to the
Group’s shareholding in these companies.
As explained
in Note 1, the annual financial statements of the subsidiaries used in the consolidation process refer to the same reporting date
and cover the same period as those of the Parent.
| e) | Changes in the consolidation perimeter |
In 2013 there
were no significant additions or exits from the consolidation perimeter. On 31 December 2013, Bioraw, S.L.U. and Bionice S.L.U.
were each established with a share capital of €100,000. These subsidiaries were inactive in 2013.
There were
no additions in 2012, however Hunan Norchem Pharmaceutical Co., Ltd. did leave the consolidation perimeter. On 31 October 2012,
the equity sales purchase agreement was signed (“Equity Transfer Agreement”) for which the Parent transferred
a 61.67% shareholding in Hunan Norchem Pharmaceutical Co., Ltd. As a result, the Group’s shareholding in this Chinese company
decreased to 5% that signified the exit of the company from the consolidation perimeter. The price of the sale of shares amounted
to €2.256m that equaled the investment (that had been acquired in 2011). Therefore, the Group did not make a profit
or loss from this transaction. The sales purchase agreement included a delay clause until 2013 for the payment of part of this
price (€915k), which had been collected upon maturity.
| f) | Responsibility for information, and key issues in relation to the
measurement and estimation of uncertainty |
| | The information contained in the consolidated
financial statements is the responsibility of the Parent’s Directors. |
| | In preparing the 2013 consolidated financial
statements, estimates made by Parent’s Directors have been used on occasion to
measure certain assets, liabilities, income, expenses and commitments that would not
be easily determined by other sources. These estimations are based on historical information
and other factors that are considered fair and in accordance with the current situation.
These estimations refer to the following: |
| · | The
useful life of tangible and intangible assets. |
| · | The
assessment of possible impairment losses on certain assets. |
| · | The
classification of leases as operating or financial. |
| · | The
fair value of certain financial instruments. |
| · | The
amount of the provisions. |
| · | The
application of deferred tax assets. |
| | Although these estimations were made
with the best information available as at 31 December 2013, future events may make it
necessary to review these estimates (upwards or downwards) in the coming years.
Any such changes would be taken to the consolidated income statement in the years affected. |
| g) | Comparison of information |
| | The information relating to 2012 included
in these notes is presented solely and exclusively for comparison purposes with that
relating to 2013. |
| | Certain items in the consolidated balance
sheet, income statement, statement of changes in shareholders’ equity and statement
of cash flows are grouped together to facilitate their understanding; however, whenever
the amounts involved are significant, the information is broken down in the related notes
to the financial statements. |
| i) | Changes in accounting criteria |
There were no significant changes
to the accounting criteria applied between 2012 and 2013.
No significant errors were identified
in the preparation of the 2013 consolidated financial statements that would have led to a restatement of the amounts included
in the 2012 consolidated financial statements.
During 2012 and 2013, the Group did not carry
out any business combinations.
| 4. | Distribution of the Parent’s profit |
The proposed distribution of the Parent’s
2013 profit, calculated by the Directors, will be submitted for approval by the shareholders at the Annual General meeting, in
the same way the 2012 profits were approved by the shareholders at the Annual General Meeting on 27 June 2013, which is detailed
below:
| |
€k | |
| |
2013 | | |
2012 | |
| |
| | |
| |
Basis of distribution: | |
| | | |
| | |
Profit for the year | |
| 6,341 | | |
| 1,834 | |
| |
| | | |
| | |
Distribution: | |
| | | |
| | |
Legal Reserves | |
| 634 | | |
| 183 | |
Voluntary Reserves | |
| 1,357 | | |
| 651 | |
Dividends | |
| 4,350 | | |
| 1,000 | |
| |
| 6,341 | | |
| 1,834 | |
Dividends paid during the year
The 2013 dividends were entirely distributed
during 2013. On 21 June 2013, the Board of Directors agreed to the distribution of a €4.35m dividend of the 2013 profit that
was recorded under “Interim dividend” in the consolidated balance sheet as at 31 December 2013, deducted from the
“Shareholders’ funds” caption (see Note 12).
On 21 June 2012, the Board of Directors agreed
to the distribution of a dividend of the 2012 profit which amounted to €1m. This dividend was paid on 10 July 2012.
The mandatory temporary financial statements
prepared by the Parent’s Board of Directors, in accordance with Article 277 of the Consolidated Companies Law, evidencing
the existence of sufficient liquidity for the distribution of the aforementioned interim dividend were the following:
Cash statement for the distribution of the Interim | |
€k | |
Dividend | |
27/06/13 | | |
27/06/12 | |
| |
| | |
| |
Trade and other receivables | |
| 1,936 | | |
| 663 | |
Cash and cash equivalents | |
| 228 | | |
| 143 | |
Other current assets | |
| 6,791 | | |
| 5,539 | |
Total current assets | |
| 8,955 | | |
| 6,345 | |
| |
| | | |
| | |
Short-term debt | |
| (1,003 | ) | |
| (1,385 | ) |
Accounts and other payables | |
| (523 | ) | |
| (653 | ) |
Total current liabilities | |
| (1,526 | ) | |
| (2,038 | ) |
Available cash | |
| 7,429 | | |
| 4,307 | |
The 2012 and 2013 amounts distributed did
not exceed the profits generated, once the estimated income tax was deducted from the profits.
| 5. | Accounting principles and policies and applied valuation
criteria |
The main accounting and valuation criteria
used by Grupo Gadea for the preparation of the 2012 and 2013 consolidated financial statements were the following:
| a) | Consolidated goodwill or negative difference between consolidated
companies |
| | At the date of acquiring a subsidiary,
the assets and liabilities acquired (including contingent liabilities, if applicable)
are (always) recorded at fair value, and when the fair value can be measured reliably.
The assets and liabilities recorded by the acquiring company are those that they have
received, as a result of the transaction. These assets and liabilities are recorded irrespective
of whether they had been previously recorded in the financial statements of the acquired
company, for failing to meet the recognition criteria. |
Goodwill
At the date of
acquisition, the positive difference between the cost of the Group’s shareholdings in the subsidiary’s capital and
the fair value of assets and liabilities from the shares acquired, are recorded under “Intangible assets – consolidated
goodwill” on the consolidated balance sheet.
Goodwill is only
recorded when it has been acquired for consideration, is assigned to one or more cash generating items, and represents advanced
payments made by the acquiring company for the future economic benefits deriving from the assets and liabilities of the acquired
company that would not be recorded or identified individually.
Goodwill is not
amortized. In accordance with the Spanish National Chart of Accounts approved by Royal Decree 1514/2007, 16 November, the Group
valued all assets and liabilities at the opening balance, in accordance with the existing principles prior to the introduction
of Law 16/2007, 4 July, that reformed Commercial Law to harmonize with international law and European Union regulations, with
the exception of financial instruments which are valued at their fair value. Therefore, “Goodwill” acquired by good
and valuable consideration prior to 1 January 2008 (date of transition to new GAAP) was recorded net of amortization until
31 December 2007.
Calculation of impairments of intangible and
tangible assets
At each accounting
closing, goodwill is reviewed for impairments that would reduce its recoverable amount to an amount below its book value. In this
case, impairment losses are recorded but they cannot be reversed in subsequent periods.
The “impairment
test” of goodwill of intangible and tangible assets (See Notes 5-b and 5-c) carried out by the Parent’s
Directors is the following:
| · | The
recoverable amounts are calculated for each cash generating unit, although for intangible
assets, where possible, the impairment calculations are performed individually for each
asset. |
| · | The
Parent’s Directors annually prepare a business plan by market and business for
each cash generating unit, typically covering a period of 5 years. The main components
of this plan include the following: |
| - | Income
and expenses forecasts |
| - | Investment
and Working Capital forecasts |
| · | Other
variables influencing the calculation of recoverable value are the following: |
| - | The
discount rate to be applied, meaning the weighted average of the cost of capital, which
is affected by the cost of liabilities and the specific risk of the assets. |
| - | The
growth rate applied to cash flows to extrapolate them beyond the period covered by budgets
and forecasts. |
The forecasts
are made based on previous results and the best estimates available, in line with externally obtained information.
The Business
Plans prepared have been reviewed and approved by Directors of the respective companies.
If there is an
impairment loss from a cash generating unit which had been assigned all, or part, of goodwill, the book value of goodwill is decreased
by this amount. However, if the impairment exceeds this amount, the remaining assets of this cash generating unit will be reduced
in proportion to their book value, by the higher value of the following: their fair value minus the cost of sale, their current
value, or zero.
Where an impairment
loss subsequently reverses (this is not permitted in specific cases relating to goodwill), the book value of the asset,
or cash generating unit, is increased to the reviewed estimate of its recoverable value. However, this book value must not exceed
the book value that would have existed if no impairment loss had occurred in previous years. This impairment loss reversal is
recorded as income.
Negative consolidation difference
If, at the date
of acquiring a subsidiary, there is a negative difference between the cost of capital share of the subsidiary, and the proportion
of the fair value of assets and liabilities from the shares acquired, the difference is recorded as an income in the consolidated
income statement for the period in which the transaction took place, under the caption “Negative consolidation difference
of subsidiaries”.
Intangible
assets are valued initially at their acquisition price or cost of production, and following their initial valuation they are adjusted
by the respective accumulated amortization, and, where appropriate, by the impairment losses recorded, that are determined in
accordance with the criteria detailed in Note 5-a.
In particular,
the Group uses the following accounting criteria for intangible assets:
| 1. | Consolidated goodwill. Described
in detail in Note 5-a. |
| 2. | Development. The costs incurred
in developing each project are capitalized when the following conditions are met: |
| - | The
cost of developing the project can be measured reliably. |
| - | The
costs are individualized for each project and relate to an asset that can be identified. |
| - | The
Group can demonstrate the technical feasibility of the project. |
| - | The
project is likely to generate profits in the future. |
The development
expenses incurred through their own means are recorded in the consolidated income statement (according to their different nature)
and, the total expenses that relate to projects that meet these conditions are transferred to the consolidated balance sheet
under the “Development” caption, and under “Work carried out by the Group on assets” on the consolidated
income statement.
The capitalized
development expenses are amortized on a straight line basis over their useful life, which is estimated between 4 and 5 years.
However, when there are reasonable doubts regarding the technical success or profitability of a project, these expenses will be
recorded directly in the income statement, for the year in which the doubts occur.
The capitalized
development costs at year end are separated by project, and their cost and the year in which they were incurred can be clearly
identified. The Parent’s Directors believe in the technical success and the profitability of these projects.
Investigation
expenses are directly expensed to the income statement in the period in which they are incurred.
| 3. | Patents, licenses, trademarks,
and similar. Patents and licenses are recorded at their book value and were affected
by the capital increase made in 2011 by the acquired company Ragactives, S.L.U. (see
Note 1) or by amounts paid to third parties by the Group for the acquisition of ownership
or rights to use the related items. They are amortized over a period of six years from
the date they began to generate profits from the manufacture and subsequent sale of active
ingredients protected by patents, and in proportion to the estimated profit, used to
calculate the value of these assets. |
| 4. | Computer software relates
to the costs incurred from the acquisition and development of computer programs that
are amortized on a straight line basis over a period of 4 to 5 years, from the date they
of their first use. The computer software maintenance costs are recorded in the consolidated
income statement in the year in which they are incurred. |
Tangible assets
are initially recorded at their acquisition price, or cost of production. The cost of tangible assets acquired through business
combinations are recorded at their fair value at the date of acquisition. Certain assets from mergers are recorded at the contribution
value to the Group, or at values attributed to the Group’s consolidated financial statements, if the Group’s companies
were acquired by the Company.
The initial
valuation is adjusted by the respective accumulated depreciation, and where applicable, by impairment losses. Therefore, in case
of loss of value, the Group is able to estimate these through “impairment tests” (see Note 5-a), the possible
loss of value that reduces the recoverable value of these assets by an amount less than their book value, which is shown under
“Impairment of intangible and tangible assets” in the same Note. The recoverable value is determined as the highest
level between the fair value minus the cost of sales, or their current value.
When there
is a recovery in the value of an impaired tangible asset, the Group records the reversal of the impairment loss in previous years,
in the consolidated income statement, and are consequently adjusted by future depreciation charges. This reversal can never exceed
the increase in the book value that would have occurred if no impairment losses were had been recorded in previous years.
The work
the Group carries out on their own tangible assets includes the accumulated cost of external and internal costs, determined by
the consumption of materials and the staff costs which are applied using hourly rates calculated on the basis of the actual costs
of these personnel. As at 31 December 2013, there were no amounts recorded in tangible assets.
For certain
assets that require a period of over one year to be in a state ready for use, the capitalized costs include financial expenses
that were accrued before the associated assets began operating or were delivered by the supplier. Financial expenses also correspond
to loans and other types of external financing, specific or generic, directly attributable to the acquisition or manufacturing
of assets. During 2012 and 2013, the Group did not capitalize interests in assets.
The repair and
maintenance expenses incurred during the year are expensed to the consolidated income statement. However, the costs of expanding,
upgrading and improvements as capitalized as they represent an increase in productivity, capacity and efficiency, or an extension
of useful life of the assets.
Retired assets,
whether those produced as a result of an upgrading process or any other cause, are written off at their gross value, accumulated
depreciation, and, if applicable, impairment provisions.
The Group follows
a policy to transfer the tangible assets in progress to operating assets at the moment they are available, and depreciation begins
at this moment.
The operating
tangible assets are depreciated using the linear method, using the acquisition cost, cost of production of assets, or if applicable,
the current value minus its residual value as a base. Note that the land where the buildings and facilities are located has an
indefinite useful life, and therefore is not subject to depreciation.
Annual depreciation
provisions of tangible assets are made under “Tangible asset depreciation” in the consolidated income statement, by
the estimated years useful life of the assets which is outlined below:
Asset Nature | |
Estimated Years
Useful Life |
| |
|
Buildings | |
33 |
Machinery and installations | |
6.67 to 8.33 |
Tools | |
3.33 |
Furniture | |
10 |
Transport elements | |
8.33 |
Information processing software | |
4 |
The estimated
useful life of tangible assets is frequently reviewed to identify any significant changes. If identified, the depreciation expense
will be prospectively adjusted in the income statement using the new useful life of these assets.
| | Leases are always classified as “financial
leases” when the risks and benefits from ownership of the assets are substantially
transferred to the lessee. Other leases are classified as “operating leases”.
|
Financial
leases
| | During 2012 and 2013 the Group had not
signed, as a lessor or lessee, any contract that could be classified as a financial lease. |
| | The assets recorded for these types of
operations are depreciated using similar criteria as those applied to tangible assets,
by nature. |
Operating
leases
| | Under operating leases, the ownership
of rented assets and, all associated risks and benefits are held by the lessor. |
| | The Group can act as lessor or lessee,
and the corresponding income and expenses from the lease are expensed to the income statement
in the period in which they are accrued. |
| | Any collection or payment arising from
the signature of an operating lease is treated either as a prepayment, if it is a payment,
or as a deferred income, if it is a collection. Both will be amortized over the length
of the lease contract, as the benefits from the lease are transferred or received. |
| | A “financial instrument”
is a contract between a financial asset in one company, and a financial liability
or equity security in another. |
| | An “equity instrument”
is any contract that involves a residual interest in the assets of the issuing entity
after deducting all of its liabilities. |
| | A “financial derivative”
is a financial instrument whose value changes in line with visible market variable
changes (interest rate, exchange rate, price of a financial instrument or market index). |
Financial Assets
The financial
assets that the Group owns are classified in the following categories:
| 1. | Loans and accounts receivable
comprise of financial assets from the sale of assets or services provided from the
Group’s ordinary course of business, or those assets that do not have a sales origin,
are not fixed assets, or derivatives whose fees are fixed, and are not traded on the
market. |
These financial
assets are initially recorded at their fair value, plus any additional directly attributable transaction costs. Subsequently,
they are valued at their amortized cost, calculated using the “effective interest rate method”, that is the
rate that entirely matches the initial value of the financial instrument to all its estimated cash flows throughout its remaining
life. For financial instruments with a fixed interest rate, the effective interest rate coincides with the interest rate established
at the moment of acquisition, and is adjusted, where applicable, by commissions and other transaction costs that can be included
in the calculation of this effective interest. For financial instruments with a variable interest rate, the effective interest
rate is estimated similarly to the fixed interest rate, and is recalculated at each date of review for the contractual interest
rate of the transaction, taking into account future cash flow changes of financial instruments.
At year end,
the Group carries out an “impairment test” on these financial assets. An impairment is required if the recoverable
value of the asset is less than the book value. In this case, the impairment is expensed to the consolidated income statement.
Regarding accounts
and other receivables, certain consolidated companies have credit guarantee insurance policies, to ensure the payment of part
of the individual customer balances, within the risk limits previously approved by them. For certain customer balances that are
not covered by these policies, valuation adjustments are made, based on an individual analysis of each of the clients, the corresponding
provisions, based on the risk of possible insolvency regarding the collection of different assets.
| 2. | Financial assets available for
sale relate to debt and equity instruments of other companies that have not been
classified into another category and are recorded at their fair value, within “Equity”,
until the asset is sold or suffers a loss in value (temporary or permanent), at
which stage these transactions, previously recorded within “Equity”, are
recorded to the consolidated income statement. The investments in equity instruments
whose reasonable value cannot be reliably calculated, are valued at cost, minus, the
accumulated adjustments for the loss of value. |
| 3. | Other financial assets mainly
comprise of deposits granted that are recorded in the balance sheet at their nominal
value, given that the effect of not discounting the future cash flows is not significant. |
The Group writes-off financial
assets when they expire, or when they have transferred the cash flow rights of the corresponding financial asset, or they have
transferred the inherent risks or benefits to their property.
In relation to the accounts and
other receivables balances, the subsidiary Crystal Pharma, S.A.U. signed a credit guarantee policy that ensured the payment of
part of the individual client’s balances within the approved risk limits. For those balances not covered by this policy,
the valuation adjustments were made by the company, based on an individual analysis for each of their clients, and the corresponding
provisions based on the risk of possible insolvency regarding the collection of different assets.
Financial liabilities
Financial liabilities are debits
and accounts payable from the purchase of assets and services in the ordinary course of business. Liabilities with no commercial
nature cannot be considered as financial instrument derivatives.
Debits and accounts payable are
initially valued at their fair value of consideration received, adjusted by any directly attributable transaction costs. These
liabilities are then valued at their amortized cost, which is calculated under the “effective interest rate” method.
The Group writes-off financial
liabilities when the obligations they generated no longer exist.
Equity instruments
Equity instruments issued by the
Parent are recorded under “Net equity” on the consolidated balance sheet by the amount received, net of the issuing
costs.
Derivative instruments
| | The Group uses financial derivatives,
“Interest Rate Swap” (IRS) to reduce exposure to interest rates. When these
transactions meet certain requirements, they are considered as “covered”.
As at 31 December 2012 and 2013, the only financial derivative that the Group had contracted
met the requirements to be classified as “covered”, and therefore, the variations
in the fair value of this effectively covered part was recorded in “Adjustments
for changes in value” of the net equity in the consolidated balance sheet, and
covered in the cash flows (see Notes 13 and 16). |
The Group uses
the following criteria to value their stock:
| · | Raw
materials, other supplies and commodities are valued at their price of acquisition
using their average weighted cost, or at their net realizable value, if the latter is
lower. Trade and other discounts are deducted from the price of acquisition. |
| · | Finished,
semi-finished and work in progress products are valued at the lower amount of either
predetermined prices (as at 31 December 2013 there was no significant difference between
this amount and the average price of production) or their net realizable value. |
The net realizable
value represents the sale price, minus all estimated costs to complete the manufacture of these products, and the costs incurred
in the sales and distribution processes.
The valuation
of obsolete, damaged or slow moving products have been reduced to their possible realizable value. In cases where the net realizable
value is lower than the price of acquisition or cost of production, valuation adjustments are made, and are recorded as an expense
in the consolidated income statement for that year.
| g) | Grants, donations and legacies received |
The Group accounts for grants,
donations and legacies received as follows:
| · | Non-refundable
grants, donations or legacies are recorded in the caption “income recorded
directly in net equity” (at the moment they are expected to meet conditions
before they are granted, and when there are no doubts regarding their payment). They
are measured at the fair value of the amount or asset received, based on whether or not
they are monetary grants, and they are transferred to income in proportion of that period’s
depreciation on the assets for which the grants were received. Alternatively, where appropriate,
on disposal of the asset or on the recognition of an impairment loss, with the exception
of the grants received from the Parent’s shareholders which are recorded directly
in “Shareholders’ funds” and do not give rise to the recognition of
income of any kind. |
| · | Refundable
grants while they are refundable, they are recorded as liabilities. |
| · | Operating
subsidies are credited to income the moment they are granted, except if they are
used to finance an operating deficit of future periods, in which case they would be deferred
to this period. If they are granted to finance specific expenses, they would be recorded
as the expenses are incurred. |
| h) | Provisions and contingencies |
| | To prepare the consolidated financial
statements, the Parent’s Directors differentiate between the following: |
| a) | Provisions: creditor
balances that cover current obligations from previous events, the nature of which is
clearly specified, but the amount and/or reversal date are uncertain, and the reversal
is likely to lead to an outflow of resources. |
| b) | Contingent liabilities:
possible obligations that arise from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more future events not wholly within
the control of the Group. |
The consolidated
balance sheet records all provisions whose probability that the obligation will have to be settled is more likely than unlikely.
The contingent liabilities not recorded in the balance sheet are included in the consolidated notes.
The provisions
are valued at their current value using the best possible estimate of the amount required to settle or transfer the obligation,
using the information available regarding the event and its consequences. Adjustments made to provisions are recorded as a financial
expense on an accrual basis.
The compensation to be received
from a third party on settlement of the obligation is recorded as an asset, provided that there are no doubts that the reimbursement
will take place, unless there is a legal relationship whereby a portion of the risk has been externalized as a result of which
the Company is not liable; in this situation, the compensation will be taken into account for the purpose of estimating the amount
of the related provision that should be recorded.
Lawsuits and/or claims in process.
As at 31 December
2013, there were certain lawsuits in process against the consolidated companies. However, the legal advisors and the Parent’s
Directors do not expect these lawsuits to significantly affect the 2013 consolidated financial statements.
| i) | Commitments to personnel |
Multi-annual remuneration plan
In 2013 Gadea
Grupo Farmacéutico, S.L.’s Directors approved a multi-annual remuneration plan to certain Grupo Gadea employees.
The plan consisted of payments of determined amounts during 2014, 2015 and 2016, that are accrued between 2013 and 2015, provided
that the employees remain in the Group, and certain strategic objectives are met. The total amount for all the Group’s companies
amounted to €360,000. The amount accrued by the Group as at 31 December 2013 for this item amounted to €120,000, and
has been recorded under “Accounts and other payables – Personnel” in the 2013 consolidated balance sheet, and
under “Personnel expenses – balances, salaries and similar” in the 2013 consolidated income statement.
| | In accordance with the current working
legislations, the consolidated companies must pay severance payments, under certain circumstances,
to employees whose employment is terminated. Severance payments are recorded as an expense
in the period in which the Parent’s Directors decide to terminate the employment.
The 2012 and 2013 consolidated financial statements did not record a provision for this
concept, as no situations of this nature are expected to arise. |
Gadea Grupo Farmacéutico,
S.L. and their Spanish consolidated subsidiaries (Crystal Pharma, S.A.U. y Gadea Biopharma, S.L.U.) are charged income
tax under the consolidated regime, as part of a tax Group, whose Parent is Gadea Grupo Farmacéutico, S.L. (Notes 1 and
17).
Tax expense or
income tax comprises of current tax expenses and deferred tax income.
The current income
tax is the amount payable by the Group as a result of the income tax settlements for a given year. Tax credits and other tax benefits,
excluding tax withholdings, tax prepayments and tax loss carry forwards from previous years effectively offset in the current
year reduce the current income tax.
The deferred
tax expense or income relates to the recognition or derecognition of deferred tax assets and liabilities. These include temporary
differences measured at the amount expected to be payable or recoverable on differences between the book value of the assets and
liabilities and their tax bases, and tax loss / credit carry forwards. These amounts are recorded by applying the temporary difference
or credit corresponding to the tax rate that is expected to be recovered or settled.
Deferred tax
liabilities are recorded for all taxable temporary differences, except for those arising from the initial recognition of goodwill
and other assets and liabilities in a transaction that is not a business combination, and will not affect the taxable profit or
accounting profit.
| | However, deferred tax assets are only
recorded to the extent that the Company believes it is likely to have sufficient taxable
profits in the future to recover them. |
| | Deferred tax assets and liabilities from
transactions charged or credited directly to equity are also recorded directly in equity. |
At each accounting
close, the deferred tax assets recorded are reviewed and appropriate adjustments are made where there are doubts as to their future
recoverability. At each accounting close the deferred tax assets that have not been recorded in the consolidated balance sheet
are assessed and recorded to the extent that their recovery against future taxable profits is likely.
The Institute
of Accounting and Auditing and the Group’s policies establish that for each of the companies within the tax Group, the income
tax or expense is determined based on the profit before taxes. This amount can be increased or decreased, where applicable, by
the permanent differences from the taxable profit, which is understood as the tax base, minus deductions and credits that correspond
to each company of the tax Group in the consolidated tax regime.
Income and expenses
are recorded on an accrual basis, i.e. when the actual flow of the related goods and services occurs, regardless of when the resulting
monetary or financial flow occurs. Income is measured at the fair value of the consideration received, net of discounts and taxes.
Income is recorded
when the significant risks and rewards of ownership of goods sold have been transferred to the buyer, and the Company no longer
continues to manage the goods, or retain effective control over them.
Income from the
services provided are proportionally recognized in the income statement using the percentage of completion method, provided the
outcome of the transaction can be reliably estimated.
The sale and
transfer of pharmaceutical “dossiers” are recorded when the compensation received is non-refundable, and relates to
the compensation of costs carried out before the sale or transfer, when there are no future obligations assumed by the Group under
different market conditions, and the risks and benefits are transferred to the asset. Otherwise, the payment is recorded as a
deferred income in the current period, for the remaining life of the product, or the remainder of the period, depending on the
specific circumstances of the agreements.
Interest income
from the financial assets is recorded using the “effective interest rate” method. In any case, the interest
accrued by financial assets after the moment of acquisition is recorded as income in the consolidated income statement.
| m) | Classification of current assets and liabilities |
Assets and liabilities are classified
as either current or non-current in the consolidated balance sheet. Current assets and liabilities are those that the Group hopes
to sell, use, or pay in the ordinary course of business, within 12 months. All other assets and liabilities are classified as
non-current, except those that are expected to be recovered, used, or settled within 12 months from the date of the consolidated
balance sheet. If, after the year end, the liability does not have an unconditional right for the Group to defer its settlement
for at least twelve months from the date of the consolidated balance sheet, this liability would be classified as current.
| n) | Transactions in foreign currency |
Assets and liabilities
whose price is stated in foreign currency are converted to the national currency using the current exchange rate at the date of
the transaction, or at the date when the assets were included in the Group’s equity.
The conversion
of credits and debits into the national currency from foreign currency is made by applying the exchange rate at the time of carrying
out the transaction, valued at the year end, according to the exchange rate at that time. Any profits or losses are directly expensed
to the consolidated income statement for the corresponding year.
| o) | Transactions with related parties |
The Group carries
out transactions with related parties at market value. The transfer pricing is adequately supported, and therefore the Parent’s
Directors believe that there are no associated risks that could give rise to potential liabilities in the future.
Assets of environmental nature
Assets of environmental
nature consist of goods that are permanently used in the Group’s business, to minimize the Group’s environmental impact,
and protect and improve the environment, including the reduction or elimination of future pollution. These assets are recorded
under “Tangible assets” in the consolidated balance sheet.
To record these
assets, the price of acquisition or cost of production is determined in accordance with the valuation principles outlined in Note
5-c.
Environmental expenses
Environmental
expenses relate to accruals for the Directors of the environmental effects of the Group’s operations, and amounts from current
environmental agreements that are considered to have an environmental nature. This includes occasional expenses for the prevention
of pollution relating to current business, waste treatment, decontamination, and environmental management and audit.
The environmental
expenses from these activities are included as operating expenses in the period in which they are accrued and are recorded in
the consolidated income statement by nature.
| q) | Discontinued operations |
A discontinued
operation is a business line that has ended or been transferred, whose assets, liabilities and profits can be distinguished physically,
operationally or for financial accounting purposes. The income and expenses from discontinued operations are presented separately
in the consolidated income statement.
During 2012 and
2013, the Group had no discontinued operations.
| | Below are definitions of the terms used
in the cash flow statement: |
| · | Cash
flows: cash inflows or outflows, understood as short-term, highly liquid investments,
subject to low risk of changes in value. |
| · | Operating
activities: the Group’s typical activities that cannot be classified as investing
or financing activities. |
| · | Investment
activities: relate to the acquisition, sale or disposal of long term assets and other
investments classified as cash and cash equivalents. |
| · | Financing
activities: activities that result in changes in the size and composition of equity
and liabilities. |
| · | As
cash and cash equivalents are included in cash in hand, the current accounts, deposits
and the temporary acquisition of assets meet the following criteria: |
| – | They
will convert to cash |
| – | At
the point of acquisition, their maturity will no be more than three months. |
| – | They
are not subject to a significant risk of change in value. |
| – | They
form part of the Company’s cash Directors policy. |
| s) | Statement of changes in consolidated equity |
Changes in the consolidated equity
included in the consolidated financial statements show the changes during that period. This information is broken down in two
statements: by income and expenses recorded, and the total changes in consolidated equity. The main characteristics of both are
explained below:
Income and expenses
Income and expenses generated by
the Group from the normal course of business during the period are recorded in the statement of changes in consolidated equity,
distinguished between those recorded as income in the consolidated income statement of the period, and other income and expenses
recorded directly in consolidated net equity, in accordance with the regulatory framework.
The income and expenses statement
includes the following:
| a) | The profit for the period. |
| b) | The net amount of income and
expenses recorded directly in consolidated net equity (the amount of income, net of
expenses from that period which are directly recorded in net equity. These expenses remain
in this caption, even though they would be recorded in the consolidated income statement
for the same period, or would be reclassified to a different caption. |
| c) | The amount transferred to the
consolidated income statement from consolidated net equity (valuation of income and
expenses and investment grants previously recorded in consolidated net equity, although
they are recorded in the consolidated income statement for the same period). |
| d) | The total income and expenses
recorded, calculated as the sum of the above. |
The amounts of these items are
recorded at their gross amount, showing their corresponding tax effect under the heading “Tax effect”.
Changes in the consolidated
net equity
Changes in consolidated net equity,
includes all changes to net equity including those that originate from changes in accounting criteria and from the correction
of errors. Therefore, it shows a reconciliation between the opening and closing book value of all items that form net equity,
grouping movements based on their nature into the following items:
| a) | Adjustments due to changes in
accounting policies and the correction of errors that includes changes in net equity
as a result of the restatement of the balances in the financial statements due to changes
in accounting policies or the correction of errors. |
| b) | Income and expenses recorded
in the period: includes the aggregated total of all items recorded in the aforementioned
consolidated income statement. |
Other variations
in net equity: includes the remaining items recorded in consolidated net equity, such as increases or decreases in the Parent’s
capital, the distribution of income, operations with own equity instruments, payments with equity instruments, transfers between
consolidated net equity items, and any other increase or decrease in consolidated net equity.
The table below shows the variations between
the 2012 and 2013 costs, accumulated amortization, and impairment losses of intangible assets:
| |
€k | |
| |
Balance as
at 31/12/11 | | |
Additions or
charges | | |
Retirements
or disposals | | |
Balance as
at 31/12/12 | | |
Additions or
charges | | |
Transfers to
tangible assets (Note 7) | | |
Balance as
at 31/12/13 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Consolidated goodwill | |
| 2,456 | | |
| - | | |
| (47 | ) | |
| 2,409 | | |
| - | | |
| - | | |
| 2,409 | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| 4,932 | | |
| 97 | | |
| - | | |
| 5,029 | | |
| 858 | | |
| - | | |
| 5,887 | |
Patents, licenses and trademarks | |
| 15,956 | | |
| - | | |
| | | |
| 15,956 | | |
| - | | |
| - | | |
| 15,956 | |
Computer software. | |
| 118 | | |
| 32 | | |
| - | | |
| 150 | | |
| 98 | | |
| 34 | | |
| 282 | |
| |
| 23,462 | | |
| 129 | | |
| (47 | ) | |
| 23,544 | | |
| 956 | | |
| 34 | | |
| 24,534 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated amortization | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| (3,231 | ) | |
| (330 | ) | |
| - | | |
| (3,561 | ) | |
| (275 | ) | |
| - | | |
| (3,836 | ) |
Patents, licenses and trademarks | |
| (13,419 | ) | |
| (1,641 | ) | |
| - | | |
| (15,060 | ) | |
| (370 | ) | |
| - | | |
| (15,430 | ) |
Computer software | |
| (75 | ) | |
| (14 | ) | |
| - | | |
| (89 | ) | |
| (18 | ) | |
| - | | |
| (107 | ) |
| |
| (16,725 | ) | |
| (1,985 | ) | |
| - | | |
| (18,710 | ) | |
| (663 | ) | |
| - | | |
| (19,373 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Impairment losses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other intangible assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| - | | |
| - | | |
| | | |
| - | | |
| (282 | ) | |
| - | | |
| (282 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Consolidated goodwill | |
| 2,456 | | |
| | | |
| | | |
| 2,409 | | |
| | | |
| | | |
| 2,409 | |
Other intangible assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Development | |
| 1,701 | | |
| | | |
| | | |
| 1,468 | | |
| | | |
| | | |
| 1,769 | |
Patents, license and trademarks | |
| 2,537 | | |
| | | |
| | | |
| 896 | | |
| | | |
| | | |
| 526 | |
Computer software. | |
| 43 | | |
| | | |
| | | |
| 61 | | |
| | | |
| | | |
| 175 | |
| |
| 6,737 | | |
| | | |
| | | |
| 4,834 | | |
| | | |
| | | |
| 4,879 | |
Consolidated goodwill
The breakdown of this caption
of the balance sheet as at 31 December 2012 and 2013 was the following:
| |
€k | |
Company | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Crystal Pharma, S.A.U. | |
| 2,046 | | |
| 2,046 | |
Crystal Pharma, Ltd. | |
| 134 | | |
| 134 | |
Cyndea Pharma, S.L. | |
| 229 | | |
| 229 | |
| |
| 2,409 | | |
| 2,409 | |
On 24 April 2007 the Parent
acquired shares representing 100% of the share capital of Crystal Pharma, S.A.U. and Ragactives, S.L.U., through a contribution
in kind. The latter company was acquired in 2011 by Crystal Pharma, S.A.U. (see Note 1). To calculate the consolidated goodwill
from this acquisition, the Group previously assigned a portion of the positive goodwill to patents and the ownership of certain
active ingredients (based on the current value of the gross margin of these active ingredients being redeveloped), to the
finished products and work in progress stock at that date (based on the margin applied to the stock at the date of acquisition),
and to a credit for R&D deductions, and those yet to be applied by the acquired companies at the end of 2006.
On 14 December 2005 Crystal
Pharma, S.A.U. acquired shares representing 100% of the share capital of Crystal Pharma, Ltd., with a registered address in Malta,
and previously named Solea Pharma, Ltd (see Note 1). To calculate the consolidated goodwill, the Group previously assigned a portion
of the positive goodwill, the tangible assets of this company, based on a technical study (appraisal) made at the time
of acquisition.
Additions and disposals in 2012 and 2013
There were no changes in
“Consolidated goodwill” during 2013, nor was any part of its value reassigned to the Group’s other assets. According
to the Group’s Directors, no goodwill suffered an impairment loss during 2013.
During 2012, the consolidated
goodwill relating to Hunan Norchem Pharmaceutical Co., Ltd. was written off (€47k) as the Parent sold a significant part
of its shares in this company, and it was excluded from the consolidation perimeter.
Impairment tests
The Parent used the “Discounted
cash flow” method to determine the recoverable amount of both the goodwill recorded as at 31 December 2012 and 2013, and
the remaining intangible and tangible assets associated with the cash generating units. The main assumptions used were the following:
| · | The
Business Plan, approved by the Group’s Directors and the Board of Directors of
Gadea Grupo Farmacéutico, S.L., which is used as a starting point for the Group’s
budget for the next period, has been used to prepare the Group’s financial projections
for the following years and the cash generating units under review. |
Apart from the
forecast results, investment forecasts (that would remain constant from 2014) and non-cash working capital variations (that
would increase annually) have also been prepared.
| · | The
Parent’s Directors annually prepare a business plan for each cash generating unit,
covering a period typically of 5 years. The main components of this plan are the following: |
| - | Investment and non-cash working
capital projections. |
| · | These
projections cover a period of 5 years. |
| · | The
most significant assumptions used for 2014 onwards are the following: |
| |
Discount rate (WACC) | | |
Annual growth in sales (a) | | |
Gross margin growth |
| |
| | |
| | |
|
Crystal Pharma, S.A.U. | |
| 12 | % | |
| 5 | % | |
Constant |
Crystal Pharma, Ltd. | |
| 12 | % | |
| 5 | % | |
Constant |
Cyndea Pharma, S.L. | |
| 12 | % | |
| (a) | | |
(a) |
Gadea Biopharma, S.L.U. | |
| 12 | % | |
| (b) | | |
(b) |
| (a) | This consolidated subsidiary
began production in 2011, and still has not reached its full production capacity, that
is forecast for future years. |
| (b) | This consolidated subsidiary
began business in 2013, and will reach its full production capacity in future years. |
Based on the latest financial
projections prepared for the future years, the Parent’s Directors expects that the forecast profit and cash flows regarding
each consolidated subsidiary strongly support the value of the goodwill and remaining intangible (except certain development
expenses) and tangible assets. They also believe that no impairments are required. They have also carried out a sensitivity
analysis of the goodwill for the impairment tests, which conclude that reasonable changes in the main assumptions will not require
impairment losses to be recorded.
Development
Development expenses at
31 December 2012 and 2013 mainly relate to expenses incurred by the Group through various projects to develop new products, some
of which have been partially funded by the Agency of Financing, Innovation and Business Internationalization of Castilla y Leon
(ADE) or the Ministry of Economy and Finance, and/or loans granted by different public bodies.
Additions in 2012 and 2013
relate mostly to the external costs incurred by the jointly controlled entity Cyndea Pharma, S.L. for the pharmaceutical and clinical
development of oral contraceptives, and the external costs incurred by Gadea Biopharma, S.L.U. for the development of new ophthalmic
and injectable medication, and to obtain intermediate active ingredients through biotechnical processes.
At 2013 year end, the Parent’s
Directors identified reasonable doubts regarding certain development projects (given that in the current market conditions,
they were not profitable, and/or their product was postponed until the economic situation of the country improved to enhance success),
as their estimated recoverable value was lower than the value at which they were recorded. Therefore, an impairment loss of
€282k was recorded under “Impairment and gains on disposal of fixed assets – Impairments and losses” in
the 2013 consolidated income statement.
Patents, licenses and trademarks
As at 31 December 2013, the majority of this
balance related to the valuation of the rights of Crystal Pharma, S.A.U.’s main products, as a result of joining the Group,
and the cost of a right of a pharmaceutical ingredient, that was acquired in 2011 by the related company, Gentec, S.A. for €2m.
As at 31 December 2013, the Parent´s
Directors estimated the recoverable value of these intangible assets. The recoverable amount is the greater amount between the
fair value minus the costs of sales, or the current value. To perform the “impairment test” Directors uses
the “discounted cash flow” method to calculate the value of their patents, licenses and trademarks, including both
forecasts of profits and cash flows from the sale of certain products under these patents and licenses, and future investment
requirements. Based on the analysis carried out, their current value was greater than the book value as at 31 December 2013, and
therefore no impairment was required.
Fully amortized items
Certain assets belonging to the Group (mostly
patents, trademarks, and development expenses) were fully amortized as at 31 December 2013, whose total cost value and amortization
together amounted to €17.257m (€15.528m as at 31 December 2012).
The table below shows the variations between
the 2012 and 2013 costs, accumulated depreciation, and impairment losses of tangible assets:
2013
| |
€k | |
| |
Opening balance | | |
Additions or charges | | |
Transfers between accounts | | |
Transfers to intangible assets
(Note 6) | | |
Final balance | |
| |
| | |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 7,069 | | |
| 457 | | |
| 2,368 | | |
| - | | |
| 9,894 | |
Production equipment and other tangible assets | |
| 30,189 | | |
| 3,880 | | |
| 3,147 | | |
| - | | |
| 37,216 | |
Tangible assets in progress and
advances | |
| 6,719 | | |
| 1,511 | | |
| (5,515 | ) | |
| (34 | ) | |
| 2,681 | |
| |
| 43,977 | | |
| 5,848 | | |
| - | | |
| (34 | ) | |
| 49,791 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated
depreciation- | |
| | | |
| | | |
| | | |
| | | |
| | |
Buildings | |
| (1,096 | ) | |
| (196 | ) | |
| - | | |
| - | | |
| (1,292 | ) |
Production equipment and other
tangible assets | |
| (17,205 | ) | |
| (2,782 | ) | |
| - | | |
| - | | |
| (19,987 | ) |
| |
| (18,301 | ) | |
| (2,978 | ) | |
| - | | |
| - | | |
| (21,279 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net- | |
| | | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 5,973 | | |
| | | |
| | | |
| | | |
| 8,602 | |
Production equipment and other tangible assets | |
| 12,984 | | |
| | | |
| | | |
| | | |
| 17,229 | |
Tangible assets in progress and
advances | |
| 6,719 | | |
| | | |
| | | |
| | | |
| 2,681 | |
| |
| 25,676 | | |
| | | |
| | | |
| | | |
| 28,512 | |
2012
| |
€k | |
| |
Opening balance | | |
Additions or charges | | |
Exits, transfers and write-
offs | | |
Final balance | |
| |
| | |
| | |
| | |
| |
Costs- | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 6,679 | | |
| 350 | | |
| 40 | | |
| 7,069 | |
Production equipment and other tangible assets | |
| 27,620 | | |
| 1,585 | | |
| 984 | | |
| 30,189 | |
Tangible assets in progress and
advances | |
| 3,772 | | |
| 4,458 | | |
| (1,511 | ) | |
| 6,719 | |
| |
| 38,071 | | |
| 6,393 | | |
| (487 | ) | |
| 43,977 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated
depreciation- | |
| | | |
| | | |
| | | |
| | |
Buildings | |
| (922 | ) | |
| (174 | ) | |
| - | | |
| (1,096 | ) |
Production equipment and other
tangible assets | |
| (14,403 | ) | |
| (2,802 | ) | |
| - | | |
| (17,205 | ) |
| |
| (15,325 | ) | |
| (2,976 | ) | |
| - | | |
| (18,301 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net- | |
| | | |
| | | |
| | | |
| | |
Land and buildings | |
| 5,757 | | |
| | | |
| | | |
| 5,973 | |
Production equipment and other tangible assets | |
| 13,217 | | |
| | | |
| | | |
| 12,984 | |
Tangible assets in progress and
advances | |
| 3,772 | | |
| | | |
| | | |
| 6,719 | |
| |
| 22,746 | | |
| | | |
| | | |
| 25,676 | |
Land and buildings
Land and buildings mainly relate to the production
plants that the Group owns in Parque Tecnológico de Boeillo (Valladolid) and in Parque Tecnológico de Leon, and
a proportional part of the production plant that Cyndea Pharma S.L. has in Polígono Industrial Emiliano Revilla de Ólvega
(Soria).
As at 31 December 2013, the net value of the
land included in “Land and buildings” amounted to €1.925m (€1.925m as at 31 December 2012.
Additions in 2012 and 2013
2013
The most significant additions recorded during
2013 relate to investments made to complete the construction and equipment in the Gadea Biopharma, S.L.U. production plant in
Parque Tecnológico de Leon. This process began in previous years, and the plant began operating in the last months of 2013.
During 2013, Cyndea Pharma, S.L. also invested in a weighing balance enclosure, and laboratory equipment. As at 31 December 2013
tangible assets in progress also included investments made by Crystal Pharma, S.A.U. for the acquisition various reactors, and
different equipment ranging from a centrifuge and vacuum rotary drum pre-coating machine, whose implementation had not been completed
at 31 December 2013, but are expected to begin operating during 2014.
Transfers from “Tangible assets - Tangible
assets in progress and advances” to other tangible items, relate mostly to the investments in the León factory that
began operating in 2013.
2012
The most significant additions recorded during
2012 mostly relate to the implementation of a soft gelatin capsule line in Cyndea Pharma, S.L., which amounted to €1.9m,
and investments made for the construction of the production plant for injectable and ophthalmic medication by Gadea Biopharma,
S.L.U. in Leon, which amounted to €4.7m.
2012 and 2013 withdrawals
No fixed asset retirements took place during
2013, whilst in 2012 various retirements were made for which Group recorded a loss of €103k.
Firm purchase commitments of tangible assets
As at 31 December 2013, the Group had contracted
firm purchase commitments of tangible assets which amounted to €140k (€1.042m as at 31 December 2012) whose delivery
is scheduled for 2014.
Mortgage loans and other charges
The land and buildings of the production plant
at Parque Tecnológico de León were mortgaged as a guarantee for the payment of a loan granted to the Parent whose
outstanding principal to be repaid as at 31 December 2012 and 2013 amounted to €2.998m (see Note 16).
As at 31 December 2012, Crystal Pharma S.A.U.’s
land and buildings were mortgaged to guarantee the return of two loans granted to the Group, whose outstanding principals amounted
to €74k and €134k, respectively. During 2013, the outstanding principal of each loan had been entirely repaid by the
Group, and they had begun to terminate these mortgage guarantees. Therefore, as at 31 December 2013, the land and buildings at
Parque Tecnologico de Boecillo (Valladolid) were not encumbered with any mortgage.
Loans granted
The acquisition of some of the Group’s
tangible assets has been partially financed through investment grants received from public bodies (see Note 14).
Capitalized financial expenses
The Group did not capitalize financial expenses
in “Tangible assets” in 2012 or 2013.
Operating rental expenses
In their capacity as lessee, Grupo Gadea’s
most significant operating rental contracts relate to transport, furniture and machinery. The total contracted rental expenses
during 2013 amounted to €133k (€151k in 2012) that was recorded under “Other operating expenses- Exterior
services” in the consolidated income statement (see Note 19). These rental payments relate to the contractually agreed minimum
payments. There are no contingent payments.
As at 31 December 2013, and in accordance
with the Group’s rental agreements, the minimum payments that the Group had with their lessors were not significant.
Assets located abroad
The Group’s tangible assets located
outside of Spain as at 31 December 2013 were those owned by Crystal Pharma, Ltd., whose net value at this date amounted to €882k
(€980k as at 31 December 2012).
Fully depreciated assets
As at 31 December 2012 and 2013, the Group
had fully depreciated assets whose total cost value and accumulated depreciation amounted to €6.881m and €9.606m, respectively,
and is outlined below:
| |
€k | |
Nature of assets | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Machinery and equipment | |
| 8,151 | | |
| 6,544 | |
Other installations, tools and furniture | |
| 88 | | |
| 76 | |
Other fixed assets | |
| 1,370 | | |
| 261 | |
| |
| 9,609 | | |
| 6,881 | |
Insurance policy
The Group has insurance policies to cover
the possible risks relating to tangible assets. According to the Parent’s Directors, the contracted policies are adequate.
“Long-term financial investments”
and “Short-term financial investments” on the consolidated balance sheet as at 31 December 2012 and 2013 consisted
of the following:
| |
€k | |
Item | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Long-term financial investments- | |
| | | |
| | |
Third party loans | |
| 1,000 | | |
| - | |
Equity instruments | |
| 64 | | |
| 246 | |
Long-term deposits and guarantees | |
| 12 | | |
| 11 | |
| |
| 1,076 | | |
| 257 | |
| |
| | | |
| | |
Short-term financial investments | |
| | | |
| | |
Third party loans | |
| 147 | | |
| 1,176 | |
Other financial assets | |
| 4 | | |
| 3 | |
| |
| 151 | | |
| 1,179 | |
Long-term financial investments – equity instruments
As at 31 December 2013, the balances under
this caption related to minority shareholdings in other companies, such as Iberaval, S.G.R. (mutual guarantee company of Castilla
y León) and Prouniol, S.A. (company whose corporate purpose is the collaboration of partners in Olvega, Soria).
These investments were recorded at their acquisition cost.
As at 31 December 2012, the main investment
related to a share in the capital of Hunan Norchem Pharmaceutical Co., Ltd. (Chinese company located in Hunan whose corporate
purpose is the manufacture of pharmaceutical products). During 2013, this shareholding was sold for a price similar to the
net value that was recorded, with no profit generated for the Group for this transaction.
Long-term third party loans
As at 31 December 2013, long-term third party
loans related to part of a participating loan amounting to €2m, which was granted by the Parent to the jointly controlled
entity Cyndea Pharma, S.L. that was not eliminated from the consolidation process, and would remain to be collected by another
partner of Cyndea Pharma, S.L. This loan has a maturity date of 1 January 2019, and bears a fixed interest rate of 4%, and a variable
interest rate up to 2% (depending on the operating profits of Cyndea Pharma, S.L.).
As at 31 December 2012 and 2013, the Group’s
stock comprised of the following:
| |
€k | |
Item | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Raw materials and other supplies | |
| 5,170 | | |
| 4,403 | |
Work in progress | |
| 7,059 | | |
| 5,915 | |
Finished products | |
| 8,175 | | |
| 6,126 | |
Prepayments to suppliers | |
| 20 | | |
| 70 | |
| |
| 20,424 | | |
| 16,514 | |
Commitments to buy and sell stock
As at 31 December 2013, the Group had contracted
firm purchase commitments for raw materials amounting to $7.912m (approximately €5.740m) whose delivery is scheduled
for the first months of 2014 (€4.058m as at 31 December 2012, whose delivery was scheduled for the first months of 2013).
At year-end 2013, the Group also had firm sales commitments for finished products amounting to €7.547m and $11.611m (approximately
€8.424m) whose delivery is also scheduled for the first months of 2014 (€4.742m and $18.451m as at 31 December
2012, whose delivery was scheduled for the first months of 2013).
Insurance policy
The Group has insurance policies to cover
the possible risks relating to stock. According to the Parent`s Directors, the contracted policies are adequate.
Client receivables as at 31 December 2012
and 2013 comprised of the following:
| |
€k | |
Item | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Client receivables | |
| 13,554 | | |
| 13,210 | |
Client receivables, related parties (Note 21) | |
| 2,079 | | |
| 1,584 | |
| |
| 15,633 | | |
| 14,794 | |
The group has credit guarantee policies to
ensure the collection of a significant part of the individual customer balances, within the risk limits previously approved. As
at 2012 and 2013 year-end, there were no impairments to correct the fair value of “Customer receivables for sales and services”.
In February 2012, the consolidated subsidiary
Crystal Pharma, S.A.U. appeared before the International Court of Arbitration of the International Chamber of Commerce upon the
request of one of its customers (sales agent in the North American market) against an end customer (manufacturer of
general pharmaceutical products) to reclaim the payments for sales made in July 2011 that were not entirely received. As at
31 December 2012 the Group received an initial payment from the client for 25% of the total invoice. However, as at 31 December
2012 and 2013, the sales agent still had an account receivable amounting to €1.718m ($2.242m).
The arbitration process ended in June 2013,
and the arbitration award was issued and published on 7 January 2014, and accepted the full amount filed by Crystal Pharma, S.A.U.
As at 4 February 2014, the outstanding amount has been received, and their own arbitration award expressed the right to reclaim
the legal costs incurred from the manufacturer (without quantifying the amount). Therefore, as at 31 December 2013, Crystal
Pharma, S.A.U. recorded accounts receivables amounting to €290k, for the best estimation of costs incurred in this process,
which is expected to be received during 2014.
| 11. | Cash and cash equivalents |
Cash
As at December 2012 and 2013, the cash item
of the consolidated balance sheet almost entirely comprised of amounts deposited in Grupo Gadea’s current accounts with
financial entities, which are almost entirely in euros or US dollars, freely available and paid at market rates.
Other cash equivalents
“Other cash equivalents” in the
consolidated balance sheet comprised of highly liquid financial investments (time deposits) that are easily converted to
cash and with a maturity no greater than three months. They do not have significant risks in changing value and form part of the
Group’s normal cash Directors.
As at 31 December 2013, the Group had a fixed
term deposit with a financial entity, with a maturity date greater than 3 months from the date of the transaction, which amounted
to €66k. The accrued interest rate for this investment is 2%.
The balance as at 31 December 2012 related
to two deposits made in November 2012 for a period of 3 months by Crystal Pharma, S.A.U. that amounted to €2.8m with a market
interest rate. The second held in a Crystal Pharma S.A.U. current account amounted to €62k with a market yield (approximately
2%).
Foreign cash and cash equivalents
As at 31 December 2013 Crystal Pharma, Ltd.
had balances in Maltese bank accounts, under Article 2 bis 4 b) of RD 1558/2012 which are outlined below:
| - | Current account number MT33MMEB44428000000042111989001
with a balance of €123k as at 31 December 2013 which was opened in HSBC Bank (Malta)
PLC, Operations Center, Mill Street. Qormi QRM 3103, Malta (the balance as at 31 December
2012 amounted to €68k). |
| - | Deposit number MT55VALL22013000000040018825266
with a balance of €66k as at 31 December 2013, which was opened in Bank of Valletta
PLC, Wignacourt Centre, Triq II Kbira San Guzepp, Santa Venera SVR 1011, Malta (the
balance as at 31 December 2012 amounted to €62k.) |
Capital
As at 31 December 2012 and 2013, Gadea Grupo
Farmacéutico, S.L.’s share capital comprised of 2,618,923,039 shares, each with a nominal value of €0.01, that
were fully subscribed and paid. All shares have the same voting and dividend rights.
The Gadea Grupo Farmacéutico, S.L.’s
share structure as at 31 December 2012 and 2013 was the following:
| |
Percentage ownership | |
Partner | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Tendeña XXI, S.L. | |
| 38.22 | | |
| 35.81 | |
Gentec, S.A. | |
| 18.35 | | |
| 17.23 | |
3-Gutinver, S.L. (a) | |
| 13.68 | | |
| 12.06 | |
Tecnológico Seguranza, F.C.R., R.S. Fund | |
| - | | |
| 9.73 | |
Other shareholders | |
| 29.75 | | |
| 25.17 | |
| |
| 100.00 | | |
| 100.00 | |
| (a) | 3-Gutinver, S.L. directly owned
a shareholding of 13.68%, and indirectly owned 25.49% through Tendeña XXI, S.L.
(affiliated company of 3-Gutinver, S.L. of 66.70%) and 0.71% indirectly through
Antartis Pharma, S.L. (affiliated company of 3-Gutinver, S.L. of 11.49%). |
During 2013, the Tecnológico Seguranza,
F.C.R, R.S. fund was no longer a shareholder of the Parent, and their shareholding was acquired by other partners.
Share premium
Current sales legislation allows the use of
share premium to increase the capital, and does not establish any type of restriction regarding the availability of this balance.
Reserves
Parent’s reserves
The table below shows the Parent’s reserves
and their distribution as at 31 December 2012 and 2013:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
| |
Distributable | | |
Non- distributable | | |
Total | | |
Distributable | | |
Non- distributable | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Legal reserves | |
| - | | |
| 1.502 | | |
| 1.502 | | |
| - | | |
| 1.319 | | |
| 1.319 | |
Other reserves | |
| 1.069 | | |
| - | | |
| 1.069 | | |
| 419 | | |
| - | | |
| 419 | |
Consolidated reserves | |
| - | | |
| 6.900 | | |
| 6.900 | | |
| - | | |
| 2.400 | | |
| 2.400 | |
| |
| 1.069 | | |
| 8.402 | | |
| 9.471 | | |
| 419 | | |
| 3.719 | | |
| 4.138 | |
Legal reserve
Under the Consolidated Spanish Companies Law,
10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20%
of the share capital (see Note 4). As at 31 December 2013 and 2012, the legal reserve did not reach 20% of the Parent’s
share capital.
The legal reserve can be used to increase
capital provided that the remaining reserve does not fall below 10% of the increased share capital.
Otherwise and until the legal reserve exceeds
20% of share capital, it can only be used to offset losses, provided that no other reserves are available for that same purpose.
Other reserves
Other reserves relate to voluntary reserves
recorded in the Parent’s accounts as at 31 December 2012 and 2013 that were freely available.
Reserves in consolidated
companies
The breakdown by company of the reserves
in the consolidated balance sheet as at 31 December 2012 and 2013 was the following:
| |
€k | |
Company | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Reserves
in consolidated subsidiaries- | |
| | | |
| | |
Crystal Pharma, S.A.U. | |
| 177 | | |
| 1,113 | |
Crystal Pharma, Ltd. | |
| 159 | | |
| 361 | |
Gadea Biopharma, S.L.U. | |
| (754 | ) | |
| (182 | ) |
| |
| (418 | ) | |
| 1,292 | |
Reserves
in jointly controlled entities- | |
| | | |
| | |
Cyndea Pharma, S.L. | |
| (3,326 | ) | |
| (1,940 | ) |
| |
| (3,744 | ) | |
| (648 | ) |
The consolidated subsidiary Crystal Pharma,
S.A.U. prohibits the distribution of voluntary reserves while the development expenses that are capitalized in intangible assets
have not been fully amortized, unless the amount of available reserves is at least equal to the amounts of the non-amortized balances.
Therefore, the €140k recorded as at 31 December 2013 was not available (€310k were unavailable as at 31 December
2012).
In accordance with Article 273 of the
Consolidated Spanish Companies Law, Crystal Pharma, S.A.U. must provide an unavailable reserve equivalent to at least 5% of the
goodwill recorded in the assets of the balance sheet. If there are no profits, or the profits are insufficient, they should use
available reserves. Therefore, and awaiting the approval of the distribution of 2013 profits, Crystal Pharma, S.A.U. recorded
€70k of unavailable reserves as at 31 December 2013 (€35k as at 31 December 2012).
Contribution of the consolidated companies to the Parent’s
2012 and 2013 profits
The breakdown, by company, of “Profits
of the year attributed to Parent” in the consolidated balance sheet as at 31 December 2012 and 2013, was the following:
| |
€k | |
Company | |
2013 | | |
2012 | |
| |
| | |
| |
Gadea Grupo Farmacéutico, S.L. | |
| (559 | ) | |
| (566 | ) |
Crystal Pharma, S.A.U. | |
| 7,895 | | |
| 5,963 | |
Crystal Pharma, Ltd. | |
| 436 | | |
| (202 | ) |
Cyndea Pharma, S.L. | |
| (917 | ) | |
| (1,386 | ) |
Gadea Biopharma, S.L.U. | |
| (1,534 | ) | |
| (572 | ) |
Bioraw, S.L.U. | |
| - | | |
| - | |
Bionice, S.L.U | |
| - | | |
| - | |
| |
| 5,321 | | |
| 3,237 | |
| 13. | Adjustments for changes in value |
Changes made during 2012 and 2013 in this
item on the consolidated balance sheet were the following:
| |
€k | |
| |
| |
Balance as at 31 December 2011 | |
| (50 | ) |
Change in fair value of hedging derivatives (Note 16) | |
| 7 | |
Tax effect of the change in value (Note 17) | |
| (2 | ) |
Balance as at 31 December 2012 | |
| (45 | ) |
Transfers to the 2013 income statement | |
| 43 | |
Tax effect (Note 17) | |
| (13 | ) |
Balance as at 31 December 2013 | |
| (15 | ) |
As at 31 December 2012 and 2013, all balances
related to changes in the fair value of financial hedging instruments.
Grupo Gadea uses financial hedging derivatives
to mitigate and reduce their exposure to changes in interest rates (see Note 16). These derivatives were named “cash
flow hedges”, to meet all requirements in Spanish GAAP to be recorded as “hedging” (see Note 5-e).
| 14. | Grants, Donations and Legacies Received |
Information on the non-refundable investment
grants received by Grupo Gadea (which relate, in their entirety, to the consolidated subsidiaries in which there are no minority
shareholders) is included in “Net Equity”, and the income from these grants recorded in the 2012 and 2013 consolidated
income statements was the following:
2013
| |
| |
€k | |
Consolidated Company | |
Year Recorded | |
Balance as
at 31/12/12 | | |
Additions | | |
Tax Effect | | |
Recorded in
2013 Income | | |
Tax Effect of
the Charges | | |
Balance as at
31/12/13 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| |
Crystal
Pharma, S.A.U. | |
1997 to 2012 | |
| 592 | | |
| - | | |
| - | | |
| (349 | ) | |
| 104 | | |
| 347 | |
Gadea Biopharma, S.L.U. | |
2012 & 2013 | |
| 41 | | |
| 258 | | |
| (77 | ) | |
| (23 | ) | |
| 7 | | |
| 206 | |
Cyndea Pharma, S.L.: | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
MINECO/ Regional Incentives | |
2007 | |
| 412 | | |
| - | | |
| - | | |
| (77 | ) | |
| 23 | | |
| 358 | |
ADE/ Special Interest Incentives | |
2006 | |
| 1,154 | | |
| - | | |
| - | | |
| (215 | ) | |
| 64 | | |
| 1,003 | |
Other | |
2007 & 2012 | |
| 201 | | |
| - | | |
| - | | |
| (34 | ) | |
| 11 | | |
| 178 | |
Non-refundable
investment grants | |
| |
| 2,400 | | |
| 258 | | |
| (77 | ) | |
| (698 | ) | |
| 209 | | |
| 2,092 | |
2012
| |
| |
€k | |
Consolidated Company | |
Year Recorded | |
Balance as
at 31/12/11 | | |
Additions | | |
Tax Effect | | |
Recorded in
2012 Income | | |
Tax Effect
of the Charges | | |
Balance as
at 31/12/12 | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| |
Crystal
Pharma, S.A.U. | |
1997 to 2010 | |
| 836 | | |
| - | | |
| - | | |
| (348 | ) | |
| 104 | | |
| 592 | |
Gadea Biopharma, S.L.U. | |
2012 | |
| - | | |
| 61 | | |
| (18 | ) | |
| (3 | ) | |
| 1 | | |
| 41 | |
Cyndea Pharma, S.L.: | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ADE/ Special Interest Incentives | |
2006 | |
| 1,305 | | |
| - | | |
| - | | |
| (216 | ) | |
| 65 | | |
| 1,154 | |
MINECO/Regional Incentives | |
2006 | |
| 466 | | |
| - | | |
| - | | |
| (77 | ) | |
| 23 | | |
| 412 | |
Other | |
2006 | |
| 38 | | |
| 244 | | |
| (73 | ) | |
| (11 | ) | |
| 3 | | |
| 201 | |
Non-refundable
investment grants | |
| |
| 2,645 | | |
| 305 | | |
| (91 | ) | |
| (655 | ) | |
| 196 | | |
| 2,400 | |
These grants were to mainly finance the
acquisition of tangible assets (mainly investments in new production lines and technological improvements of the facilities)
and to finance research and development projects. The addition in 2013 relates to the partial funding of the “Research and
development of lyophilized sterile products and pioneering steroid hormones for biotransformation processes” project.
Complying with the grants’ terms and conditions
For the grants recorded at 31 December
2013, which form part of “Net Equity”, the Parent’s Directors believe that they have complied and will continue
to fully comply with the terms and conditions established in the Individual Grant Award Decisions for the corresponding grants
and funding.
This caption’s balance recorded
in the consolidated balance sheet, includes the value of the minority shareholders’ shareholding in the consolidated companies
which is calculated using the “full consolidation method”. The balance of the “Income attributed to Minority
Shareholders” in the consolidated income statement includes the year’s income from these minority shareholders.
Variations within this caption in the
2012 and 2013 consolidated balance sheet were the following:
| |
€k | |
| |
| |
Balance
as at 31 December 2011 | |
| 475 | |
The year’s reduction for the consolidation perimeter
of Hunan Norchem Pharmaceutical Co., Ltd. | |
| (475 | ) |
Balance as
at 31 December 2012 | |
| - | |
Income attributed to minority shareholders | |
| - | |
Balance as
at 31 December 2013 | |
| - | |
As at 31 December 2012 and 2013 there
were no minority shareholders.
| 16. | Financial liabilities, suppliers and other creditors
|
Long and short-term borrowings
The breakdown of the “long-term
borrowings” and “short-term borrowings” balances included in the consolidated balance sheets as at 31 December
2012 and 2013 was the following:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
Description | |
Current Liability | | |
Non- Current Liability | | |
Total | | |
Current Liability | | |
Non- Current Liability | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Borrowings
from Financial Institutions- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans | |
| 7,846 | | |
| 7,537 | | |
| 15,383 | | |
| 4,406 | | |
| 7,902 | | |
| 12,308 | |
Discount facilities and funding for foreign operations | |
| 4,545 | | |
| - | | |
| 4,545 | | |
| 6,348 | | |
| - | | |
| 6,348 | |
Interest payments | |
| 44 | | |
| - | | |
| 44 | | |
| 36 | | |
| - | | |
| 36 | |
| |
| 12,435 | | |
| 7,537 | | |
| 19,972 | | |
| 10,790 | | |
| 7,902 | | |
| 18,692 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Derivatives | |
| 22 | | |
| - | | |
| 22 | | |
| 64 | | |
| - | | |
| 64 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other
financial liabilities- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans granted by public bodies | |
| 785 | | |
| 4,943 | | |
| 5,728 | | |
| 333 | | |
| 4,455 | | |
| 4,788 | |
Capex suppliers | |
| 674 | | |
| - | | |
| 674 | | |
| 1,020 | | |
| - | | |
| 1,020 | |
Other financial liabilities | |
| 153 | | |
| 1,000 | | |
| 1,153 | | |
| 573 | | |
| 32 | | |
| 605 | |
| |
| 1,612 | | |
| 5,943 | | |
| 7,555 | | |
| 1,926 | | |
| 4,487 | | |
| 6,413 | |
| |
| 14,069 | | |
| 13,480 | | |
| 27,549 | | |
| 12,780 | | |
| 12,389 | | |
| 25,169 | |
As at 31 December 2012 and 2013 the maturity
schedule of the Group’s financial debt was the following:
| |
€k | |
| |
Year of Maturity: | | |
| |
| |
2013 | | |
2014 | | |
2015 | | |
2016 | | |
2017 | | |
2018 onwards | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
At 31/12/13 | |
| - | | |
| 14,069 | | |
| 5,039 | | |
| 3,587 | | |
| 1,615 | | |
| 3,239 | | |
| 27,549 | |
At 31/12/12 | |
| 12,780 | | |
| 4,796 | | |
| 2,613 | | |
| 1,931 | | |
| 955 | | |
| 2,094 | | |
| 25,169 | |
Borrowings from financial institutions
Loans
As at 31 December 2013 the Group had been
granted the following loans by various financial institutions:
| |
€k | |
| |
Al 31/12/13 | | |
Al 31/12/12 | |
| |
Maturity: | | |
| | |
Maturity: | | |
| |
Consolidated Company | |
Short-term | | |
Long-term | | |
Total | | |
Short-term | | |
Long-term | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Crystal Pharma, S.A.U. (a) | |
| - | | |
| - | | |
| - | | |
| 74 | | |
| - | | |
| 74 | |
“ (b) | |
| 610 | | |
| - | | |
| 610 | | |
| 639 | | |
| 610 | | |
| 1,249 | |
“ (c) | |
| 500 | | |
| 1,250 | | |
| 1,750 | | |
| 375 | | |
| 1,625 | | |
| 2,000 | |
“ (d) | |
| 1,000 | | |
| 1,583 | | |
| 2,583 | | |
| - | | |
| - | | |
| - | |
“ (e) | |
| 359 | | |
| 967 | | |
| 1,326 | | |
| - | | |
| - | | |
| - | |
“ (f) | |
| 652 | | |
| 1,031 | | |
| 1,683 | | |
| - | | |
| - | | |
| - | |
“ (g) | |
| 1,764 | | |
| - | | |
| 1,764 | | |
| - | | |
| - | | |
| - | |
Cyndea Pharma, S.L. (h) | |
| 567 | | |
| 577 | | |
| 1,144 | | |
| 565 | | |
| 1,147 | | |
| 1,712 | |
“ (i) | |
| 303 | | |
| 607 | | |
| 910 | | |
| 294 | | |
| 908 | | |
| 1,202 | |
“ (j) | |
| 100 | | |
| 183 | | |
| 283 | | |
| 100 | | |
| 382 | | |
| 382 | |
“ (k) | |
| 1,500 | | |
| - | | |
| 1,500 | | |
| - | | |
| 1,500 | | |
| 1,500 | |
Gadea Biopharma, S.L.U. (l) | |
| 491 | | |
| 1,339 | | |
| 1,830 | | |
| 477 | | |
| 1,830 | | |
| 2,307 | |
Gadea Grupo Farmacéutico, S.L. (m) | |
| - | | |
| - | | |
| - | | |
| 134 | | |
| - | | |
| 134 | |
“ (n) | |
| - | | |
| - | | |
| - | | |
| 1,748 | | |
| - | | |
| 1,748 | |
| |
| 7,846 | | |
| 7,537 | | |
| 15,383 | | |
| 4,406 | | |
| 7,902 | | |
| 12,308 | |
| (a) | This loan was granted by Caja
España on 28 January 2005 for an initial amount of €671k to construct the
Group’s sterile crystallization and micronized steroids plant, which is located
in Boecillo Technology Park (Boecillo, Valladolid). As a money-back guarantee, a mortgage
was created over Crystal Pharma, S.A.U.’s land and buildings. In 2013, the repayment
of the principal’s outstanding amount as at 31 December 2012 and the cancellation
of the mortgage guarantees began (see Note 7). |
| (b) | This loan was granted by Banco
de Castilla, S.A. on 18 November 2010 for an initial amount of €2.5m and was repaid
through regular repayments. The final repayment matured on 18 November 2014. |
| (c) | This loan was granted by Banco
Santander, S.A. on 5 June 2012 for an initial amount of €2m. This loan’s principal
is being repaid through 16 quarterly repayments with a one year grace period (maturity
of the final repayment is set for 5 June 2017). |
| (d) | This loan was granted by Bankia,
S.A. on 12 June 2013 under the protection of the “2013 ICO-Companies and Entrepreneurs”
Financing Agreement, for an initial amount of €3m. This loan was granted to fund
investments in fixed production assets, the acquisition of Companies or to fund the business’
launch. The loan’s principal is being repaid through 36 monthly repayments (maturity
of the final repayment is set for 10 July 2016). |
| (e) | This loan was granted by Banco
Santander, S.A. on 19 June 2013 under the protection of the “2013 EIB-SME-Medium-Sized
Enterprises” Financing Agreement. The principal is being repaid through 48 monthly
repayments (maturity of the final repayment is set for 19 June 2017). |
| (f) | This loan was granted by Banco
Bilbao Vizcaya Argentaria, S.A. on 19 June 2013 under the protection of the “ICO-Companies
and Entrepreneurs” Financing Agreement and totaled €2m. This loan was granted
to update Crystal Pharma, S.A.U.’s equipment. The principal is being repaid through
36 quarterly repayments (maturity of the final repayment is set for 16 June 2016). |
| (g) | This loan was granted by Banco
Popular Español, S.A. on 18 June 2013 under the protection of the “ICO-
Empresas circulante 2013” Financing Agreement for an initial amount of €3m.
This loan was granted to finance investments in Crystal Pharma, S.A.U.’s working
capital and its principal was repaid through 12 monthly repayments (maturity of the
final repayment was 10 July 2014). |
| (h) | This loan was granted by Caixabank
S.A. on 6 November 2008 for an initial amount of €2.8m to finance the investments
made in Cyndea Pharma, S.L. production plant. The loan’s final maturity will occur
in December 2015 and its repayment is being made through 60 monthly repayments (the
first of which matured in January 2011 and the final repayment is expected to mature
in December 2015). |
| (i) | This loan was granted by Caixabank,
S.A. on 22 November 2011 for an initial amount of €1.5m. The loan’s principal
is being repaid through 60 monthly repayments. |
| (j) | This loan was granted by Caixabank
S.A. on 19 November 2011 for an initial amount of €500k. This loan was signed under
the protection of the ICO agreement. |
| (k) | This loan was granted by Caixabank
S.A. on 27 September 2012 for an initial amount of €1.5m and was fully repaid through
one repayment which matured on 30 March 2014. |
| (l) | This loan was granted by Banco
Bilbao Vizcaya Argentaria, S.A. on 6 July 2012 for an initial amount of €2.5m and
was to fund the investments made in Gadea Biopharma, S.L.U. production plant. The loan’s
final maturity will occur in July 2017 and is being repaid through 60 monthly repayments
(maturity of the final repayment is set for July 2017). |
| (m) | A mortgage over certain Crystal
Pharma, S.A.U. land and buildings was created as a guarantee for this loan. However,
this loan was canceled in 2013. |
| (n) | This personal loan was canceled
in 2013. |
Short-term discount
facilities and funding for foreign transactions (imports and exports)
As at 31 December 2013, the Group had
been granted various short-term discounting facilities and funding for foreign transactions that had been granted by various Financial
Institutions and had a combined total limit of €10.250m. As at this date, the Group had a combined total of €4.545m
available (as at 31 December 2012 the limit of this funding had amounted to €9.186m and the available balance totaled
€6.348m).
As at 31 December 2012 and 2013, the Group
had been granted working capital financing by a Financial Institution, with a limit amounting to €750k; however as at these
dates it had not been used.
Derivatives
As at 31 December 2012 and 2013, the only
derivative financial instrument Grupo Gadea had was the following:
| |
Derivative in Thousands of Euros | | |
| |
Contract Expiry | |
Interest Rate | |
Fixed Interest Rate |
Derivative | |
31/12/13 | | |
31/12/12 | | |
Contract Date | |
Date | |
Payable | |
Receivable |
| |
| | |
| | |
| |
| |
| |
|
Classified as “hedging”-
Interest Rate Swap | |
| 1,500 | | |
| 1,500 | | |
4/06/2009 (a) | |
9/06/2009 | |
Euribor at 3 months variable (1.75% & 3.75%) | |
Euribor at 3 months CAP 3.90% rate |
| (a) | The effective start date was
8 June 2009. |
Grupo Gadea uses an
in-house IRS valuation model, where the inputs are the Euribor market curves and long-term swap rates, to establish the fair value
of the interest rate derivative structures.
As at 31 December 2012 and 2013, this
derivative financial instrument’s valuation was the following:
| |
€k | |
Balances in the Consolidated Balance Sheet | |
Assets | | |
Non-Current Liabilities | | |
Current Liabilities | |
| |
| | |
| | |
| |
As at 31 December 2012 | |
| - | | |
| - | | |
| 64 | |
As at 31 December 2013 | |
| - | | |
| - | | |
| 22 | |
In 2013, there were no variations in the
fair value of the hedging instrument used by the Group (in 2012, its fair value increased by €7k), while net financial
expenses recorded in “Financial expenses-debt with third parties” of the 2013 income statement related to regular
settlements of this derivative and amounted to €43k.
Interest rate sensitivity
analysis
Variations
in the fair value of the interest rate derivative used by Grupo Gadea depend on the variation in the Euribor’s interest
rate yield curve and the long-term swaps. Fair value sensitivity analysis (variations in the fair value as at 31 December 2013)
of the derivative recorded in “Net Equity” (“hedge accounting”) before changes to the euro interest rate
yield curve, do not lead to significant impacts for Grupo Gadea.
Other financial liabilities
The breakdown of these items in the consolidated
balance sheets as at 31 December 2012 and 2013 was the following:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
Item | |
Current liabilities | | |
Non-current liabilities | | |
Total | | |
Current liabilities | | |
Non-current liabilities | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Loans granted by public bodies | |
| 785 | | |
| 4,943 | | |
| 5,728 | | |
| 333 | | |
| 4,455 | | |
| 4,788 | |
Remaining financial liabilities | |
| 827 | | |
| 1,000 | | |
| 1,827 | | |
| 1,593 | | |
| 32 | | |
| 1,625 | |
| |
| 1,612 | | |
| 5,943 | | |
| 7,555 | | |
| 1,926 | | |
| 4,487 | | |
| 6,413 | |
Loans granted by public
bodies
As at 31 December 2013,
the most significant loans granted by public bodies to Grupo Gadea were the following:
| – | A
loan granted by the European Investment Bank (EIB) through the Castilla y León
Business Innovation, Financing, and Internationalization Agency (ADE) |
In 2012, the Parent received
a €2.998m mortgage secured loan, with the mortgaged assets being the land and buildings owned by Gadea Biopharma, S.L.U.,
and Pharma, S.A.U. acting as guarantor. This loan, which accrues an annual interest rate equivalent to the Euribor plus a market
spread, was granted to finance the investment project for the production plant located in León Technology Park (See Note
7).
| – | A
loan granted by the Centre for the Development of Industrial Technology (CDTI) |
In 2010, the Centre for the
Development of Industrial Technology granted Crystal Pharma, S.A.U. a €1.851m loan to finance the investment project for
the construction and launch of the highly active potent ingredients (HAPI) plant and to finance the development expenses necessary
for the subsequent production of these active ingredients. This loan, which does not have a set contractual interest rate, is
recorded as a liability in the consolidated balance sheets as at 31 December 2012 and 2013 at “amortized cost”.
The amortization of this loan
is being carried out through 13 half-yearly repayments, with each repayment amounting to €142,400 and maturing between 15
April 2009 (the date of the first repayment) and 15 April 2015 (maturity of the last repayment).
| – | A
loan granted by the Ministry of Economy and Competitiveness |
This loan was granted to Gadea
Biopharma, S.L.U. in two instalments. The first instalment was made in 2012 for a nominal amount of €347k and the second
was made in 2013 for a nominal amount of €1.387m. This loan was granted to finance the “Research and development of
lyophilized sterile products and pioneering steroid hormones for biotransformation processes” project. The total budget
amounted to approximately €462k and €1.849m in 2012 and 2013, respectively. This long-term loan does not have a set
contractual interest rate and was recorded at its amortized cost. The existing positive difference between the loan’s nominal
amount and actual value, which is calculated by using the “effective interest rate method” was recorded as “capital
grant”, see Note 14. As at 31 December 2012 and 2013, the Parent had met all of the loan’s technical and economic
terms and conditions.
| – | A
loan granted by the Ministry of Industry, Energy and Tourism |
Cyndea Pharma, S.L. received
a €276k repayable advance from the Ministry of Industry, Energy and Tourism to partially finance the investment project for
the pharmaceuticals plant located in the Ólvega Industrial Park (Soria). Repayment of this interest-free funding is being
made over a period of 14 years, with a grace period of 4 years, and annual repayments of €27k being made in the following
10 years. As at 31 December 2013, the amortized costs of this funding amounted to €185k (€203k as at 31 December 2012).
| – | A
PROFIT loan granted by the Centre for the Development of Industrial Technology (CDTI)
|
In 2010, Cyndea Pharma, S.L.
signed a contract with the CDTI to partially finance the investigation and development project “Women’s health medication”.
The funding totaled €373k, of which €56k was non-repayable. In 2010, Cyndea Pharma, S.L. received the first instalment
which amounted to €93k, and the remaining amount was granted when the contract’s terms and conditions were met in 2012,
at which point this funding was recorded through its amortized cost as a capital grant, where applicable. As at 31 December 2013,
the amortized cost of this funding’s repayable amount amounted to €252k (€260k as at 31 December 2012).
| – | A
Reindus loan granted by the Ministry of Industry, Energy and Tourism |
On 14 July 2011, Cyndea Pharma,
S.L. received a loan for a nominal amount of €500k from the Ministry of Industry, Energy and Tourism to partially finance
the investment project. In accordance with the corresponding award decision, repayment of this interest free funding is to be
made through 10 annual payments of €50k from 1 October 2014 onwards. This loan partially financed “Expansion of the
pharmaceutical laboratory for the development and production of generic soft gelatin capsule medications”, whose bankable
investment budget amounted to €2.362m. Before the 2011 year-end, Cyndea Pharma, S.L.
was informed that the period for carrying out the investment had been extended until mid-2012. In 2012, evidence that the investment
had been made was produced and this funding was recorded at its amortized cost, and partially as an implicit capital grant, where
applicable. As at 31 December 2013, the amortized cost of this funding amounted to €393k (€372k as at 31 December 2012).
As at 31 December 2012 and 2013, the maturity
schedule of the funding was the following:
| |
€k | |
| |
Year of maturity: | | |
| |
| |
2013 | | |
2014 | | |
2015 | | |
2016 | | |
2017 | | |
2018 onwards | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
At 31/12/13 | |
| - | | |
| 785 | | |
| 988 | | |
| 909 | | |
| 891 | | |
| 2,155 | | |
| 5,728 | |
At 31/12/12 | |
| 333 | | |
| 752 | | |
| 642 | | |
| 593 | | |
| 581 | | |
| 1,887 | | |
| 4,788 | |
Remaining financial
liabilities
As at
31 December 2013, the balances of these items included €1m relating to a participating loan with a final maturity on 1 January
2019. This loan was granted to Cyndea Pharma, S.L. by the other partner of Infarco, S.A, and which accrues a fixed interest rate
of 4% and a variable interest rate of up to 2% (according to the operating income obtained). The remaining liabilities included
in these items in the balance sheets as at 31 December 2012 and 2013 mainly related to debt with fixed asset suppliers.
Suppliers and other creditors
The breakdown of these
items as at 31 December 2012 and 2013 was the following:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Suppliers | |
| 8,770 | | |
| 6,429 | |
Supplier, Group companies (Note 21) | |
| 76 | | |
| 395 | |
| |
| 8,846 | | |
| 6,824 | |
| |
| | | |
| | |
Various creditors | |
| 1,949 | | |
| 1,967 | |
Personnel (remuneration yet to be paid) | |
| 741 | | |
| 626 | |
Client advances | |
| 722 | | |
| 152 | |
| |
| 3,412 | | |
| 2,745 | |
| 17. | Public Administrations and the Group’s Tax Position |
Balances with Public Administrations
As at 31 December 2012 and 2013, Grupo
Gadea had the following balances with Public Administrations:
| |
€k | |
Item | |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
DEBIT
BALANCES: | |
| | | |
| | |
| |
| | | |
| | |
Deferred
tax assets | |
| 1,075 | | |
| 982 | |
| |
| | | |
| | |
Current
tax assets | |
| 962 | | |
| 1,034 | |
| |
| | | |
| | |
Other
receivables from Public Administrations | |
| | | |
| | |
Tax
receivables: | |
| | | |
| | |
Corporation tax from the previous year | |
| 1,034 | | |
| - | |
Value-Added Tax (VAT) | |
| 1,559 | | |
| 1,571 | |
| |
| 2,593 | | |
| 1,571 | |
Other
public body receivables: | |
| | | |
| | |
Operating subsidies yet to be collected | |
| 393 | | |
| 753 | |
Other items (Maltese Tax Authorities) | |
| 95 | | |
| 113 | |
| |
| 488 | | |
| 866 | |
| |
| 3,081 | | |
| 2,437 | |
| |
| | | |
| | |
CREDIT
BALANCES: | |
| | | |
| | |
| |
| | | |
| | |
Deferred
tax liabilities | |
| 2,422 | | |
| 2,491 | |
| |
| | | |
| | |
Other
debt with Public Administrations- | |
| | | |
| | |
Tax
payables: | |
| | | |
| | |
Withholding taxes of Personal Income Tax (IRPF) | |
| 128 | | |
| 115 | |
Value Added Tax (VAT) (a) | |
| 5 | | |
| 72 | |
| |
| 133 | | |
| 187 | |
Social
Security creditors | |
| 394 | | |
| 301 | |
| |
| 527 | | |
| 488 | |
Corporation Tax
As described in Note 5-k, for Corporation
Tax purposes, the Spanish Parent and the consolidated subsidiary Companies pay Corporation Tax by filing consolidated tax returns
as a Tax Group. Gadea Grupo Farmacéutico, S.L. is the Parent of this Tax Group.
For each consolidated Company, Corporation
Tax is calculated on the basis of the accounting profit which is calculated by applying generally accepted accounting principles.
This however does not necessarily coincide with taxable profit, which is considered as the tax assessment basis.
Reconciliation of the 2012 and 2013 consolidated
accounting profit and the consolidated tax base from the corporate income tax was the following:
2013
| |
€k | |
Item | |
Increase | | |
(Decrease) | | |
Total | |
| |
| | |
| | |
| |
Consolidated profit before tax | |
| | | |
| | | |
| 6,336 | |
Jointly controlled entity losses for which a tax credit
has not been recorded | |
| 919 | | |
| - | | |
| 919 | |
Permanent differences- | |
| | | |
| | | |
| | |
From individual companies (a) | |
| 48 | | |
| - | | |
| 48 | |
Temporary differences- | |
| | | |
| | | |
| | |
From individual differences: | |
| | | |
| | | |
| | |
Non-deductible
fixed asset depreciation (Law 16/12, 27 December) | |
| 616 | | |
| - | | |
| 616 | |
Other
increases (decreases) | |
| 339 | | |
| (547 | ) | |
| (208 | ) |
Decreases from Crystal Pharma, Ltd. | |
| - | | |
| (24 | ) | |
| (24 | ) |
| |
| | | |
| | | |
| | |
Applied tax loss carry forwards from previous years | |
| - | | |
| (635 | ) | |
| (635 | ) |
Consolidated
tax base (accounting profit) | |
| | | |
| | | |
| 7,052 | |
Tax
rate (30% in Spain and 35% in Malta) | |
| | | |
| | | |
| 2,115 | |
Minus the deductions applied | |
| | | |
| | | |
| (1,057 | ) |
Estimated
tax expense | |
| | | |
| | | |
| 1,058 | |
Minus withholding tax and tax prepayments | |
| | | |
| | | |
| (2,020 | ) |
Corporation
tax receivable | |
| | | |
| | | |
| (962 | ) |
| (a) | This amount does not include the
individual permanent differences relating to dividends from the consolidated Tax Group
as they have not been included in the consolidation process. |
2012
| |
€k | |
Item | |
Increase | | |
(Decrease) | | |
Total | |
| |
| | |
| | |
| |
Consolidated profit before tax | |
| | | |
| | | |
| 4.229 | |
Jointly controlled entity losses for which a tax credit
has not been recorded | |
| 1.386 | | |
| - | | |
| 1.386 | |
Permanent differences- | |
| | | |
| | | |
| | |
From individual companies (a) | |
| 28 | | |
| - | | |
| 28 | |
From the consolidation adjustments (a) | |
| 61 | | |
| - | | |
| 61 | |
Temporary differences- | |
| | | |
| | | |
| | |
From individual differences | |
| 637 | | |
| (1.152 | ) | |
| (515 | ) |
From the consolidation differences | |
| 717 | | |
| - | | |
| 717 | |
Consolidated
tax base (accounting profit) | |
| | | |
| | | |
| 5,906 | |
Tax
rate (30% in Spain and 35% in Malta) | |
| | | |
| | | |
| 1,892 | |
Minus the deductions applied | |
| | | |
| | | |
| (685 | ) |
Estimated
tax expense | |
| | | |
| | | |
| 1,207 | |
Minus withholding tax and tax
prepayments | |
| | | |
| | | |
| (2,241 | ) |
Corporation
tax receivable | |
| | | |
| | | |
| (1,034 | ) |
| (a) | This amount does not include
the individual permanent differences relating to dividends from the consolidated Tax
Group as they have not been included in the consolidation process. |
Corporation Tax expenses
The 2012 and 2013 Corporation Tax expenses
were calculated as follows:
| |
€k | |
Item | |
2013 | | |
2012 | |
| |
| | |
| |
Consolidated profit before tax | |
| 6,336 | | |
| 4,229 | |
Losses incurred by certain consolidated companies for
which a tax credit has not been recorded | |
| 919 | | |
| 1,386 | |
Permanent differences- | |
| 48 | | |
| 89 | |
| |
| 7,303 | | |
| 5,704 | |
Tax
rate (30% in Spain and 35% in Malta) | |
| 2,215 | | |
| 1,712 | |
Deductions applied | |
| (1,058 | ) | |
| (685 | ) |
Deductions yet to be applied | |
| (142 | ) | |
| - | |
Other items | |
| - | | |
| (35 | ) |
Corporation
Tax expenses recorded in the consolidated income statement | |
| 1,015 | | |
| 992 | |
The breakdown of the 2012 and 2013 Corporation
Tax expenses was the following:
| |
€k | |
Item | |
2013 | | |
2012 | |
| |
| | |
| |
Current tax- | |
| | | |
| | |
For ongoing operations | |
| 1,058 | | |
| 1,207 | |
Deferred tax- | |
| | | |
| | |
For ongoing operations | |
| (43 | ) | |
| (215 | ) |
Corporation
Tax expenses recorded in the consolidated income statement | |
| 1,015 | | |
| 992 | |
Deferred taxes
The “Deferred tax assets”
and “Deferred tax liabilities” balances included within the consolidated balance sheets as at 31 December 2012 and
2013, and the variation in these headings as at the aforementioned dates were the following:
| |
€k | |
| |
Balance at
31/12/11 | | |
Increases | | |
Decreases | | |
Balance at
31/12/12 | | |
Increases | | |
Decreases | | |
Balance at
31/12/13 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Deferred
tax assets- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deduction
rights yet to be applied | |
| 150 | | |
| - | | |
| (73)
| (a) | |
| 77 | | |
| 143 | | |
| - | | |
| 220 | |
Crystal Pharma, Ltd.
tax credits | |
| 767 | | |
| 108 | | |
| - | | |
| 875 | | |
| - | | |
| (222 | ) | |
| 653 | |
Non-deductible tangible
asset depreciation for the year (Law 16/12, 27 December) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 185 | | |
| - | | |
| 185 | |
Tax effect of the variation
in the fair value of the hedging instruments (Note 13 and 16) | |
| 21 | | |
| - | | |
| (2 | ) | |
| 19 | | |
| - | | |
| (13 | ) | |
| 6 | |
Other
items | |
| 12 | | |
| - | | |
| (1 | ) | |
| 11 | | |
| - | | |
| - | | |
| 11 | |
| |
| 950 | | |
| 108 | | |
| (76 | ) | |
| 982 | | |
| 328 | | |
| (235 | ) | |
| 1,075 | |
Deferred
tax liabilities- | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-refundable capital
grants (Note 14) | |
| (1,134 | ) | |
| (91 | ) | |
| 196 | | |
| (1,029 | ) | |
| (77 | ) | |
| 209 | | |
| (897 | ) |
Tax impairments | |
| (546 | ) | |
| (345 | ) | |
| - | | |
| (891 | ) | |
| - | | |
| - | | |
| (891 | ) |
Consolidation adjustments | |
| (215 | ) | |
| - | | |
| 215 | | |
| - | | |
| - | | |
| - | | |
| - | |
Amortization
and other items | |
| (762 | ) | |
| - | | |
| 191 | | |
| (571 | ) | |
| (164 | ) | |
| 101 | | |
| (634 | ) |
| |
| (2,657 | ) | |
| (436 | ) | |
| 602 | | |
| (2,491 | ) | |
| (241 | ) | |
| 310 | | |
| (2,422 | ) |
(a) In
July 2012, the Tax Agency began inspecting certain taxes for Crystal Pharma, S.A.U., including Corporation Tax for 2005 and 2006.
Upon the outcome of these operations, in 2011, Crystal Pharma, S.A.U. filed a repayment claim for undue income, demanding a €73k
refund and a correction for the R&D&I item generated in 2005. In 2012, Crystal Pharma, S.A.U. won the claim for the amount
filed in addition to the corresponding accrued interest.
Deferred tax assets
As at 31 December 2013,
“Deferred tax assets” related to the following:
| · | The
deduction rights yet to be applied as at the date stated, and an accounts receivable
amounting to €77k due to the repayment claim filed for undue income of certain tax
credits from previous years, which were carried out by Crystal Pharma, S.A.U. |
| · | The
tax credits by deductions yet to be applied and the temporary difference brought about
by the Maltese consolidated subsidiary, Crystal Pharma, Ltd.
|
| · | The
tax effect of the temporary differences between the moment in which the expense for certain
tangible asset depreciation is recorded and the moment in which it is recorded as a tax
expense. |
| · | The
tax effect of the variation in fair value of the hedging derivative financial instrument,
in its effective part. |
| · | These
deferred tax assets were recorded in the consolidated balance sheets, as the Parent’s
Directors have stated that collecting these assets is reasonably assured based on the
recent estimates prepared for the expected development in the consolidated Companies’
tax base, and where applicable, in the consolidated Tax Group to which the Company belongs. |
Deferred tax liabilities
As at 31 December 2013, “Deferred
tax liabilities” mainly related to the following:
| · | The
tax effect from the non-refundable capital grant recorded as “Net Equity”
(see Note 14). |
| · | The
tax effect of the tax impairment from the shares that the Parent owns in Cyndea Pharma,
S.L. |
| · | The
tax effect generated by the different economic and tax criteria used in the amortization
of intangible asset once the Group accepts the freedom to amortize incentive which is
established in the Revised Text of the Corporate Tax Law in its various versions. |
The deferred tax liabilities
relating to the capital grants will be recorded in the income statement once the corresponding grant is recorded.
Tax recorded as net
equity
As at 31 December 2012 and 2013, the tax
balances directly recorded in “Net Equity” and their movement during 2012 and 2013 were the following:
| |
€k | |
| |
Balance at
31/12/11 | | |
Asset
(Liabilities) | | |
Reversal
of the Current Tax | | |
Balance at
31/12/12 | | |
Assets
(Liabilities) | | |
Reversal
of the Current Tax | | |
Balance
at 31/12/13 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Non-refundable
capital grant liabilities recorded as “Net Equity” (Note 14) | |
| (1,134 | ) | |
| (91 | ) | |
| 196 | | |
| (1,029 | ) | |
| (77 | ) | |
| 209 | | |
| (897 | ) |
Assets
due to variation in the fair value of the hedging instruments (Note 13) | |
| 21 | | |
| (2 | ) | |
| - | | |
| 19 | | |
| - | | |
| (13 | ) | |
| 6 | |
| |
| (1,113 | ) | |
| (93 | ) | |
| 196 | | |
| (1,010 | ) | |
| (77 | ) | |
| 196 | | |
| (891 | ) |
Tax loss carry forwards yet to be applied
Based on the tax returns filed by the
consolidated Companies and the consolidated Tax Group in previous years, and including the declaration provided for Corporation
Tax in 2013, the tax loss carry forwards yet to be applied for the consolidated Companies as at 31 December 2013 were the following:
Year Generated | |
€k | | |
|
Last year to apply | |
| |
| | |
| |
Cyndea Pharma, S.L.
(proportional part related to Grupo Gadea): | |
| | | |
| | |
2005 | |
| 6 | | |
| 2023 | |
2006 | |
| 23 | | |
| 2024 | |
2007 | |
| 108 | | |
| 2025 | |
2008 | |
| 22 | | |
| 2026 | |
2009 | |
| 213 | | |
| 2027 | |
2010 | |
| 687 | | |
| 2028 | |
2011 | |
| 906 | | |
| 2029 | |
2012 | |
| 1,387 | | |
| 2030 | |
2013 | |
| 919 | | |
| 2031 | |
| |
| 4,271 | | |
| | |
In accordance with current legislation,
the tax loss carry forwards yet to be applied can be used to offset future tax liabilities during the following and successive
18 years. However, the final amount of these tax loss carry forwards yet to be applied can be adjusted as
a result of the review by the Tax Authorities of the years in which the losses were incurred.
However, the current tax legislation includes
a limitation for applying the tax loss carry forwards, which states that for tax periods starting 2013, 2014 and 2015, companies
whose turnover is equal or greater than €60m, can only use tax loss carry forwards up to 25% of the tax base (this percentage
increases to 50% for companies whose turnover is equal to or greater than €20m, but less than €60m).
As at 31
December 2013, Grupo Gadea had not recorded any tax loss carry forwards under “Deferred tax assets” as a tax
credit of the consolidated balance sheet. Even though Cyndea Pharma, S.L. could reasonably expect to fully and legally offset
the outstanding tax loss carry forwards, they have decided not to record the tax credits generated by applying these tax loss
carry forwards, due to the uncertainty of not securing their sales business.
However, as at 31 December 2012, Crystal
Pharma, Ltd. had €635k in tax loss carry forwards yet to be applied, for which a tax credit amounting to €222k was recorded.
In 2013, these tax loss carry forwards were applied.
Deductions
The current Corporation Tax legislation
includes various tax incentives. The deductions generated in a year which are more than the applicable legal limit, may be applied
to the reduction of Corporation Tax payments of the following year, in line with the limits and deadlines set by the applicable
tax legislation.
The Group took advantage of the tax benefits
provided by this legislation by deducting €1.057m when calculating the 2013 Corporation Tax payments, according to the following
breakdown:
Item | |
Year Generated | | |
€k | |
| |
| | |
| |
Crystal Pharma, S.A.U.: | |
| | | |
| | |
Research and development | |
| 2013 | | |
| 509 | |
Professional training | |
| 2013 | | |
| 8 | |
Innovation | |
| 2013 | | |
| 67 | |
Environmental deductions | |
| 2005 | | |
| 58 | |
Various items | |
| 2012-2013 | | |
| 3 | |
Gadea Biopharma, S.L.U.: | |
| | | |
| | |
Research and development | |
| 2013 | | |
| 379 | |
Innovation | |
| 2013 | | |
| 23 | |
Contributions | |
| 2013 | | |
| 8 | |
Gadea Grupo Farmacéutico,
S.L.: | |
| | | |
| | |
Contributions | |
| 2013 | | |
| 2 | |
| |
| | | |
| 1,057 | |
Consolidated Spanish
subsidiary Companies’ tax credits yet to be applied
As at 31 December 2013, the consolidated
Spanish Companies were yet to apply the following tax credits:
Item | |
Year Generated | | |
€k | |
| |
| | |
| |
Crystal Pharma, S.A.U.: | |
| | | |
| | |
Environmental tax credits | |
| 2005 | | |
| 12 | |
Environmental tax credits | |
| 2007 | | |
| 32 | |
Environmental tax credits | |
| 2008 | | |
| 32 | |
Gadea Biopharma, S.L.U.: | |
| | | |
| | |
Research and development | |
| 2013 | | |
| 67 | |
| |
| | | |
| 143 | |
As at 31 December 2013, the Group had
recorded €143k of deductions yet to be applied within “Deferred tax assets” of the consolidated balance sheet.
The Parent’s Directors have stated
that collecting these assets is reasonably assured based on recent estimates prepared by Grupo Gadea’s Directors for the
expected development in the consolidated Companies’ tax base, and where applicable, in the consolidated Tax Group to which
the Company belongs.
Years open to inspection
Under the current legislation, taxes cannot
be considered as settled until the tax returns filed have been inspected by the Tax Authorities or the four year limitation period
has ended. As at 31 December 2013, the consolidated companies had the years 2010 to 2013, inclusive, open to inspection for all
applicable taxes and Corporation Tax for 2009.
The Parent’s Directors believe that
the various taxes have been settled appropriately; therefore, in the event of discrepancies in interpreting the current legislation
for the tax treatment of transactions, the possible resulting liabilities generated by the checks, which may be carried out by
the Tax Authorities for the years open to inspection, would not significantly affect the 2013 consolidated financial statements
if any arose.
| 18. | Guarantees Provided to Third Parties and Other Contingent
Liabilities |
As at 31 December 2012 and 2013, the Group
had provided guarantees to third parties, granted by various financial institutions, for an amount of €1.741m and €1.775m,
respectively. These guarantees mainly related to guarantees to ensure compliance with utilities payment obligations, to guarantee
repayment of certain subsidized loans and other obligations to Local Authorities, and various advances paid on grants. The Parent’s
Directors believe that any unexpected liabilities which may have arisen as at 31 December 2013 from the guarantees provided and
relating to the commitments and obligations were not significant.
Net turnover
Distribution by business
and geographical market of Grupo Gadea’s 2012 and 2013 net turnover was the following:
| |
€k | |
| |
2013 | | |
2012 | |
| |
| | |
| |
By business- | |
| | | |
| | |
Biotechnology | |
| 158 | | |
| 300 | |
Active ingredients | |
| 58,997 | | |
| 57,958 | |
Pharmaceuticals | |
| 3,906 | | |
| 1,540 | |
| |
| 63,061 | | |
| 59,798 | |
| |
| | | |
| | |
By
geographical market- | |
| | | |
| | |
National | |
| 10,731 | | |
| 10,149 | |
International | |
| 52,330 | | |
| 48,649 | |
| |
| 63,061 | | |
| 58,798 | |
Supplies
The breakdown of this item included in
the 2012 and 2013 consolidated income statement was the following:
| |
€k | |
Item | |
2013 | | |
2012 | |
| |
| | |
| |
Raw
materials and other consumables- | |
| | | |
| | |
Purchases: | |
| | | |
| | |
National purchases | |
| 4,688 | | |
| 5,296 | |
Intra-community acquisitions | |
| 7,386 | | |
| 4,679 | |
Imports | |
| 24,286 | | |
| 20,930 | |
Stock variations | |
| (767 | ) | |
| 248 | |
| |
| 35,593 | | |
| 31,153 | |
Outsourced production | |
| 2,563 | | |
| 3,500 | |
| |
| 38,156 | | |
| 34,653 | |
Social contributions
The breakdown of these social contributions
in the 2012 and 2013 consolidated income statement was the following:
| |
€k | |
Item | |
2013 | | |
2012 | |
| |
| | |
| |
Social security | |
| 2,017 | | |
| 1,706 | |
Other social contributions | |
| 267 | | |
| 270 | |
| |
| 2,284 | | |
| 1,976 | |
External services
The breakdown of this item in the 2012
and 2013 consolidated income statement was the following:
(a) | |
€k | |
| |
2013 | | |
2012 | |
| |
| | |
| |
Research and development expenses | |
| 1,844 | | |
| 899 | |
Operating lease (Note 7) | |
| 133 | | |
| 151 | |
Repair and maintenance | |
| 777 | | |
| 526 | |
Independent professional services | |
| 2,526 | | |
| 2,230 | |
Transport | |
| 733 | | |
| 669 | |
Insurance premiums | |
| 311 | | |
| 449 | |
Bank services | |
| 116 | | |
| 147 | |
Advertising | |
| 133 | | |
| 104 | |
Supplies | |
| 1,478 | | |
| 1,205 | |
Other items | |
| 975 | | |
| 721 | |
Tax | |
| 58 | | |
| 80 | |
| |
| 9,084 | | |
| 7,181 | |
| 21. | Transactions with related parties |
Transactions with related parties
The transactions carried out by Grupo
Gadea with related parties during 2012 and 2013 were the following:
| |
€k | |
| |
2013 | | |
2012 | |
Company | |
Sales and services provided | | |
Services received | | |
Sales and services provided | | |
Services received | |
| |
| | |
| | |
| | |
| |
Gentec, S.A. | |
| 7,436 | | |
| 113 | | |
| 6,278 | | |
| 294 | |
3-Gutinver, S.L. (a) | |
| - | | |
| 192 | | |
| - | | |
| 196 | |
Other companies (a) | |
| - | | |
| 5 | | |
| - | | |
| 5 | |
| |
| 7,436 | | |
| 310 | | |
| 6,278 | | |
| 495 | |
| (a) | These Companies are Directors
of the Parent. |
These aforementioned transactions were
carried out within Grupo Gadea’s ordinary course of business under market conditions.
Transactions and balances with other related
parties (Partners, Directors, and the Group’s Senior Directors) are indicated in the following sections.
Related party balances
As a result of these transactions, as
at 31 December 2012 and 2013, Grupo Gadea had the following balance receivables and payables with related parties:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
Clients (Note 10)- | |
| | | |
| | |
Gentec, S.A. | |
| 2,079 | | |
| 1,584 | |
| |
| | | |
| | |
Suppliers (Note 16)- | |
| | | |
| | |
Gentec, S.A. | |
| (76 | ) | |
| (151 | ) |
3-Gutinver, S.L. | |
| - | | |
| (244 | ) |
| |
| (76 | ) | |
| (395 | ) |
Payments to the Parent’s Directors
In 2013, through the Company that represents
3-Gutinver, S.L., the Parent paid the Managing Director €192k (€196k in 2012) for services provided. Additionally,
in 2013, remuneration through wages and salaries paid by the Group to two employees of Crystal Pharma, S.A.U., who were also Directors
(one of whom was working for a third party) of the Parent amounted to €195k, which was in line with 2012. In 2012
and 2013, the Group carried out other transactions with other Parent Directors. Please refer to the “Transactions with related
parties” section for more information on these transactions.
As at 31 December 2012 and 2013, Grupo
Gadea did not have any pension or life insurance obligations relating to the Parent’s current Directors.
As at 31 December 2012 and 2013, Grupo
Gadea had accounts receivables with certain Parent Directors. The amounts of these accounts receivables have been included in
the “Related party balances” section.
Payments to the Group’s Senior Directors
Remuneration through wages and salaries
in their entirety to Grupo Gadea’s Senior Directors in 2013 amounted to €710k (€661k in 2012). This amount excludes
the remuneration relating to three of the aforementioned Parent Directors.
Grupo Gadea does not have any pension
obligations with Key Personnel, nor has the Group awarded any credits or guarantees to them.
Director conflicts of interest
The Parent’s Directors do not present
situations of conflicts of interest with the Group. In accordance with Article 229 of the Revised Text of the Spanish Corporations
Law, approved by the Royal Legislative Decree 1/2010, 2 July, the following table presents the shares in the capital stock of
any companies engaging in an activity that is identical, similar or complementary to the activity that constitutes the corporate
purpose of Gadea Grupo Farmacéutico, S.L., and whose activities are similar to those carried out by self-employed people
or third parties:
|
|
|
|
|
|
Percentage of
Share |
|
|
Related Person |
|
|
|
|
|
Direct (D) |
|
Position or Tasks Carried Out |
Name and Relation |
|
Affiliated
Company |
|
Activity Carried Out |
|
Indirect (I) |
|
in the Indicated Company |
|
|
|
|
|
|
|
|
|
Eutimio González Santos |
|
Gentec, S.A. |
|
Sale of products to the pharmaceutical
industry and research and development of active ingredients |
|
7.50 (D) |
|
- |
|
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
1.38 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
1.38 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
1.38 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.69 (I) |
|
- |
|
|
Bioraw, S.L. |
|
Development, production and sale of pharmaceutical
products |
|
1.38 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
1.38 (I) |
|
- |
|
|
Duke Chem, S.A. |
|
Development, production and sale of chemical-pharmaceutical
active ingredients used in the pharmaceutical, food and veterinary industries |
|
7.50 (I) |
|
- |
|
|
Pharmanoid, S.A. |
|
Research, development, production and
sale of active ingredients |
|
7.50 (I) |
|
- |
Antartis Pharma, S.L. |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
6.14 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
6.14 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients |
|
6.14 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
6.14 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
6.14 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
3.07 (I) |
|
- |
José Antonio Gutiérrez Fuentes |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
0.36 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.36 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients |
|
0.36 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
0.36 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
0.36 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.18 (I) |
|
- |
Jaime Melendo Baños |
|
Gentec, S.A. |
|
Sale of products to the pharmaceutical
industry and research and development of active ingredients |
|
71.60 (D) |
|
Sole Director |
|
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
13.14 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
13.14 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
13.14 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
13.14 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
13.14 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
6.57 (I) |
|
- |
|
|
Duke Chem, S.A. |
|
Development, production and sale of chemical-pharmaceutical
active ingredients used in the pharmaceutical, food and veterinary industries |
|
71.60 (I) |
|
Sole Director |
|
|
Pharmanoid, S.A. |
|
Research, development, production and
sale of active ingredients |
|
71.60 (I) |
|
Sole Director |
Francisco Javier Gallo Nieto |
|
Antartis Pharma, S.L. |
|
Pharmaceutical business and shareholdings
in other companies of the sector |
|
7.15 (D) |
|
- |
|
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
1.14 (I) |
|
- |
|
|
|
|
|
|
Percentage of
Share |
|
|
Related Person |
|
|
|
|
|
Direct (D) |
|
Position or Tasks Carried Out |
Name and Relation |
|
Affiliated
Company |
|
Activity Carried Out |
|
Indirect (I) |
|
in the Indicated Company |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
1.14 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients |
|
1.14 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
1.14 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
1.14 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.57 (I) |
|
- |
3-Gutinver, S.L. |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
40.13 (I) |
|
Sole Director |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
40.13 (I) |
|
Sole Director |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
40.13 (I) |
|
Director |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
40.13 (I) |
|
Sole Director |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
40.13 (I) |
|
Sole Director |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
20.07 (I) |
|
Chairman of the Board |
|
|
Antartis Pharma, S.L. |
|
Pharmaceutical business and shareholdings
in other companies of the sector |
|
11.49 (D) |
|
Board Member |
José Luis Puerta
López-Cózar |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
0.65 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.65 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
0.65 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
0.65 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
0.65 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
0.33 (I) |
|
- |
Gbb Pharminvest 99, S.L. |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
4.44 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
4.44 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
4.44 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
4.44 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production and sale of pharmaceutical
products |
|
4.44 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
2.22 (I) |
|
- |
Muggio Holding, S.L. |
|
Crystal Pharma, S.A.U. |
|
Development, production and sale of active
ingredients |
|
7.21 (I) |
|
- |
|
|
Gadea Biopharma, S.L.U. |
|
Development, production and sale of finished
pharmaceutical products |
|
7.21 (I) |
|
- |
|
|
Crystal Pharma, Ltd. |
|
Production and sale of active ingredients
|
|
7.21 (I) |
|
- |
|
|
Bioraw, S.L.U. |
|
Development, production, and sale of
pharmaceutical products |
|
7.21 (I) |
|
- |
|
|
Bionice, S.L.U. |
|
Development, production, and sale of
pharmaceutical products |
|
7.21 (I) |
|
- |
|
|
Cyndea Pharma, S.L. |
|
Development, production and sale of finished
pharmaceutical products |
|
3.61 (I) |
|
- |
|
|
Medichem, S.A.U. |
|
Development, production and sale of active
and intermediary substances |
|
100.00 (I) |
|
Individual Representative
of the Sole Director |
|
|
Medichem Manufacturing (Malta) Ltd. |
|
Development, production and sale of active
and intermediary substances |
|
100.00 (I) |
|
Director |
|
|
Medichem Tradex, S.A. |
|
Trading of active substances |
|
100.00 (I) |
|
Director |
|
|
Nanjing Medichem Biopharmaceutical Development
Co., Ltd. |
|
Research and development of active and
intermediary substances |
|
100.00 (I) |
|
Director |
|
|
Chizhou Ruick Pharmaceutical Co., Ltd. |
|
Trading of active substances |
|
33.33 (I) |
|
- |
|
|
Combino Pharm, S.L. |
|
Development, production and sale of generic
pharmaceutical specialties |
|
100.00 (I) |
|
- |
|
|
|
|
|
|
Percentage of
Share |
|
|
Related Person |
|
|
|
|
|
Direct (D) |
|
Position or Tasks Carried Out |
Name and Relation |
|
Affiliated
Company |
|
Activity Carried Out |
|
Indirect (I) |
|
in the Indicated Company |
|
|
Combino Pharm (Malta), Ltd. |
|
Development, production and sale of generic
pharmaceutical specialties |
|
100.00 (I) |
|
Director |
|
|
Combino Pharm Portugal, Unipessoal, Ltda. |
|
Development, production and sale of generic
pharmaceutical specialties |
|
100.00 (I) |
|
- |
| 22. | Transactions in Foreign Currency |
In 2012 and 2013, Grupo Gadea carried
out the following transactions in a foreign currency (mainly in US Dollars):
| |
€k | |
| |
2013 | | |
2012 | |
| |
| | |
| |
Sales | |
| 30,752 | | |
| 34,650 | |
Purchases | |
| 28,491 | | |
| 25,692 | |
The exchange rate differences recorded
by financial instrument in the 2012 and 2013 consolidated income statements were the following:
| |
€k | |
| |
2013 | | |
2012 | |
| |
| | |
| |
Foreign currency in cash | |
| (120 | ) | |
| (74 | ) |
Accounts receivable collected- | |
| | | |
| | |
Transactions collected throughout the year | |
| (336 | ) | |
| 205 | |
Transactions yet to be collected at year-end | |
| 72 | | |
| (365 | ) |
Accounts payable- | |
| | | |
| | |
Transactions paid throughout the year | |
| 98 | | |
| (250 | ) |
Transactions yet to be paid at year-end | |
| 94 | | |
| 180 | |
| |
| (192 | ) | |
| (304 | ) |
The assets and liabilities recorded in
the Group’s consolidated balance sheets as at 31 December 2012 and 2013, in a foreign currency were the following:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
| |
| | |
| |
ASSETS: | |
| | | |
| | |
Cash | |
| 1,149 | | |
| 593 | |
Loans and accounts receivable- | |
| | | |
| | |
Sales and services provided to clients | |
| 5,559 | | |
| 9,205 | |
| |
| 6,708 | | |
| 9,798 | |
LIABILITIES: | |
| | | |
| | |
Short-term debt- | |
| | | |
| | |
Debt with Financial Institutions and liabilities with
suppliers | |
| 5,495 | | |
| 6,928 | |
| 23. | Nature and level of risk |
Financial risks
The Group’s policies for managing
risk are established by the Financial Risk Directors Committee which have been approved by the Directors. Based on these policies,
the Group’s Financial Department have established a number of procedures and controls which allow for the identification,
measure and Directors of the risks generated by financial instruments.
Credit risk
Credit risk arises from the possible loss
caused by breaching the contractual obligations of the Group’s opposing parties, i.e. by the possibility of not recovering
the financial assets for the amount accounted and established in the time frame.
To manage credit risk, the Group distinguishes
between financial assets generated by operational activities and financial assets generated by investment activities.
The sales and finance departments set
limits for each client, which are calculated based on the information provided by a Company which specializes in analyzing business’
solvency. In certain countries which are considered a greater risk due to political and geographical reasons, the Group uses collection
instruments as documentary credits as they guarantee greater security.
Periodically, information of each account
receivable’s seniority is prepared to manage its collection. Overdue accounts are claimed monthly in order for them to be
collected. Therefore, given the Group’s past experiences and the sector in which it operates, the Parent’s Directors
do not expect significant non-payment problems. Credit limits with payment delays are reviewed on a monthly basis.
Credit risk of the cash funds is limited
as Group Gadea generally maintains its cash and cash equivalents in Financial Institutions with a high level of solvency.
As at 31 December 2013, the Parent’s
Directors stated that no impairment of the assets subject to being recorded were present.
Liquidity risk
Liquidity risk is caused by the possibility
of the Group not having available cash funds or not being able to access a sufficient amount and in a cost effective manner to
meet their payment obligations at all times. The Group’s aim is to maintain a sufficient level of available funds, which
is achieved through their policies that establish the minimum amount of cash to be available at all times. The Group’s finance
department has established policies to carry out continuous monitoring of the consolidated balance sheet structure by maturity
date. This enables the department to anticipate the possible need for cash in the short and medium term and adopt a strategy that
stabilizes the financial sources. These procedures are always carried out in conjunction with the Group’s general financial
policies.
The contractual maturities of the short
and long-term debt liabilities, the contractual maturities of sales creditors and other accounts payable as at 31 December 2013
with maturities below 3 months in their entirety are included in Note 16.
Accordingly, as at year-end 2013, Grupo
Gadea had sufficient cash and credit facilities available, and based on the 2014 cash budget and current expectations for generating
financial resources, no difficulties in paying debts as they mature are foreseen.
Market risk (including interest rates, exchange rates
and other price risks)
Market risk is the risk associated with
the fair value or future cash flows of a financial instrument varying due to interest rates, exchange rates or other price risks.
Interest rate risk arises due to
the possible loss caused by variations in the fair value or future cash flows of a financial instrument due to changes in the
market’s interest rates. The Group’s exposure to the risk of changes in interest rates is mainly due to its long-term
loans and credit which have variable interest rates.
The Group manages its interest rate risk
by taking out loans with variable interest rates and using a fixed interest rate. To achieve this aim, the Group carries out interest
rate swaps that are established as hedging transactions for the corresponding loans. Variable interest rate funding is linked
to the Euribor.
The Group has carried out sensitivity
analysis on the amounts of financial debt with variable rates as at 31 December 2013, taking into account the terms and conditions
of the existing funding as at this date and a forecast 0.5% increase in the interest rate yield curve having a lower impact than
the €200k included in the 2014 consolidated income and expenses.
The Parent’s Directors believe that
there are no significant differences between the book value and fair value of the financial assets and liabilities.
Exchange rate risk arises due to
the possible loss caused by variations in the fair value or future cash flows of a financial instrument due to fluctuations in
exchange rates. The Group’s exposure to the risk of fluctuating exchange rates is mainly due to sales and purchases being
carried out in currencies different to that used by the Group (see Note 22). While the Group does not have a policy relating to
exchange rate hedging instruments, the Parent’s Directors believe that they sufficiently cover a large part of the Group’s
exposure to this risk due to its consolidated companies’ sales being offset by purchases in US dollars.
The accounts receivable and payable, and
the current accounts and financing are items in the Group’s assets and liabilities that include balances in a foreign currency.
Note 22 includes the balances in a foreign currency which were exposed to the exchange rate risk as at 31 December 2013.
Other price risks relates to Grupo
Gadea’s exposure to the risk of fluctuations in the price of basic raw materials. Grupo Gadea continually monitors the price
of these raw materials in order to make appropriate decisions at all times according to the market development observed and expected
and the Group’s strategy, although given its nature, the rotation of these raw materials is very high. Grupo Gadea addresses
the effect of raw material price fluctuations by changing the sale prices of their products in a manner that does significantly
impact the Group’s income statement.
| 24. | Environmental Aspects and Greenhouse Gas Emissions
Rights |
An environmental activity
is any operation whose main purpose is to minimize environmental impacts and protect and improve the environment.
As at 31 December 2012
and 2013, the Group’s most significant systems, teams and facilities (entirely owned by Cyndea Pharma, S.L. and hereinafter,
the proportional consolidation method is 50%- see Note 1) relating to environmental activities
were the following:
| |
€k | |
| |
31/12/13 | | |
31/12/12 | |
Description | |
Cost | | |
Accumulated Amortization | | |
Cost | | |
Accumulated Amortization | |
| |
| | |
| | |
| | |
| |
Purifiers | |
| 249 | | |
| 106 | | |
| 249 | | |
| 81 | |
The expenses from protecting and improving
the environment, which were expensed directly to the 2013 consolidated income statement, amounted to €469k (€457k
in 2012) and mainly related to packaging.
Grupo Gadea does not have any other environmental
responsibilities, assets, provisions or contingencies that could significantly affect the Group’s equity, financial situation
or profit. During 2012 and 2013, Grupo Gadea did not receive any environmental grants or obtain income from environmental related
business.
According to the National Allocation Plan,
and given the nature of the Group’s business, Grupo Gadea was not allocated any amount of greenhouse gas emissions rights.
Therefore, as at 31 December 2013, the Group had not recorded any balance in the “Greenhouse gas emissions rights”
item included in the consolidated balance sheet and had not recorded any cash flow within this item or any impairment in 2013.
Additionally, during 2013, the Group did not incur any expenses or record any provisions relating to this item. The Group has
not drawn up any future contracts relating to emissions rights, has not received any environmental grants or created any contingencies
relating to greenhouse gas emissions.
In March 2014, the Group acquired a production
plant in San Cristóbal de Entreviñas (Zamora), for the fermented products project. This transaction amounted to
€1.6m. No other significant developments arose after the 2013 year-end.
Average number of employees
The average number of people employed
by Grupo Gadea during 2012 and 2013, by professional category, was the following:
| |
Average number of employees | |
Professional category | |
2013 | | |
2012 | |
| |
| | |
| |
Senior executives | |
| 11 | | |
| 5 | |
Engineers and technicians | |
| 139 | | |
| 108 | |
Administrative assistants | |
| 15 | | |
| 23 | |
Production personnel | |
| 90 | | |
| 108 | |
Sales and distribution personnel | |
| 11 | | |
| 14 | |
| |
| 266 | | |
| 258 | |
During 2012 and 2013, Grupo Gadea did
not contract anyone with a legally recognized disability equal to or greater than 33%.
Distribution of functions by gender
Grupo Gadea’s distribution of functions
by gender of their employees as at 31 December 2012 and 2013 was the following:
As at 31 December 2013
| |
Number of employees | |
Professional category | |
Male | | |
Female | | |
Total | |
| |
| | |
| | |
| |
Senior executives | |
| 9 | | |
| 2 | | |
| 11 | |
Engineers and technicians | |
| 51 | | |
| 65 | | |
| 116 | |
Administrative assistants | |
| 3 | | |
| 13 | | |
| 16 | |
Production personnel | |
| 103 | | |
| 28 | | |
| 131 | |
Sales and distribution personnel | |
| 5 | | |
| 7 | | |
| 12 | |
| |
| 171 | | |
| 115 | | |
| 286 | |
As at 31 December 2012
| |
Number of employees | |
Professional category | |
Male | | |
Female | | |
Total | |
| |
| | |
| | |
| |
Senior executives | |
| 3 | | |
| 2 | | |
| 5 | |
Engineers and technicians | |
| 53 | | |
| 60 | | |
| 113 | |
Administrative assistants | |
| 14 | | |
| 10 | | |
| 24 | |
Production personnel | |
| 85 | | |
| 27 | | |
| 112 | |
Sales and distribution personnel | |
| 6 | | |
| 8 | | |
| 14 | |
| |
| 161 | | |
| 107 | | |
| 268 | |
As at 31 December 2013, the Parent’s
Board of Directors consisted of 4 legal entities and 5 natural people, all of which were male.
Audit fees
During 2012 and 2013, fees relating to
auditing accounts and other services provided by the Group’s main auditor or any company linked to it by control, common
ownership or Directors, were the following:
| |
€k | |
Description | |
2013 | | |
2012 | |
| |
| | |
| |
Audit services: | |
| | | |
| | |
Audit of the consolidated financial statements
of Gadea Grupo Farmacéutico, S.L. | |
| 11 | | |
| 4 | |
Audit of the individual financial statements of the
consolidated Spanish Companies | |
| 45 | | |
| 47 | |
Other verification services: | |
| | | |
| | |
Agreed upon procedures reports | |
| 2 | | |
| - | |
Total audit
and associated services | |
| 58 | | |
| 51 | |
The fees relating to other auditors in
2012 and 2013 for auditing Crystal Pharma, Ltd. amounted to €4k.
| 27. | Deferred payments to suppliers |
In compliance with Law 15/2012, 5 July
(an amendment of Law 3/2004, 29 December), which enforces measures to avoid late payments in business transactions that have been
established in the Accounting and Auditing Institute’s Resolution of 29 December 2010, and taking into account stipulations
in the Second Transitory Provision of this Resolution, deferred payments made by the Group to service and trading suppliers (including,
where appropriate, the Group companies located in Spain) during 2012 and 2013 were the following:
| |
2013 | | |
2012 | |
| |
Amount (€k) | | |
% over Total | | |
Amount (€k) | | |
% over Total | |
| |
| | |
| | |
| | |
| |
Payments
made during the year- | |
| | | |
| | | |
| | | |
| | |
Payments made within the maximum legal
period (*) | |
| 3,443 | | |
| 17.09 | | |
| 17,166 | | |
| 100.00 | |
Other payments made | |
| 16,710 | | |
| 82.91 | | |
| - | | |
| - | |
Total payments made | |
| 20,153 | | |
| 100.00 | | |
| 17,166 | | |
| 100.00 | |
Excess
of weighted DPO (in days) | |
| 74.4 | | |
| - | | |
| - | | |
| - | |
Deferments that surpass the maximum legal period as
at year-end (*) | |
| 799 | | |
| 9.03 | | |
| - | | |
| - | |
| (*) | In
each case, the legal period has been determined according to the corresponding nature
of the goods or services received by the Group in accordance with Law 3/2004, 29 December,
which establishes measures to prevent delinquency in business transactions and Law 11/2013,
26 July, which includes measures to support entrepreneurs and stimulate growth and the
creation of jobs. |
In accordance with the applicable aforementioned
regulations, the information presented relates exclusively to the Group’s suppliers and companies located in Spain.
Article 84 of Royal Decree 1159/2010,
24 September, which approved the regulations for preparing consolidated financial statements, states that the consolidated Annual
Account’s memorandum must present the Group’s business by business area, including which components are the Group’s
operating business areas, which business areas generate income and incur costs, and which income and expenses are subject to inspection,
discussion and evaluation by the entity’s highest authority on a regular basis. In particular, any component that accrues
10% or more of the turnover generated by all of the entity’s business areas, including both intragroup and external sales,
or the business areas that accrue 10% of more the of the entity’s total amount of assets must be included.
Given the nature of the business carried
out by the Group, the only business area recorded relates to the strategic business unit (and not to the product lines offered).
This business area is uniquely managed given that to date, it does not have specific markets and regulations. Therefore, there
is no need to include a further breakdown by business area in the consolidated financial statements.
Gadea Grupo Farmacéutico, S.L. and its Subsidiaries
Consolidated Directors Report
for the year ended 31 December 2013
2013
Turnover and profit
The Group’s net turnover in 2013
was €63.061m, a 5.5% increase compared to 2012, whilst consolidated profit after tax amounted to €5.321m, which was
64.4% higher compared to 2012.
The Group’s business
Crystal Pharma, S.A.U. was the subsidiary
that accounted for most of the Group’s turnover (€58.996m) and profit (€7.895m).
In the last quarter of 2013, Gadea Biopharma,
S.L.U. opened its production plant which focuses on finished sterile injectable products and biotechnological developments. Both
companies focus on obtaining dossiers for pharmaceutical products for the subsequent production and sale of finished products.
Cyndea Pharma, S.L. focuses on the development,
production, through contract manufacturing and sale of pharmaceutical products.
Furthermore, the Group continues to follow
its vertical integration strategy. Accordingly, in Dec-13, the Group created two new subsidiaries, Bioraw, S.L.U. and Bionice,
S.L.U, to implement investment projects in the biotechnology-chemical sector that guarantee the supply, quality and a competitive
cost of key raw materials used in the Group’s production processes.
2014 forecast development
The Parent’s Directors forecast
that the increases achieved in previous years would have continued in 2014. Therefore, the Group’s 2014 consolidated budget
had forecast a net turnover of approximately €78.169m and a profit after tax of €8.426m.
Investigation, development, the environment and personnel
The Group continues to follow its clear
commitment of enhancing its activities in investigation and development to sustain projects which enable the future production
and sale of new products.
Protecting, improving and minimizing the
impact on the environment is taken into consideration when all of the Group’s businesses are planned, this includes reducing
or eliminating future pollution.
Grupo Gadea believes that its employees
are its main asset, therefore developing the workforce’s talent is one of the most important aspects for growth and operational
efficiencies. A number of the annual and strategic objectives always focus on eliminating accidents that affect the Group’s
employees. Additionally the Group offers all of its employees the possibility of being a shareholder in the corporate structure
and all employees receive bonuses according to the Group’s profit.
Hedging instruments
As at 31 December 2013, the Group had
contracted financial derivatives with a notional amount of €1.5m to cover the possible problems that arise with interest
rates. These financial instruments consisted of variable interest rate swaps to a fixed interest rate which have the characteristics
included in the memorandum.
The risks and uncertainties faced by the Group
The main risks that may affect the future
development of our business, and the measures implemented to reduce these risks, are the following:
| - | On the international market,
the sale price pressure of pharmaceutical products is currently increasing. To maintain
competitiveness in the sector, Grupo Gadea is implementing efficiency programs and tools
to reduce the cost of the production processes and policies to control and restrict expenses
incurred by the Group. |
| - | As a result of the impact that
a variation in interest rates may have on the Group’s profit, derivative instruments
are used for certain financial transactions. Information on the other financial risks
is included in the memorandum. |
Parent shares
During 2012 and 2013, neither the Parent
nor its subsidiaries had acquired shares in the Parent. Additionally, as at 31 December 2013, none of these companies had shares
in Gadea Grupo Farmacéutico, S.L.
Events after year-end
There were no significant events after
2013 year-end that may have affected the Group’s consolidated financial statements.
DIRECTORS’ SIGNATURES
The Directors of Gadea Grupo Farmacéutico,
S.L. sign the consolidated financial statements and consolidated notes to the financial statements for the year ended 31 December
2013.
Boecillo (Valladolid), 26 March 2014
/s/ Mr. Luis Gerardo Gutiérrez Fuentes |
|
/s/ Mr. Francisco Javier Gallo Nieto |
Mr. Luis Gerardo Gutiérrez Fuentes |
|
Mr. Francisco Javier Gallo Nieto |
On behalf of 3-Gutinver, S.L. |
|
Board Member |
Chairman |
|
|
|
|
|
/s/ Mr. Eutimio González Santos |
|
/s/ Mr. José Antonio Gutiérrez Fuentes |
Mr. Eutimio González Santos |
|
Mr. José Antonio Gutiérrez Fuentes |
Board Member |
|
Board Member |
|
|
|
/s/ Mr. Jaime Melendo Baños |
|
/s/ Mr. José Luis Puerta López-Cózar |
Mr. Jaime Melendo Baños |
|
Mr. José Luis Puerta López-Cózar |
Board Member |
|
Board Member |
|
|
|
/s/ Mr. José Luis Stampa Jäger |
|
/s/ Mr. Samuel Alonso Martínez |
Mr. José Luis Stampa Jäger |
|
Mr. Samuel Alonso Martínez |
On behalf of Muggio Holding, S.L. |
|
On behalf of Antartis Pharma, S.L. |
Board Member |
|
Board Member |
|
|
|
/s/ Mr. Jorge Martín Juárez |
|
|
Mr. Jorge Martín Juárez |
|
|
On behalf of GBB Pharminvest 99, S.L. |
|
|
Board Member |
|
|
DISCLAIMER: This is to certify
that the 2013 Consolidated Financial Statements and Notes to the Consolidated Financial Statements,
which were prepared by the Board of Directors in their 26 March 2014 session, are those attached, and that the signatures of Gadea
Grupo Farmacéutico, S.L. Directors contained in this document are legitimate.
|
/s/ Mr. José Luis Vecilla Camazón |
|
|
Mr. José Luis Vecilla Camazón |
|
|
Secretary non-Board Member |
|
Exhibit 99.2
Gadea Grupo Farmaceutico, S.L.
Business Lines
Active Pharmaceutical Ingredients (API)
|
FY2014 |
|
|
· Production
of steroids, sex hormones and sterile products such as derivatives from betamethasone and hydrocortisone
· Sales
in 70 countries with 50% of sales direct to customers |
Sales: $75 million
GM: $36 million
GM%: 47.9% |
Final Dosage Forms (FDF) and Other
|
FY2014 |
|
|
· Contract Manufacturing Organization |
Sales: $8 million |
|
|
· Co-development |
GM: $4 million |
|
|
· Out-licensing |
GM%: 60.5% |
Note: Gross margin only accounts for material costs.
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