Central Business Registration no. 26 05 87 08 Annual report 2014
Contents Page Company details 3 Statement by Management on the annual report 4 Independent auditor's report 5 Financial highlights 6 Management s Commentary 7 Accounting policies 10 Income statement for 2014 13 Balance sheet at 31.12.2014 14 Statement of changes in equity for 2014 16 Notes 17 2
Company details Company Energivej 15 5260 Odense S Central Business Registration no. 26 05 87 08 Registered in: Odense Board of Directors Erik Sandberg Hans Bøgh-Sørensen Birgitte Bøgh-Sørensen Anna Rehman Linder Executive Board Jens Peter Nielsen, Chief Executive Officer Company auditors Deloitte Statsautoriseret Revisionspartnerselskab The Annual General Meeting adopted the annual report on 27 May 2015 Chairman of the General Meeting: 3
Statement by Management on the annual report We have today presented the annual report of for the financial year 1. januar - 31. december 2014. The annual report is presented in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Company s financial position and results. Also, we believe that the management commentary contains a fair review of the affairs and conditions referred to therein. We recommend the annual report for adoption at the Annual General Meeting. Odense, 21 May 2015 Executive Board Jens Peter Nielsen Chief Executive Officer Board of Directors Erik Sandberg Hans Bøgh-Sørensen Birgitte Bøgh-Sørensen Chairman of the Board Anna Rehman Linder 4
Independent auditor's report To the shareholders of Report on the financial statements We have audited the financial statements of for the financial year 1. januar - 31. december 2014, which comprise the accounting policies, income statement, balance sheet, statement of change in equity and notes. The financial statements are prepared in accordance with the Danish Financial Statements Act. Management's responsibility for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the financial statements give a true and fair view of the Company s financial position at 31 december 2014 and of the results of their operations for the financial year 1. januar - 31. december 2014 in accordance with the Danish Financial Statements Act. Statement on the management commentary Pursuant to the Danish Financial Statements Act, we have read the management commentary. We have not performed any further procedures in addition to the audit of financial statements. On this basis, it is our opinion that the information provided in the management commentary is consistent with the financial statements. Odense, 21 May 2015 Deloitte Statsautoriseret Revisionspartnerselskab Lars Knage Nielsen State Authorised Public Accountant Allan Dydensborg Madsen State Authorised Public Accountant 5
Financial highlights (1.000 DKK) 2014 2013 2012 2011 2010 Key figures Revenue 1.149.174 1.078.460 928.417 1.160.174 1.140.815 Gross profit 46.753 42.247 44.423 37.364 26.992 Operating profit 8.177 7.612 5.640 6.023 4.107 Net financials -2.162-1.072 326-1.637-2.011 Profit of the year 4.431 4.473 2.664 3.202 1.331 Equity 22.793 18.362 13.889 11.224 8.023 Balance sheet total 218.875 213.815 115.951 149.577 145.272 Investments in property, plant and equipment 0 590 0 0 371 Ratios Gross margin (%) 4,1 3,9 4,8 3,2 2,4 Operating margin (%) 0,7 0,7 0,6 0,5 0,4 Solvency ratio (%) 10,4 8,6 12,0 7,6 5,5 Return on equity (%) 21,5 27,7 21,2 33,9 18,1 6
Ledelsesberetning Præsentation af virksomheden beskæftiger sig med salg i Danmark af parallelimporterede lægemidler fra EU/EØS-lande, hvor originalproducenter afsætter deres præparater til lavere priser, end de forlanger for de identiske præparater i f.eks. Norden. Herved udnyttes princippet om varernes frie bevægelighed inden for EU/EØS, og der skabes konkurrence til gavn for samfundet. Gennem virksomhedens levetid har det været evnen til at udfordre, innovere, agere, satse, forandre, nytænke og optimere, der har skabt resultater. I Orifarm kalder vi det Rethinking the business of healthcare. Dette er virksomhedens mission. Orifarms vision We want to be No.1 in making healthcare a better deal udtrykker virksomhedens overordnede mål, hvor a better deal ikke kun skal forstås som besparelser, men som et partnerskab med kunder og leverandører for at levere løsninger, som imødekommer vore interessenters behov. Vores værdigrundlag er fleksibilitet, ambition, ansvarlighed og fokus på kunden. Virksomhedens mission, vision og værdigrundlag udgør tilsammen Orifarms DNA, og er samarbejdspartneres garanti for, at Orifarm fokuserer på at udvikle, optimere og nytænke forretningen, så Orifarm altid vil være markedets bedste samarbejdspartner. Ved løbende at tilpasse og styrke forretningskonceptet og dermed konkurrenceevnen er Orifarm blevet markedsleder. For at sikre, at varerne frembringes ved de lavest mulige omkostninger og leveres effektivt til kunderne, tilpasser Orifarm løbende både organisation og processer. Udvikling i aktiviteter og økonomiske forhold Selskabets nettoomsætning udgjorde i 2012 928 MDKK sammenholdt med 1.160 MDKK i 2011. I 2012 var resultatet af den primære drift 5,6 MDKK, hvilket er på niveau med 2011, hvor resultatet var 6,0 MDKK. Under de markedsmæssige vilkår anses årets resultatet for tilfredsstillende. I Danmark fastholdt sin position som den største parallelimportør på trods af markant øget konkurrence. I tillæg til stigende konkurrence reducerede blandt andre følgende eksterne forhold Orifarms muligheder for at udvikle parallelimportforretningen: Kvotesystemer En række af de globalt største lægemiddelproducenter har indført kvoteordninger for salg af lægemidler i EU. I nogle tilfælde er lægemiddelproducenter gået endnu videre og har standset leverancer til grossister, som reeksporterer lægemidler. Det begrænser Orifarms indkøbsmuligheder og dermed muligheden for at øge salget. Efter Orifarms opfattelse er kvotesystemer i strid med EUtraktaten, idet lægemiddelproducenterne begrænser konkurrencen inden for EU. Eksportforbud Flere EU-medlemsstater har indført eller forsøgt at indføre forbud mod eksport af lægemidler til andre medlemsstater. Da eksportforbud er i strid med EU-traktatens regler om varernes frie bevægelighed og kan ændre hele forretningsgrundlaget, ser Orifarm med stor alvor herpå. EU-Kommissionen orienteres løbende om udviklingen med henblik på indgriben. 7
Ledelsesberetning Dual Pricing En række multinationale lægemiddelproducenter etablerede eller har opretholdt dual-pricing i Spanien. Dual-pricing fungerer således, at lægemiddelproducenterne sælger deres produkter til en kunstig høj pris til de spanske lægemiddelgrossister. Disse grossister kan imidlertid opnå den normale spanske pris, såfremt grossisten kan dokumentere, at lægemidlerne er solgt på det spanske marked og ikke til reeksport. Systemet med dual-pricing medfører derfor, at parallelimportørerne ikke kan udnytte EUprincippet om varernes frie bevægelighed. Dette er efter Orifarms opfattelse i strid med EU-traktatens Direkte leverancer Endeligt forringes Orifarms muligheder for at indkøbe lægemidlerne i eksportlandene yderligere ved, at de multinationale lægemiddelproducenter etablerer direkte leverancer til apotekerne. Således springes grossistleddet over, og parallelimportørerne afskæres dermed muligheden for indkøb hos disse. Direkte leverancer begrænser konkurrencen og varetilgængeligheden på markedet, og det er Orifarms opfattelse, at dette tiltag ligeledes kan være i strid med EU-retten og reglerne om varernes frie På trods af disse handelsbegrænsninger kan alligevel garantere sine kunder en stabil levering af varer ved at opdyrke nye indkøbslande og -kanaler. Særlige risici Driftsmæssige forhold Selskabets indtjening er i væsentlig grad afhængig af lovmæssige tiltag, som påvirker prissætningen af lægemidler i både indkøbs- og afsætningslande. Indtjeningen påvirkes desuden af tiltag i afsætningslandene, der har til formål at begrænse lægemiddelforbruget. Ved introduktion af nye produkter er virksomheden afhængig af sagsbehandlingstiden hos dels lægemiddelmyndighederne i salgslandene, og dels hos den centrale europæiske registreringsmyndighed, EMA. I visse lande er der fortsat lange sagsbehandlingstider, hvilket forhindrer hurtig introduktion af både nye parallelimporterede og nye generiske lægemidler. Det er virksomhedens politik at undgå krænkelse af varemærkerettigheder. har derfor ingen væsentlige igangværende retssager af denne art. Finansielle forhold Selskabet er eksponeret over for ændringer i renteniveau og valutakurser. En ændring af renteniveauet på et procentpoint påvirker således selskabets indtjening med ca. 0,9 MDKK. Selskabets finansielle risici, herunder likviditetsstyring og kreditgivning, styres centralt. Der tilstræbes en lav risikoprofil. Kultur og medarbejdere Det er Orifarms målsætning at være en førende udbyder af parallelimporterede i Norden. Vi tror på, at der en sammenhæng mellem vore resultater og medarbejdernes kompetencer og engagement. Derfor arbejdes der kontinuerligt på at udvikle medarbejdernes viden og kompetencer, hvilket understøtter Orifarms resultat- og udviklingsorienterede kultur. Orifarm er bevidst om sit sociale ansvar og finder det derfor vigtigt at have en stor bredde i medarbejderskaren. Internt i virksomheden arbejdes der derfor på at integrere både medarbejdere med anden etnisk baggrund og medarbejdere med handicap. 8
Ledelsesberetning Internationaliseringen i koncernen er øget markant de senere år, og der foretages international rotation af medarbejdere for at sikre integrering og deling af både kultur og viden. Samfundsansvar Selskabet har ikke en nedskrevet politik på området. Selskabet påvirker kun i meget begrænset omfang det omgivende miljø. De lægemidler, som ikke kan sælges, bliver destrueret hos et kvalificeret og godkendt firma. Overflødig emballage med videre bliver i videst muligt omfang sorteret og genanvendt. Udviklingsaktiviteter Selskabet har væsentlige udviklingsaktiviteter, hvilket både omfatter produkt- og procesudvikling. Begivenheder efter regnskabsårets afslutning Der er fra balancedagen og frem til i dag ikke indtrådt forhold, som forrykker vurderingen af årsrapporten. Forventet udvikling forventer et resultat i 2013 på niveau med 2012. 9
Accounting policies This annual report has been presented in accordance with the provisions of the Danish Financial Statements Act governing reporting class C enterprises (large). Referring to section 86 (4) of the Danish Financial Statements Act, has not prepared any cash flow statements, given that there are cash flow statements in the consolidated financial statements. The accounting policies applied for these financiel statements are consistent with those applied last year. Recognition and measurement Assets are recognised in the balance sheet when it is probable as a result of a prior event that future economic benefit will flow to the Company, and the value of the assets can be measured reliably. Liabilities are recognised in the balance sheet when the Company has a legal or constructive obligation as a result of a prior event, and it is probable that future economic benefits will flow out of the Company, and the value of the liabilities can be measured reliably. On initial recognition, assets and liabilities are measured at cost. Measurement subsequent to initial recognition is effected as described below for each financial statement item. Anticipated risks and losses that arise before the time of presentation of the annual report and that confirm or invalidate affairs and conditions existing at the balance sheet date are considered at recognition and measurement. Income is recognised in the income statement when earned, whereas costs are recognised by the amounts attributable to this financial year. Foreign currency translation On initial recognition, foreign currency transactions are translated applying the exchange rate at the transaction date. Receivables, payables and other monetary items denominated in foreign currency that have not been settled at the balance sheet date are translated using the exchange rate at the balance sheet date. Exchange differences that arise between the rate at the transaction date and the one in effect at the payment date or the rate at the balance sheet date are recognised in the income statement as financial income or financial expenses. Income statement Revenue Revenue from the sale of manufactured goods and goods for resale is recognised in the income statement when delivery is made and risk has passed to the buyer. Revenue is recognised net of VAT, duties and sales discounts and is measured at fair value of the determined consideration. Cost of sales Cost of sales includes direct and indirect costs incurred to generate revenue. The cost of sales is recognized raw materials, consumables and cost of production staff. Other external expenses Other external expenses comprise expenses for distribution, sale, advertising, administration, premises, etc. Staff costs Staff costs comprise wages and salaries, social security costs, pension contributions, etc. for the Company s staff. Financial income and expenses These items comprise interest income and interest expenses, realised as well as unrealised capital gains and losses on liabilities and transactions in foreign currencies. 10
Accounting policies Income taxes Tax for the year, which consists of current tax for the year and changes in deferred tax, is recognized in the income statement by the portion attributable to the profit/loss for the year and recognized directly in equity by the portion attributable to entries directly in equity. The portion of the tax taken to the income statement, which relates to extraordinary profit/loss for the year, is allocated to this entry whereas the remaining portion is taken to the year s profit/loss from ordinary activities. Current tax payable or receivable is recognized in the balance sheet, stated as tax calculated on this year s taxable income, adjusted for prepaid tax. Deferred tax is recognized on all temporary differences between the carrying amount and tax-based value of assets and liabilities, for which the tax-based value of assets is calculated based on the planned use of each asset. Deferred tax assets, including the tax base of tax loss carryforwards, are recognized in the balance sheet at their estimated realisable values, either as a set-off against deferred tax liabilities or as net tax assets. The Company is jointly taxed with the ultimative Parent company and all the ultimative Parent company's Danish subsidiaries. The current Danish income tax is allocated among the jointly taxed companies proportionally to their taxable income (full allocation with a refund concerning tax losses). The jointly taxed companies are subject to the rules of section 11B of the Danish Companies Act governing interest deduction limitation. It has been agreed in the joint taxation that reduced interestdeduction is recognized in the company in which the interestdeduction has been reduced. Balance sheet Goodwill Goodwill is amortised straight-line over its estimated useful life which is fixed on the basis of the experience gained by Management for each business area. The period of amortisation is usually 2-5 years. When goodwill subject to impairment, goodwill is written down to the lower of recoverable amount and carrying amount. Files and application fees Gross profit x Files 100 and application fees are measured at cost less accumulated amortisation and impairment losses. Gross margin: Net turnover Operating income x 100 Files Operating and application margin: fees regarding anet specific turnover product in relation to which a potential future market can be demonstrated and where the intention is Equity to market x 100 the product in question are recognised as intangible assets. Solvency ratio: Total assets Other costs relating to applications are recognised as cost in the income statement as incurred. year x 100 Return on equity: Profit for the Average equity Amortisation of application fees regarding other products is carried out as follows: Year of acquisition: 0% Year after acquisition: 50% Second year after acquisition: 50% When files and application fees are subject to impariment, files and application fees are written down to the lower of recoverable amount and carrying amount. 11
Accounting policies Receivables Receivables are measured at amortised cost, usually equalling nominal value less write-downs for bad receivables. Prepayments Prepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at cost. Other financial liabilities Other financial liabilities are measured at amortized cost, usually equaling nominal value of the liability. Segment information The company has not specified segment information as the company only has operations in Denmark and all revenue relating to parallel imported pharmaceuticals. Financial highlights Financial highlights are calculated as follows: 12
Income statement (1.000 DKK) Note 2014 2013 Revenue 1.149.174 1.078.460 Other operating income 35.613 29.411 Use of materials -1.102.310-1.037.749 Other external expenses -35.724-27.946 Gross profit 46.753 42.176 Staff costs 1-33.312-29.756 Income before depreciation 13.441 12.420 Depreciation and impairment losses 2-5.264-4.808 Operating income 8.177 7.612 Financial income 3 79 1.192 Financial expenses 4-2.241-2.264 Profit before tax 6.015 6.540 Tax 5-1.584-2.067 Profit for the year 4.431 4.473 Distribution of profit Retained earnings 4.431 13
Balance sheet (1.000 DKK) Note 2014 2013 Files and application fees 6 9.656 8.119 Other intangible assets 6 52 332 Intangible assets 9.708 8.451 Plant and Machinery 7 0 119 Tangible assets 0 119 Fixed assets 9.708 8.570 Receivables from group enterprises 21.631 33.167 Trade receivables 173.812 164.906 Other receivables 13.717 7.172 Accruals 7 0 Receivables 209.167 205.245 Current assets 209.167 205.245 Total assets 218.875 213.815 14
Balance sheet (1.000 DKK) Note 2014 2013 Share capital 8 5.100 5.100 Retained earnings 17.693 13.262 Total equity 22.793 18.362 Deferred tax liabilities 9 2.209 1.963 Provisions 2.209 1.963 Bank debt 133.192 159.012 Trade payables 26.338 25.684 Payables to group enterprises 26.508 0 Income taxes 1.260 1.524 Other debt 6.575 7.270 Short-term liabilities 193.873 193.490 Liabilities 193.873 193.490 Total equity, provisions and liabilities 218.875 213.815 Pledged assets and contingent liabilites etc. 10 Other Notes 11-13 15
EStatement of changes in equity for 2014 (1.000 DKK) Share capital Retained earnings Total Equity at 01.01.2014 5.100 13.262 18.362 Profit for the year 0 4.431 4.431 Equity at 31.12.2014 5.100 17.693 22.793 16
Notes (1.000 DKK) 2014 2013 1. Staff costs Salaries and wages 29.558 26.096 Pension costs 3.336 3.341 Other social security costs 418 319 33.312 29.756 Of this, total remuneration for Board and Management 766 570 Average number of employees 61 52 2. Depreciation and impairment losses Application fee 4.984 4.360 Other intangible assets 280 348 Plant and machinery 0 100 5.264 4.808 3. Financial income Financial income from group enterprises 76 1.191 Other financial income 3 1 79 1.192 4. Financial expenses Financial expenses from group enterprises 173 202 Other financial expenses 2.068 2.062 2.241 2.264 5. Tax on profit for the year Current tax 1.260 1.524 Change in deferred tax 308 344 Effect of changed tax rates -63-103 Adjustment concerning previous years 79 302 1.584 2.067 17
Notes (1.000 DKK) 6. Intangible assets Goodwill Files and application fees Other intangible assets Cost at 01.01.2014 7.800 34.288 2.640 Additions 0 6.521 0 Disposals 0-8.692 0 Cost at 31.12.2014 7.800 32.117 2.640 Depreciation at 01.01.2014 7.800 26.169 2.308 Depreciation of the year 0 4.984 280 Reversal of disposals 0-8.692 0 Depreciation at 31.12.2014 7.800 22.461 2.588 Carrying amount at 31.12.2014 0 9.656 52 7. Tangible assets Plant and machinery Cost at 01.01.2014 140 Additions 0 Disposal -140 Cost at 31.12.2014 0 Depreciation at 01.01.2014 21 Depreciation of the year 0 Reversal of disposals -21 Depreciation at 31.12.2014 0 Carrying amount at 31.12.2014 0 8. Share capital The share capital consists of 5.100 shares at DKK 1.000. The shares have not been divided into classes. There has not been changes in share capital in the past five financial years. 2014 2013 9. Deferred tax Deferred tax is incumbent on the following financial statement items: Intangible assets 2.197 1.908 Other intangible assets 12 78 Plant and machinery 0-23 2.209 1.963 Net value is recognised in the balance sheet as follows: Deferred tax liabilities 2.209 1.963 2.209 1.963 18
Notes (1.000 DKK) 10. Pledged assets and contingent liabilities The Group has provided guarantees under which the guarantors assume joint and several liability for group enterprises net debt with bank and credit institution. The Groups total net debt in relation to this guarantee is booked at 500.531 t.dkk at 31.12.2014. The Company has provided receivables from sales of goods and services, 173.812 t. DKK, as security for debt to the Group's banks and credit institutions. The Company is a party to litigation regarding alleged infringement of trademark rights and other legal matters. Management believes that these legal proceedings will not lead to significant losses for the company. The group has normal trade obligations on returned goods, and no significant losses are expected. The company is jointly taxed with all Danish subsidiaries, with Habico Holding A/S as the administration company. The Company therefore is held liable under the Corporation Tax Act rules accordingly from 1. July 2012, for any obligation to withhold tax on interest, royalties and dividends for the jointly taxed companies. 11. Related parties Related parties with controlling interest in : The companies parent company Orifarm PI A/S, Odense, Central Business Registration No 27 34 71 77. Other related parties and has had transactions within 2014. All transactions with related parties are eliminated in the overlying consolidated statements. 12. Ownership The company has registered the following shareholders to hold more than 5% of the voting share capital or of the nominal value of the share capital: Orifarm PI A/S, Energivej 15, 5260 Odense S. 13. Consolidation is included in the consolidated financial statements of Orifarm Group A/S, Odense, Central Business Registration No 27 34 72 82. is additionally included in the ultimative consolidated financial statements of Habico Holding A/S, Odense, Central Business Registration No 27 34 71 34. 19