PHARMATHEN PHARMACEUTICALS S.A. Financial ......2015/12/31 · PHARMATHEN PHARMACEUTICALS S.A....

PHARMATHEN PHARMACEUTICALS S.A.

Financial Statements in accordance with

International Financial Reporting Standards

December 31, 2015

Financial Statements for the year ended December 31, 2015 2

CONTENTS

INDEPENDENT AUDITORS’ REPORT ................................................................................................................. 3

Consolidated statement of profit and loss for the year ended December 31, 2015 ............................................. 4

Consolidated statement of Other Comprehensive Income for the year ended December 31, 2015 ..................... 5

Consolidated statement of Financial Position as at December 31, 2015 ............................................................. 6

Consolidated statement of Changes in Equity for the year ended December 31, 2015 ........................................ 7

Separate Statement of Changes in Equity for the year ended December 31, 2015 .............................................. 8

Consolidated statement of Cash Flow for the year ended December 31, 2015 .................................................... 9

1. CORPORATE INFORMATION ................................................................................................................... 10

2. BASIS OF PREPARATION ........................................................................................................................ 10

3. BASIS OF CONSOLIDATION ..................................................................................................................... 11

4. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES ....................................................................... 13

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................................. 18

6. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS ............................................ 30

7. PROPERTY, PLANT AND EQUIPMENT ..................................................................................................... 34

8. INTANGIBLE ASSETS .............................................................................................................................. 36

9. INVESTMENTS IN SUBSIDIARIES ............................................................................................................ 39

10. INVESTMENTS IN ASSOCIATES ............................................................................................................... 40

11. OTHER NON - CURRENT ASSETS ............................................................................................................ 41

12. DEFERRED INCOME TAXES .................................................................................................................... 42

13. INVENTORIES ......................................................................................................................................... 44

14. TRADE AND OTHER ACCOUNTS RECEIVABLE ........................................................................................ 45

15. CASH AND CASH EQUIVALENTS ............................................................................................................. 46

16. SHARE CAPITAL AND RESERVES ............................................................................................................ 47

17. BORROWINGS ......................................................................................................................................... 49

18. PROVISION FOR STAFF RETIREMENT INDEMNITIES .............................................................................. 54

19. ACCOUNTS PAYABLE .............................................................................................................................. 55

20. ACCRUED AND OTHER CURRENT LIABILITIES ....................................................................................... 56

21. REVENUE ............................................................................................................................................... 56

22. OTHER INCOME ...................................................................................................................................... 57

23. COST OF SALES ....................................................................................................................................... 57

24. ADMINISTRATIVE EXPENSES ................................................................................................................. 58

25. SELLING AND DISTRIBUTION EXPENSES ................................................................................................ 58

26. RESEARCH AND DEVELOPMENT EXPENSES ........................................................................................... 59

27. FINANCE INCOME / EXPENSES ............................................................................................................... 59

28. INCOME TAXES ....................................................................................................................................... 60

29. RISK MANAGEMENT ............................................................................................................................... 61

30. CONTINGENT ASSETS / LIABILITIES ...................................................................................................... 65

31. RELATED PARTIES ................................................................................................................................. 65

32. DIVIDEND PROPOSALS ........................................................................................................................... 68

33. EVENTS AFTER THE REPORTING PERIOD .............................................................................................. 68

PHARMATHEN PHARMACEUTICALS S.A. Financial Statements in accordance with International Financial Reporting Standards December 31, 2015 (Amounts in Euro, unless otherwise stated)

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INDEPENDENT AUDITORS’ REPORT To the Shareholders of Pharmathen Pharmaceuticals S.A. Report on the separate and consolidated Financial Statements We have audited the accompanying separate and consolidated financial statements of Pharmathen Pharmaceuticals S.A. (the “Company”) and its subsidiaries, which comprise the separate and consolidated statement of financial position as at December 31, 2015 and the separate and consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Separate and Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these separate and consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal controls 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 these financial statements based on our audit. We conducted our audit in accordance with International Standards of Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 auditors’ judgment, including the assessment of the risks of material misstatement 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 and fair presentation of the financial statements 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 evaluating 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. Opinion In our opinion, the accompanying separate and consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries as at December 31, 2015, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Athens, June 22, 2016

The Certified Auditor Accountant

PANOS I. PAPAZOGLOU SOEL REG. No. 16631

ERNST &YOUNG (HELLAS)

CERTIFIED AUDITORS ACCOUNTANTS S.A.

CHIMARRAS 8B, 151 25 MAROUSI, ATHENS SOEL REG. No. 107


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Consolidated statement of profit and loss for the year ended December 31, 2015

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Notes 5.1 and 5.13.

Notes 2015 2014 Restated 2015 2014 Restated

Revenue 21 194.176.139 176.399.842 163.150.066 156.983.428

Cost of sales 23 (104.185.433) (92.579.365) (104.724.074) (99.754.361)

Gross profit 89.990.706 83.820.478 58.425.992 57.229.068

Other income 22 3.692.399 1.472.731 3.714.460 1.210.531

Administrative expenses 24 (11.238.023) (10.935.318) (8.961.937) (8.038.915)

Selling and distribution expenses 25 (33.608.710) (29.716.340) (10.992.212) (12.306.863)

Research and development expenses 26 (20.722.825) (21.971.102) (21.115.702) (21.796.045)

Operating profit 28.113.547 22.670.449 21.070.601 16.297.776

Finance income 27 694.960 293.065 614.488 249.361

Finance costs 27 (6.401.352) (6.702.551) (4.979.473) (4.184.883)

Other financial income / (expenses) 10 - - (1.511.971) -

Share of loss of an associate 10 - (487.971) - -

Profit before income taxes 22.407.155 15.772.992 15.193.645 12.362.254

Income taxes 28 (8.588.909) (4.360.464) (5.926.612) (2.837.921)

Profit for the year 13.818.246 11.412.528 9.267.033 9.524.333

Attributable to:

Owners of the parent 13.818.014 11.471.524 - -

Non-controlling interests 232 (58.996) - -

13.818.246 11.412.528 - -

GROUP COMPANY

For the year ended December 31 For the year ended December 31


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Consolidated statement of Other Comprehensive Income for the year ended December 31, 2015

For the year ended December 31 For the year ended December 31

2015 2014 Restated 2015 2014 Restated

Profit for the year 13.818.246 11.412.528 9.267.033 9.524.333

Other comprehensive income:

Exchange differences on translations of foreign operations 321.685 115.707 - -

Net other comprehensive income to be reclassified to profit or loss in subsequent periods: 321.685 115.707 - -

Other comprehensive income / (loss) not to be reclassified to profit or loss in subsequent periods:

Re-measurement gain/(losses) on defined benefit plans (note 18) 65.040 (288.722) 52.483 (207.990)Income tax effect (note 12) (20.043) 75.068 (15.220) 54.077

Net other comprehensive Income/(loss) not to be reclassified to profit or loss in subsequent

periods: 44.997 (213.654) 37.263 (153.913)

Other comprehensive Income/(loss) for the year, net of tax 366.682 (97.947) 37.263 (153.913)

Total comprehensive income for the year, net of tax

Attributable to:

Equity holders of the parent 14.181.953 11.355.840 - - Non-controlling interests 2.974 (41.260) - -

Total 14.184.928 11.314.580 - -

9.304.296 9.370.420

GROUP COMPANY

14.184.928 11.314.581


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Consolidated statement of Financial Position as at December 31, 2015


ASSETSNotes 31.12.2015

31.12.2014

Restated

1.1.2014

Restated31.12.2015

31.12.2014

Restated

1.1.2014

Restated

Non-current assets

Property plant and equipment 7 48.515.881 41.178.449 37.800.103 11.442.282 10.661.579 11.003.161

Intangible assets 8 58.882.979 50.266.925 43.322.143 56.643.147 46.881.040 40.273.655

Investments in subsidiaries 9 - - - 46.462.831 41.971.540 41.971.540

Investment in associates 10 30.000 30.000 31.034 30.000 1.541.971 1.054.000

Other non-current assets 11 345.335 821.860 1.131.863 246.479 764.913 738.852

Total non-current assets 107.774.195 92.297.234 82.285.143 114.824.739 101.821.043 95.041.208

Current assets

Inventories 13 36.764.126 34.428.151 36.977.744 19.216.593 20.875.497 24.392.852

Trade accounts receivable 14 50.518.465 48.402.272 53.695.868 42.873.803 35.781.939 37.451.499

Other receivables 14 21.020.461 15.076.134 13.204.589 7.301.270 8.533.438 8.068.909

Cash and cash equivalents 15 30.842.543 12.233.106 17.851.590 28.742.190 9.202.463 14.871.128

Total current assets 139.145.595 110.139.663 121.729.791 98.133.856 74.393.337 84.784.388

TOTAL ASSETS 246.919.790 202.436.897 204.014.934 212.958.595 176.214.380 179.825.595

EQUITY & LIABILITIES

Equity attributable to shareholders of the Company

Issued capital 16 33.057.374 34.006.134 33.947.134 33.057.374 34.006.134 33.947.134

Fair value reserve 16 3.122.388 3.122.388 3.122.388 2.932.388 2.932.388 2.932.388

Share premium 16 - 9.053.520 9.053.520 - 9.053.520 9.053.520

Treasury shares 16 - (14.408.927) - - (14.408.927) -

Other reserves 16 22.181.477 20.143.004 16.980.297 12.561.072 10.537.777 7.375.071

Pooling of interest reserve 16 (7.553.310) (7.553.310) (7.553.310) - - -

Retained earnings 48.611.259 42.994.236 41.565.828 48.744.855 47.523.112 47.982.153

Other components of equity (121.145) (442.830) (558.537) - - -

Equity attributable to the equity holders of the parent 99.298.043 86.914.215 96.557.320 97.295.689 89.644.004 101.290.267

Non-controlling interests 366.071 365.839 424.836 - - -

Total equity 99.664.114 87.280.054 96.982.156 97.295.689 89.644.004 101.290.267

Non-current liabilities

Interest - bearing loans and borrowings 17 46.998.588 27.400.255 29.426.956 43.267.852 23.956.603 16.541.190

Provision for staff retirement indemnities 18 1.951.565 1.762.978 1.306.550 1.169.671 1.084.613 815.491

Deferred tax liabilities 12 6.991.880 2.599.812 178.417 8.791.519 4.477.012 2.337.061

Total non-current liabilities 55.942.033 31.763.045 30.911.923 53.229.042 29.518.228 19.693.742

Current liabilities

Trade accounts payable 19 39.006.383 28.886.110 25.102.861 27.544.378 23.223.599 18.692.480

Short-term loans 17 31.930.080 28.479.973 32.600.285 21.043.479 17.924.441 28.621.961

Interest - bearing loans and borrowings 17 7.200.000 11.087.874 9.422.044 6.200.000 4.487.874 3.562.044

Income tax payable 4.268.984 2.107.177 2.667.523 - 960.048 2.141.456

Accrued and other current liabilities 20 8.908.196 12.832.664 6.328.143 7.646.007 10.456.185 5.823.646

Total current liabilities 91.313.643 83.393.798 76.120.855 62.433.864 57.052.148 58.841.586

TOTAL LIABILITIES 147.255.676 115.156.843 107.032.778 115.662.906 86.570.376 78.535.328

TOTAL EQUITY AND LIABILITIES 246.919.790 202.436.897 204.014.934 212.958.595 176.214.380 179.825.595

GROUP COMPANY


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Consolidated statement of Changes in Equity for the year ended December 31, 2015


Share Capital Share Premium Treasury Shares Other Reserves Retained Earnings Fair Value Reserve Pooling of Interest Reserve Other Components of Equity Total

Non Controlling

Interests Total Equity

Balance January 1, 2014 33.947.134 9.053.520 - 16.980.297 44.281.710 3.122.388 (7.553.310) (558.537) 99.273.203 424.836 99.698.039

Change in accounting policy (note 5.1, 5.13) - - - - (2.715.882) - - - (2.715.882) - (2.715.882)Balance January 1, 2014 (restated) 33.947.134 9.053.520 - 16.980.297 41.565.828 3.122.388 (7.553.310) (558.537) 96.557.320 424.836 96.982.156

Profit for the year ended 31/12/2014 (restated) - - - - 15.403.571 - - - 15.403.571 (58.996) 15.344.575

Change in accounting policy (note 5.1, 5.13) - - - - (3.932.047) - - - (3.932.047) - (3.932.047)

Restated Profit for the period - - - - 11.471.524 - - - 11.471.524 (58.996) 11.412.528

Other comprehensive income - - - - (213.654) - - 115.707 (97.947) - (97.947)

Total comprehensive income - - - - 11.257.870 - - 115.707 11.373.577 (58.996) 11.314.581

Purchase of own shares (note 16) - - (14.408.927) - - - - - (14.408.927) - (14.408.927)

Dividends (note 32) - - - - (6.607.756) - - - (6.607.756) - (6.607.756)

Transfer from retained earnings to share capital 59.000 - - - (59.000) - - - - - -

Transfer from retained earnings to other reserves - - - 3.162.707 (3.162.705) - - - - - -

Balance December 31, 2014 (restated) 34.006.134 9.053.520 (14.408.927) 20.143.004 42.994.236 3.122.388 (7.553.310) (442.830) 86.914.214 365.840 87.280.054

Balance January 1, 2015 34.006.134 9.053.520 (14.408.927) 20.143.004 42.994.236 3.122.388 (7.553.310) (442.830) 86.914.216 365.840 87.280.056

Profit for the year - - - - 13.818.014 - - - 13.818.014 232 13.818.246

Other comprehensive income - - - - 44.997 - - 321.685 366.682 366.682

Total comprehensive income - - - - 13.863.011 - - 321.685 14.184.696 231 14.184.928

Cancellation of own shares (948.760) (9.053.520) 14.408.927 - (4.406.647) - - - - - -

Dividends (note 32) - - - - (1.800.869) - - - (1.800.869) - (1.800.869)

Transfer from retained earnings to other reserves - - - 2.038.473 (2.038.473) - - - - - -

Balance December 31, 2015 33.057.374 - - 22.181.477 48.611.259 3.122.388 (7.553.310) (121.145) 99.298.043 366.071 99.664.114


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Separate Statement of Changes in Equity for the year ended December 31, 2015


Share Capital Share Premium Treasury Shares Other Reserves Retained Earnings Fair Value Reserve Total Equity

Balance January 1, 2014 33.947.134 9.053.520 - 7.375.071 50.698.036 2.932.388 104.006.149

Change in accounting policy (note 5.1, 5.13) - - - - (2.715.882) - (2.715.882)Balance January 1, 2014 (restated) 33.947.134 9.053.520 - 7.375.071 47.982.153 2.932.388 101.290.267

Profit for the year ended 31/12/2014 (restated) - - - - 13.456.380 - 13.456.380

Change in accounting policy (note 5.1, 5.13) - - - - (3.932.047) - (3.932.047)

Restated Profit for the period - - - - 9.524.333 - 9.524.333

Other comprehensive income - - - - (153.914) - (153.914)

Total comprehensive income - - - - 9.370.419 - 9.370.419

Purchase of own shares (note 16) - - (14.408.927) - - - (14.408.927)

Dividends (note 32) - - - - (6.607.756) - (6.607.756)

Transfer from retained earnings to share capital 59.000 - - - (59.000) - -

Transfer from retained earnings to other reserves - - - 3.162.706 (3.162.705) - -

Balance December 31, 2014 (restated) 34.006.134 9.053.520 (14.408.927) 10.537.777 47.523.111 2.932.388 89.644.003

Balance January 1, 2015 34.006.134 9.053.520 (14.408.927) 10.537.777 47.523.111 2.932.388 89.644.003

Profit for the period - - - - 9.267.033 - 9.267.033

Other comprehensive income - - - - 37.263 - 37.263

Total comprehensive income - - - - 9.304.296 - 9.304.296

Cancellation of own shares (948.760) (9.053.520) 14.408.927 - (4.406.647) - -

Dividends (note 32) - - - - (1.652.611) - (1.652.611)

Transfer from retained earnings to other reserves - - - 2.023.295 (2.023.295) - -

Balance December 31, 2015 33.057.374 - - 12.561.072 48.744.855 2.932.388 97.295.689


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Consolidated statement of Cash Flow for the year ended December 31, 2015


Notes2015

2014

Restated2015

2014

Restated

Operating activities

Profit before income taxes 22.407.155 15.772.992 15.193.645 12.362.254

Non - cash adjustments to reconcile profit before tax to net cash flows: -

Depreciation of property, plant and equipment 7 4.371.287 4.251.726 1.310.327 1.216.852

Amortisation of intangibles 8 16.034.646 16.470.693 15.511.796 15.889.186

Loss on disposal of property, plant and equipment - 166.064 - 166.064

Impairment of receivables 14 (13.988) 1.073.942 (216.236) 82.224

Impairment of tangible and intangibles assets 7, 8 63.198 79.422 7.570 105.423

Finance income 27 (694.960) (293.065) (614.488) (249.361)

Finance costs 27 6.401.352 6.702.551 4.979.473 4.184.883

Share of loss of an associate 10 - 487.971 - -

Impairment loss in associate 10 - - 1.511.971 -

Provision for obsolete inventory 13 (300.503) 86.860 (538.061) 106.057

Provision for staff retirement indemnities 18 253.627 167.706 137.541 61.132

Other provisions (80.772) - - -

Operating profit before working capital changes 48.441.042 44.966.862 37.283.539 33.924.715

Working capital adjustments

(Increase)/Decrease in:

Inventories 13 (2.035.473) 2.462.730 2.196.964 3.411.296

Trade accounts receivable and other receivables (9.510.299) 2.131.459 (7.847.725) 891.249

Increase/(Decrease) in:

Trade accounts payable and other payables 5.699.593 8.514.160 827.952 7.610.339

42.594.862 58.075.211 32.460.729 45.837.599

Income tax paid (670.031) (1.411.783) (463.065) (1.079.392)

Interest received 7.754 62.677 5.249 49.810

Payment of staff retirement indemnities 18 - - - -

Net cash flows from operating activities 41.932.585 56.726.105 32.002.913 44.808.017

Investing Activities

Purchase of property, plant and equipment 7 (11.672.958) (7.957.946) (2.091.031) (1.283.834)

Purchase/development of intangible assets 8 (24.650.701) (23.569.920) (25.273.903) (22.601.995)

Proceeds from disposal of property, plant and equipment 7 650 242.500 43.569 242.500

Sale / (participation in share capital increase) of subsidiaries/associates, net of cash 9,10 - (487.971) (4.491.291) (487.971)

Net cash flows used in investing activities (36.323.009) (31.773.337) (31.812.656) (24.131.299)

Financing activities

Net proceeds from acquisition of own shares 16 - (14.408.927) - (14.408.927)

Dividends paid (1.786.042) (6.607.756) (1.652.611) (6.607.756)

Repayment of borrowings (7.923.705) (26.572.167) (863.881) (22.059.421)

Proceeds from borrowings 27.085.737 21.779.954 25.000.000 19.700.000

Payment of finance costs (4.376.129) (4.762.357) (3.134.038) (2.969.279)

Net cash flows used in financing activities 12.999.861 (30.571.252) 19.349.470 (26.345.383)

Net increase / (decrease) in cash and cash equivalents 18.609.437 (5.618.484) 19.539.727 (5.668.665)

Cash and cash equivalents as at January 1 15 12.233.106 17.851.590 9.202.463 14.871.128

Cash and cash equivalents as at January 1 of merging subsidiary - - - -

Cash and cash equivalents as at December 31 15 30.842.543 12.233.106 28.742.190 9.202.463

GROUP COMPANY

December 31 December 31


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1. CORPORATE INFORMATION Pharmathen Pharmaceuticals S.A. (“Pharmathen” or the “Company”) is a pharmaceutical company focused on developing and marketing of pharmaceuticals, with a strong position in generics. Founded in 1969 by Nicolaos Katsos, it is one of the fastest growing pharmaceutical companies in Europe. With a long history of development and manufacturing of generic products, Pharmathen has emerged as one of the largest generic development companies in Europe with a development pipeline of approximately ten generic molecules per year and export activities to over 85 countries and to over 274 customers including the largest generics companies worldwide. Exports sales represent a 67% of total sales. Pharmathen S.A is the parent company of Pharmathen Group or the “Group”. The subsidiaries of the Group that are fully consolidated are as follows: Pharmathen International is the main production unit and it is fully consolidated as the Company has total direct and indirect interest of 99,8%. Pharmathen Development Group is fully consolidated as the Company participates by 99,3% in its share capital. Pharmathen Development Group consists of Pharmathen U.K Ltd and Adventus India. Pharmathen Investment Group (“PIG”) is fully consolidated, as the Company participates by 99% in the sub-group. PIG’s main subsidiary is Pharmathen Hellas. PIG’s other subsidiary is Libytec. Although the Company participates by 50% in Libytec, it has control over Libytec. Additionally, Pharmathen initiated in 2006, its activities in the field of innovative products. The Group is focused on research and development of core technologies such as long acting injectables and sustained release products with a highly experienced in house development team of 199 scientists. There are 6 Long Active Release products (“LAI”) and 9 Preservative Free products (“PF”). The Group maintains state of the art facilities - GMP (Good Manufacturing and Practice) approved. It is a vertically integrated organization with modern manufacturing facilities in Pallini, Greece and in Sapes, Greece. Additionally the Group operates R&D laboratories in Thessaloniki, Greece as well as in India. The business development headquarters are located in London, England. The Company’s headquarters are in Athens at 6 Dervenakion Street, 15351 Pallini. The life of the Company according to its Articles of Association is 90 years as of 2010 with a possible extension permitted following a decision of the General Assembly of Shareholders. The Company’s average number of employees for the years ended December 31, 2015 and 2014, amounted to approximately 504 and 470, respectively, while that of the Group amounted to 1016 and 930, respectively.

2. BASIS OF PREPARATION

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the relevant Interpretations, as issued by the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union (“EU”). The consolidated financial statements have been prepared on a historical cost basis and they are presented in euro which is the Company’s operating and reporting currency. All the subsidiaries of the Group present their financial statements in euro, except Pharmathen U.K Ltd (GBP) and Adventus India (Indian Rupee, INR) The preparation of financial statements in accordance with IFRS requires the use of accounting estimates and assumptions. Additionally, it requires management’s judgments during the implementation process of the Company’s accounting policies. The estimates and assumptions are based on the management’s best knowledge in relation to the current circumstances. The consolidated financial statements are presented in euro and all values are rounded to the nearest euro except when otherwise indicated. Areas which require the greatest level of judgment or are of great complexity or where those estimates and assumptions have the most significant effect on the amounts recognized in the financial statements are analysed in Note 6.


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Explicit and unreserved statement of compliance These financial statements comprise the separate financial statements of Pharmathen Pharmaceutical S.A. and the consolidated financial statements of the Company and its subsidiaries (“Group”) for the year ended December 31, 2015, in accordance with IFRS, as issued by the IASB and adopted by the European Union. Going concern The Group’s Management has taken into consideration the appropriateness of the preparation of statements according to the going-concern principle and deems it appropriate to prepare the financial statements upon the basis of such concept.

3. BASIS OF CONSOLIDATION

Subsidiaries The consolidated financial statements comprised the financial statements of the Company and all subsidiaries controlled by the Company directly or indirectly. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically the Group controls an investee if, and only if, the Group has: - Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) - Exposure, or rights, to variable returns from its involvement with the investee -The ability to use its power over the investee to affect its returns. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. The financial statements of the subsidiaries are prepared as of the same reporting period as the parent company, using consistent accounting policies. All intercompany balances, transactions and any intercompany profit or loss are eliminated in the consolidated financial statements. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. In the consolidated financial statements the foreign exchange gains and losses arising from the translation of the subsidiaries financial statements into euro are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in the income statement.

Associates Associates are those entities in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates in which the Group has significant influence are accounted for using the equity method. Under this method the investment is carried at cost and is adjusted to recognize the investor’s share of the earnings or losses of the investee from the date that significant influence commences until the date that significant influence ceases and also for changes in the investee’s net equity. Gains or losses from transactions with associates are eliminated to the extent of the interest in the associate. Dividends received from associates are eliminated against the carrying value of the investment. The associate’s value is adjusted for any accumulated impairment loss. When the Group’s share of losses exceeds the carrying amount of the investment, the carrying value of the investment is reduced to nil and recognition of further losses is discontinued, except to the extent the Group has created obligations or has made payments on behalf of the associate.


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Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition’s date fair value. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs are expensed as incurred and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. If the business combination is achieved in stages, the fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in the income statement. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Basis of consolidation prior to January 1, 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: Acquisitions of non-controlling interests, prior to January 1, 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognized in goodwill. Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover these. Losses prior to January 1, 2010, were not reallocated between the non-controlling interests and the parent shareholders. Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments at January 1, 2010, has not been restated. Transactions between entities under common control Transactions between entities under common control which is defined as a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination and that control is not transitory are excluded from the scope of IFRS 3. Therefore, the Group accounts for such transactions using a method akin to the “pooling of interests”. Based on this principle, the Group consolidates the assets and liabilities of the combined entities at their carrying amounts (without revaluation to fair values or recognition of any new assets and liabilities). The financial statements of the Group or the new entity after the transaction are prepared on the basis as if the new structure was in effect since the beginning of the first period which is presented in the consolidated financial statements and consequently the comparative figures are adjusted. The income statement reflects the results of the combining entities for the full year (including the comparative period), irrespective of when the combination took place. The difference between the cost of investment (if any) and the carrying value of the percentage of the net assets combined is recognized directly in equity, in a separate “pooling of interests” reserve. A


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change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction on the date the transaction occurs.

Separate financial statements In the separate financial statements, investments in subsidiaries and associates are accounted for at cost adjusted for any impairment where necessary.

4. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Group as of 1 January 2015.

The IASB has issued the Annual Improvements to IFRSs 2011 – 2013 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2015. These annual improvements have not yet been endorsed by the EU. The management will assess the impact of the amendments in its consolidated/separate financial statements.

IFRS 3 Business Combinations: This improvement clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself.

IFRS 13 Fair Value Measurement: This improvement clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation.

IAS 40 Investment Properties: This improvement clarifies that determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property requires the separate application of both standards independently of each other.

STANDARDS ISSUED BUT NOT YET EFFECTIVE AND NOT EARLY ADOPTED

The following new standards, amendments to standards and interpretations have been issued but are not yet effective:

IAS 16 Property, Plant & Equipment and IAS 38 Intangible assets (Amendment): Clarification of

Acceptable Methods of Depreciation and Amortization

The amendment is effective for annual periods beginning on or after 1 January 2016. The amendment provides additional guidance on how the depreciation or amortization of property, plant and equipment and intangible assets should be calculated. This amendment clarifies the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

http://www.iasplus.com/en/standards/ias/ias39

http://www.iasplus.com/en/standards/ifrs/ifrs9


http://www.iasplus.com/en/standards/ifrs/ifrs3



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IAS 19 Employee benefits (Amended): Employee Contributions

The amendment applies to contributions from employees or third parties to defined benefit plans. The objective of the amendment is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 9 Financial Instruments – Classification and measurement

The standard is applied for annual periods beginning on or after 1 January 2018 with early adoption permitted. The final phase of IFRS 9 reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 11 Joint arrangements (Amendment): Accounting for Acquisitions of Interests in Joint

Operations

The amendment is effective for annual periods beginning on or after 1 January 2016. IFRS 11 addresses the accounting for interests in joint ventures and joint operations. The amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business in accordance with IFRS and specifies the appropriate accounting treatment for such acquisitions. The amendment has not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 14 Regulatory Deferral Accounts

The standard is effective for annual periods beginning on or after 1 January 2016. IFRS 14 permits first-time

adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP

requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS

and do not recognize such amounts, the standard requires that the effect of rate regulation must be presented

separately from other items. An entity that already presents IFRS financial statements is not eligible to apply

the standard. This standard has not yet been endorsed by the EU, as the European Commission has decided

not to launch the endorsement process of this interim standard and to wait for the final standard. . Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 15 Revenue from Contracts with Customers

The standard is effective for annual periods beginning on or after 1 January 2018. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates. The standard has not been yet endorsed by the EU. The Company is in the process of examining the impact from the adoption of the standard in its Financial Statements.


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Clarifications to IFRS 15, Revenue from Contracts with Customers

The amendments do not change the underlying principles of the standard, just clarify and offer some additional transition relief. The amendments add clarifications in the following areas: (i) identifying performance obligations; (ii) principal versus agent considerations; and (iii) licensing application guidance. The amendments introduce additional practical expedients for entities transitioning to IFRS 15 on (i) contract modifications that occurred prior to the beginning of the earliest period presented and (ii) contracts that were completed at the beginning of the earliest period presented. The amendments are effective for annual reporting periods beginning on or after 1 January 2018 with earlier application permitted. The clarifications to IFRS 15 have not been endorsed by the EU.

IAS 27 Separate Financial Statements (amended)

The amendment is effective from 1 January 2016. This amendment will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements and will help some jurisdictions move to IFRS for separate financial statements, reducing compliance costs without reducing the information available to investors. This amendment has not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. . In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception

(Amendments)

The amendments address three issues arising in practice in the application of the investment entities consolidation exception. The amendments are effective for annual periods beginning on or after 1 January 2016. The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. Also, the amendments clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value. Finally, the amendments to IAS 28 Investments in Associates and Joint Ventures allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. These amendments have not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.


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IAS 1: Disclosure Initiative (Amendment)

The amendments to IAS 1 Presentation of Financial Statements further encourage companies to apply professional judgment in determining what information to disclose and how to structure it in their financial statements. The amendments are effective for annual periods beginning on or after 1 January 2016. The narrow-focus amendments to IAS clarify, rather than significantly change, existing IAS 1 requirements. The amendments relate to materiality, order of the notes, subtotals and disaggregation, accounting policies and presentation of items of other comprehensive income (OCI) arising from equity accounted Investments. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

The IASB has issued the Annual Improvements to IFRSs 2010 – 2012 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 February 2015. These annual improvements have not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 2 Share-based Payment: This improvement amends the definitions of 'vesting condition' and 'market condition' and adds definitions for 'performance condition' and 'service condition' (which were previously part of the definition of 'vesting condition').

IFRS 3 Business combinations: This improvement clarifies that contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments.

IFRS 8 Operating Segments: This improvement requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments and clarifies that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly.

IFRS 13 Fair Value Measurement: This improvement in the Basis of Conclusion of IFRS 13 clarifies that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting if the effect of not discounting is immaterial.

IAS 16 Property Plant & Equipment: The amendment clarifies that when an item of property, plant and equipment is revalued, the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.

IAS 24 Related Party Disclosures: The amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity.

IAS 38 Intangible Assets: The amendment clarifies that when an intangible asset is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.


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The IASB has issued the Annual Improvements to IFRSs 2012 – 2014 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2016. These annual improvements have not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: The amendment clarifies

that changing from one of the disposal methods to the other (through sale or through distribution to the owners) should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in IFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification.

IFRS 7 Financial Instruments: Disclosures: The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. Also, the amendment clarifies that the IFRS 7 disclosures relating to the offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.

IAS 19 Employee Benefits: The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.

IAS 34 Interim Financial Reporting: The amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The Board specified that the other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. If users do not have access to the other information in this manner, then the interim financial report is incomplete.

IFRS 16: Leases

The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). The new standard requires lessees to recognize most leases on their financial statements. Lessees will have a single accounting model for all leases, with certain exemptions. Lessor accounting is substantially unchanged. The standard has not been yet endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IAS 12 Income taxes (Amendments): Recognition of Deferred Tax Assets for Unrealised Losses

The amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. The objective of these amendments is to clarify the accounting for deferred tax assets for unrealised losses on debt instruments measured at fair value. For example, the amendments clarify the accounting for deferred tax assets when an entity is not allowed to deduct unrealised losses for tax purposes or when it has the ability and intention to hold the debt instruments until the unrealised loss reverses. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

IAS 7 Statement of Cash Flows (Amendments): Disclosure Initiative

The amendments are effective for annual periods beginning on or after 1 January 2017, with earlier application permitted. The objective of these amendments is to enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendments will require entities to provide disclosures that enable investors to evaluate changes in liabilities arising from financing activities, including changes arising from cash flows and non-cash changes. These amendments have


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not yet been endorsed by the EU. Management has assessed that the new standard is not expected to have an impact in the financial position or financial performance of the Group.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 5.1 Revenue

Revenue comprises revenue from the sale of goods and the rendering of services. Revenue is measured by reference to the fair value of the consideration received or receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts. The Group often enters into sales transactions involving a range of the Group's products and services for example for the sale of drug dossier and related after-sales services. The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales transaction in order to reflect the substance of the transaction. The consideration received from these transactions is allocated to the separately identifiable component by taking into account the relative fair value of each component. Revenue is recognized when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Group's different activities has been met. These activity-specific recognition criteria are based on the goods or solutions provided to the customer and the contract conditions in each case, and are described below. Sale of Goods (Generic Drugs) Sale of goods comprises the sale of merchandise, semi-finished products and raw materials and is recognized when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods. The Group does not sell any contracts that need to be recognized using the percentage of completion method as defined. Discounts are subtracted from the consideration originally recognized.

Rendering of Services Sale of services may include drug dossiers and costs for the approval of a drug in a country that the Group may incur on behalf of a client. Change in the measurement approach for price reconciliations During 2015 the management of the Group carried out a review of the approach followed for revenue recognition, and more specifically the measurement of the price reconciliations. Following careful consideration of the underlying transactions management changed the measurement basis of the price reconciliation adjustments as described below, in order to reflect more accurately the substance of certain transactions. Until 2014, the Group applied its accounting policy by recognizing obligations for accrued price reconciliations based on the units reported by its customers as sold in the same calendar year. However, as evidenced by the claims received, it was possible that under normal trading conditions some of the quantities that are sold to the Company’s customers were not sold by them in the same year (usually there is a 3 – 6 months lead time), and therefore the Group might be exposed to a potential risk of receiving the information for these price adjustments of revenue after a long period of time compared to the initial sale of product. Following a careful consideration of the above facts and with the objective of matching more accurately the reported revenue with the related expenses in each year, the management of the Group decided to proceed with the change in the method of application of its policy for price reconciliations, so that it is based on the quantities sold by the company to its customers instead of on the quantities sold by the customers to third parties. The change to the measurement approach for price reconciliations is consistent with the industry practice. As a result of this change the Group


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has restated in its 2015 financial statements, the comparative numbers of 2014 and opening financial position as of 1 January 2014, in accordance with IAS8. The impact of this change on the financial statements of the last two years has been estimated according to the table below. Impact on equity ( increase / (decrease) in equity) :

Impact on statement of profit and loss ( increase/(decrease) in profit) :

The change did not have an impact on OCI for the period or the Group's and the Company's operating, investing and financing cash flows.

31 December 2014 1 January 2014

Accrued and other current liabilities 6.781.998 2.492.908

Total liabilities 6.781.998 2.492.908

Retained earnings (6.781.998) (2.492.908)

Equity (6.781.998) (2.492.908)


Accrued and other current liabilities 6.781.998 2.492.908

Total liabilities 6.781.998 2.492.908

Retained earnings (6.781.998) (2.492.908)

Equity (6.781.998) (2.492.908)

Group

Company

Group

Year 2014

Revenue (4.289.091)

Net impact on profit for the year (4.289.091)

Equity holders of the parent (4.289.091)

Non controlling interests -

Company

Year 2014

Revenue (4.289.091)

Net impact on profit for the year (4.289.091)

Equity holders of the parent (4.289.091)



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5.2 Dividends Dividends are recognized when the Group’s right to receive the payment is established, which is generally when shareholders approve the dividend.

5.3 Operating Expenses

Operating expenses are recognized in the income statement upon utilization of the service or at the date of their origin.

5.4 Borrowing Costs

Borrowing costs primarily comprise interest on the Group's borrowings. Borrowing costs are recognized as expenses as incurred, unless these costs are capitalized in accordance with IAS 23 “Borrowing costs”. Borrowing costs, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. This cost is capitalized only if it is probable that future economic benefits will flow to the Group and can be reliably measured. All other borrowing costs are expensed as incurred and included in “Financial expenses” in the income statement by using the effective interest rate method. Effective interest rate method is a method of estimating the amortized cost of a financial asset or liability and allocation of interest income or interest expenses during the relevant period. The effective interest rate is the rate which is used to discount future payments or receipts in cash accurately, during the expected useful life of the financial instrument or, if required, for shorter period, in the net carrying value of the financial asset or liability. While calculating the effective interest rate, the Company estimates the cash flows by taking into account the contractual terms behind the financial instrument (for example, prepayments) but not the future losses. The estimation includes all expenses and items paid or received among counterparties which are considered part of the effective interest rate, any issuance fees and additional charges or discounts.

5.5 Goodwill

The acquisition of subsidiaries is accounted for using the acquisition method of accounting that measures the acquiree’s assets and liabilities and contingent liabilities at their fair value at the date of acquisition. For business combinations occurring subsequent to the date of transition to IFRS, goodwill is the excess of the purchase price over the fair value of the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment at least annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount for each cash generating unit to which goodwill relates. Where the recoverable amount of the cash generating unit is less than the carrying amount an impairment loss is recognized. Thus, after initial recognition, goodwill is measured at cost less any accumulated impairment losses. An impairment loss recognized for goodwill is not reversed in a subsequent period. Goodwill on acquisition of subsidiaries is presented as an intangible asset. Negative goodwill on acquisition of subsidiaries is recorded directly in the income statement. Goodwill recognized on acquisition of associates is included in the carrying amount of the investment. The difference between the cost of acquisition and the non-controlling interest acquired, arising on the acquisition of non-controlling interests in a subsidiary where control already exists, is recorded directly in equity. When non-controlling interests are disposed of, but control is retained, any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the parent.


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5.6 Intangible Assets

Internally generated drugs. Expenditure on research is expensed as incurred. Internally generated drugs arising from development are recognized if, and only if, an entity can demonstrate all of the following: (a) The technical feasibility of completing the intangible asset so that it will be available for use or

sale; (b) Its intention to complete the intangible asset and use or sell it; (c) Its ability to use or sell the intangible asset; (d) How the intangible asset will generate probable future economic benefits. Among other things,

the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;

(e) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;

(f) Its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Internally generated drugs and patents are stated at historical cost less subsequent amortization and any accumulated impairment losses. Amortization is calculated using the straight-line method over the useful economic lives, to a period of 5 years. Costs that are directly associated with identifiable and unique drug products controlled by the Group are recognized as part of intangible assets. Direct costs include materials, staff costs of the drug development team and other specific and direct expenses. Amortization of the assets begins when development is completed and the asset is available for use. Costs incurred after regulatory approval are insignificant. In addition to the Company’s own research and development, Pharmathen is also a partner in collaborations aimed at developing marketable products. These collaborations typically involve payments for the achievements of certain milestones. With respect to this, an assessment is required as to whether these upfront or milestone payments represent compensation for services performed (research and development expense) or whether the payments represent the acquisition of a right which has to be capitalized. However, until completion of the development project, the assets are subject to impairment testing. The gain or loss arising on the disposal of an intangible asset is determined as the difference between the proceeds and the carrying amount of the asset and is recognized in the income statement within “other income” or “research and development expenses”. Software Acquired Software acquired is stated at historical cost less subsequent amortization and any impairment. Amortization is calculated using the straight-line method over the useful economic lives, not exceeding a period of 5 years. Costs associated with maintaining computer software programs are recognized as an expense as incurred. Licenses and Trade Marks Software licenses and trademarks are stated at historical cost less subsequent amortization which is calculated using the straight-line method over the useful economic lives, not exceeding a period of 5 years.


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5.7 Property, Plant and Equipment Land held for use in production or administration is stated at cost. As no finite useful life for land can be determined, related carrying amounts are not depreciated. Buildings, IT equipment and other equipment (comprising furniture and fixtures) are carried at acquisition cost or manufacturing cost less subsequent depreciation and impairment losses. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. There are no assets under lease hold. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Buildings: 32 years IT equipment: 5 years Other equipment: 9 years.

The asset’s residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in the income statement within “other income” or the relative expense function. Impairment For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount of its asset, management estimates its value in use which is the expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future re-organizations and asset enhancements. Discount factors are determined individually for each asset or cash-generating unit and reflect their respective risk profiles as assessed by management. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist or may have decreased. An impairment charge is reversed if the asset or cash-generating unit’s recoverable amount exceeds its carrying amount and the reversal is credited to the income statement. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that could have been determined, net of depreciation, had no impairment loss been recognized for the assets in prior years.


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5.8 Financial Instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through the income statement, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below.

5.9 Financial Assets

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables; financial assets at fair value through income statement; held to maturity investments; and available-for-sale financial assets. The category determines subsequent measurement and whether any resulting income and expense is recognized in the income statement or in other comprehensive income. All financial assets except for those at fair value through the income statement are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognized in the income statement are presented within “finance expense”, “financial income” or “other financial items”, except for impairment of trade receivables which is presented within “other financial expenses or other finance income”.

5.9.1. Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are subsequently measured at amortized cost using the effective interest rate method (EIR), less impairment. Discounting is omitted where the effect of discounting is immaterial. EIR amortization is included in finance income in the income statement. The losses arising from impairment are recognized in the income statement in finance costs for loans. The Group's trade and most other receivables fall into this category of financial instruments. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of counterparty and other available features of shared credit risk characteristics. The percentage of the write down is then based on recent historical counterparty default rates for each identified group. Impairment of trade receivables is presented within “selling and distribution expenses”.

5.10 Financial Liabilities

The Group's financial liabilities include borrowings, trade and other payables. Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through the income statement, that are carried subsequently at fair value with gains or losses recognized in the income statement. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at fair value through the income statement.


24

5.11 Derecognition of Financial Assets A financial asset (or, a part of a financial asset or part of a group of similar financial assets) is derecognized when: the rights to receive cash flows from the asset have expired; the Company or the Group retains the right to receive cash flows from the asset, but has

assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

the Company or the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the assets, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company or the Group have transferred their rights to receive cash flows from an asset and have neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company or the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset or the maximum amount of consideration that the Company or the Group could be required to repay. Where continuing involvement takes the form of a written and/or purchase option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Company’s or the Group’s continuing involvement is the amount of the transferred asset that the Company or the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Company’s or the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

5.12 Derecognition of Financial Liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the income statement. Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

5.13 Inventories Inventories are stated at the lower of cost and net realizable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Borrowing costs are not taken into consideration. Net realizable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. Any decrease in the carrying value of inventory to the net realizable value is recognized in the income statement. The Group values its raw materials and consumables based on the weighted average cost. Change in the accounting policy for validation batches During 2015 the management of the Company carried out a periodic review of the accounting policy for inventories and intangible assets. Following careful consideration of the underlying transactions management believes that it is in the interest of the users of the financial statements of the Group, if the cost value of validation batches products is reported under Intangible Assets (Internally generated drugs developed) rather than under Inventories.


25

More particularly, in the process of obtaining regulatory approval for the commercial distribution and exploitation of its products, the Group is required to submit to regulators samples of each product under evaluation for their approval. According to the applicable industry regulations, pharmaceutical industries are typically required to produce commercial size batches for each product out of which the regulators select the samples they will test. Due to the large size of a commercial size batch, after the regulators pick their samples, still a large volume of products remains in the warehouse under quarantine until the product is approved and licensed for distribution. Even though the specifics of each licensing process differ, in general by the time regulatory approval is received the initial commercial batch has reached or is very close to reaching the end of its shelf life, thus having no economic value at that point. In the past, the Company used to record the cost value of validation batches products as Inventory and subsequently tested its carrying value for impairment. However, since these products are required by the approval regulations and that they are not available for sale until they have been approved by the regulators, it is more appropriate that they are accounted for as part of the overall drug development cost and hence, they should be capitalized as internally generated drugs (subject to annual amortization) instead of inventory. Such costs are directly associated with identifiable and unique drug products controlled by the Group and should be recognized as such. Having considered the above, the management of the Group decided to proceed with the change in the above accounting policy and prepare restated financial statements for the comparative numbers of 2014 as well as of 2013 (January 1, 2014) in accordance with IAS8. The impact of the changes in the accounting policy is reflected below. Impact on equity ( increase / (decrease) in equity) :

Impact on statement of profit and loss ( increase/(decrease) in profit) :


Intangible assets 1.520.905 544.669

Inventories (1.386.836) (767.643)

Total assets 134.069 (222.975)

Retained earnings 134.069 (222.975)

Equity 134.069 (222.975)


Intangible assets 1.520.905 544.669

Inventories (1.386.836) (767.643)

Total assets 134.069 (222.975)

Retained earnings 134.069 (222.975)

Equity 134.069 (222.975)

Group

Company


26

The change did not have an impact on OCI for the period or the Group's and the Company's operating, investing and financing cash flows.

5.14 Income Taxes

Income tax expense recognized in the income statement comprises the sum of deferred income tax and current income tax not recognized in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current income tax is payable on taxable profit, which differs from the income statement in the financial statements. Calculation of current income tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred income tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred income tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred income tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred income tax liabilities are always provided for in full. Deferred income tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. For management's assessment of the probability of future taxable income to be utilized against deferred income tax assets, see note 12. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered. Deferred income tax assets and liabilities are offset only when the Group has a legally enforceable right and intention to set-off current income tax assets and liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Changes in deferred income tax assets or liabilities are recognized as a component of tax income or expense in the income statement, except where they relate to items that are recognized in other comprehensive income (actuarial gain or losses) or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Group

Year 2014

Cost of sales 357.043

Net impact on profit for the year 357.043

Equity holders of the parent 357.043


Company

Year 2014

Cost of sales 357.043

Net impact on profit for the year 357.043

Equity holders of the parent 357.043



27

Sales tax Expenses and assets are recognized net of the amount of sales tax, except:

1. When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable

2. When receivables and payables are stated with the amount of sales tax included The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

5.15 Cash and Short-Term Deposits

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

5.16 Share Capital Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment. Foreign currency translation differences arising on the translation of the Group's foreign entities are included in the translation reserve. Special reserves established under various laws for entrepreneurship and competitiveness are also included in equity. Retained earnings include all current and prior period retained profits. Dividend distributions payable to equity shareholders are included in “other liabilities” when the dividends have been approved in a general meeting of shareholders prior to the reporting date. All transactions with owners of the parent are recorded separately within equity.

5.17 Employee Benefits

The Group provides post-employment benefits through defined benefit plans as well as various defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent state-owned entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The Group contributes to several state plans and insurances for individual employees that are considered defined contribution plans. Plans that do not meet the definition of a defined contribution plan are defined benefit plans. The defined benefit plans sponsored by the Group defines the amount of pension benefit that an employee will receive on retirement by reference to length of service and final salary. The legal obligation for any benefits remains with the Group, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. The liability recognized in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Management estimates the DBO annually with the assistance of independent actuaries. The estimate of its post-retirement benefit obligations is based on standard rates of inflation and mortality. It also takes into account the Group's specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurement gains or losses are not reclassified in statement of profit and loss in subsequent periods. Past service costs are recognized immediately in the income statement, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the


28

vesting period). In this case, the past service costs are amortized on a straight-line basis over the vesting period. Interest expenses related to pension obligations are included in “financial expenses” in the income statement. Return on plan assets is included in other “finance income”. All other post-employment benefit expenses are included in “administrative expenses”. Short-term employee benefits, including holiday entitlement, are current liabilities included in “provision for staff retirement indemnities”, measured at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

5.18 Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized when present obligations (legal or constructive) as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, for example, product warranties granted legal disputes or onerous contracts. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognized for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized, unless it was assumed in the course of a business combination. In a business combination contingent liabilities are recognized in the course of the allocation of the purchase price to the assets and liabilities acquired in the business combination. They are subsequently measured at the higher amount of a comparable provision as described above and the amount initially recognized, less any amortization. Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets. They are described along with the Group's contingent liabilities in note 31.

5.19 Foreign Currency Translation

Pharmathen’s functional currency is the euro. Transactions involving other currencies are translated into euro at the exchange rates, ruling on the date of the transactions. At the reporting date, monetary assets and liabilities, which are denominated in foreign currencies, are retranslated at the exchange rates at that date. Gains or losses resulting from foreign currency translation are recognized in the income statement. Non-monetary items denominated in foreign currencies that are measured at historical cost are retranslated at the exchange rate at the date of the initial transaction. Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the exchange rates at the date that the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensive income or profit or loss, respectively). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using the functional currency. Assets and liabilities of these entities are translated into euro using exchange rates ruling at the reporting date. Revenues and expenses are translated at rates prevailing at the date of the transaction. All resulting foreign


29

exchange differences are recognized in other comprehensive income and are recognized in the income statement on the disposal of the foreign operation.

5.20 Government Grants The Group recognizes government grants, if there is reasonable assurance that the entity will comply with all attached conditions and the grants will be received. Government grants relating to reimbursement of incurred expenses are recognized as income on a systematic basis in the same period that the grant expenses are incurred. Government grants relating to tangible and intangible assets are recognized on a systematic basis in the income statement over the useful lives of the related tangible and / or intangible asset. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant. 2012 onwards, the Group deducts the government grants from the carrying amount of the tangible and intangible asset as applicable, in which case the grant is recognized in income as a reduction of depreciation and / or amortization. The Group believes that this policy is more consistent with industry practice.

5.21 Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

1. In the principal market for the asset or liability Or 2. In the absence of a principal market, in the most advantageous market for the asset or

liability The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

5.22 Merge of subsidiary Based on Law 2190/1920 and the Law 2166/1993, the management of the two companies Pharmathen Hellas S.A and Vita Sante S.A, decided to merge the latter company with Pharmathen Hellas S.A as at May 31, 2015. The financial statements resulted from the merge of the two companies were approved by the Independent Auditor as at June 22, 2015 and from the Board of Directors of the two companies as at May 27, 2015. The merger was formally completed on November 23, 2015 and therefore since November 24, 2015 the operations of Vita Sante are undertaken by Pharmathen Hellas. Consequently all transactions since the legal merge date (May 31, 2015) until December 31, 2015 are included in the financial results of Pharmathen Hellas. Before the merger the two companies which were fully consolidated in the Pharmathen Investment Group, Pharmathen Investment Group has transferred its participation amount in Vita Sante of € 522.324 to Pharmathen Hellas S.A. At the date of the merger the share capital of Vita Sante amounted to (€ 248.609).The difference between the net assets of the merged entity and the carrying amount of the investment at the merger date was recognized directly in Pharmathen Hellas equity and the company recognized a loss of € 770.933. There has not been any effect in the consolidated financial statements.


30

5.23 Amendments and reclassifications In the Group and Company’s statement of financial position for the year ended December 31, 2014 and December 31, 2013 (January 1, 2014) amounts from trade payables have been reclassified to short-term loans as follows. Impact on statement of financial position increase / decrease :

The reclassification refers to at sight letters of credit.

In the Group and Company’s statement of financial position for the year ended December 31, 2014 amounts from trade receivables have been reclassified to accrued and other current liabilities as follows. Impact on statement of financial position increase / decrease :

The reclassification refers to accruals for customers’ credit invoices which have been reclassified for comparability reasons.

6. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the financial statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. On an ongoing basis, management evaluates its estimates, including those related to development costs, deferred income tax assets, provision for income taxes, impairment, useful lives of depreciable assets, provision for inventories, provision for staff retirement indemnities, contingencies and provision for doubtful debt. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the bases for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The key assumptions concerning the future and other key sources of


Trade accounts payable (5.405.836) (2.778.889)

Short-term loans 5.405.836 2.778.889


Trade accounts payable (1.382.155) (351.436)

Short-term loans 1.382.155 351.436

Company

Group


Trade accounts receivable 907.820 -

Accrued and other current liabilities 907.820 -


Trade accounts receivable 907.820 -

Accrued and other current liabilities 907.820 -

Group

Company


31

estimation uncertainty at the reporting date, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

6.1 Development Costs (note 8)

Development costs are capitalized according to the accounting policy as described under the respective paragraph above Intangible Assets. In order for the Group to account for the amounts to be capitalized, management proceeds in certain assumptions in relation to expected future cash inflows generated from the asset, discount rates and expected future periods in which benefits will inflow to the Group.

6.2 Deferred Income Tax Assets (note 12)

Deferred income tax assets and liabilities have been provided for the tax effects of temporary differences between the carrying amount and tax base of such assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused losses can be utilized. The Group and the Company have considered future taxable income and followed ongoing feasible and prudent tax planning strategy in the assessment of the recoverability of deferred tax assets. The accounting estimate related to deferred income tax assets requires management to make assumptions regarding the timing of future events, including the probability of expected future taxable income and available tax planning opportunities.

6.3 Provision for Income Taxes (note 28)

The provision for income taxes in accordance with IAS 12 “Income taxes”, are the amounts expected to be paid to the taxation authorities and includes provision for current income taxes reported and the potential additional tax that may be imposed as a result of audits by the taxation authorities. Group entities are subject to income taxes in various jurisdictions and significant management judgment is required in determining the provision for income taxes. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which the Company and the Group operate, or unpredicted results from the final determination of each year’s liability by the tax authorities. These changes could have a significant impact on the Company’s and the Group’s financial position. Where the actual additional income taxes payable are different from the amounts that were initially recorded, these differences will impact the income tax and deferred income tax provisions in the period in which such a determination is made.

6.4 Impairment of goodwill (note 8)

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

6.5 Impairment of Property Plant and Equipment (note 7)

The determination of impairment of property, plant and equipment involves the use of estimates that include, but are not limited to, the cause, timing and amount of the impairment. Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth in the industry, increased cost of capital, changes in the future availability of financing, technological obsolescence, discontinuance of services, current replacement costs, prices paid in comparable transactions and other changes in circumstances that indicate an impairment exists. The recoverable amount is typically determined using a discounted cash flow method. The identification of impairment indicators, as well as the estimation of future cash flows and the determination of fair values for assets (or groups of assets) require management to make significant judgments concerning


32

the identification and validation of impairment indicators, expected cash flows, applicable discount rates, useful lives and residual values.

6.6 Impairment of Intangible assets (note 8) The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The Group bases its impairment calculation on detailed budgets, which are prepared separately. These budgets cover a period of five years.

6.7 Investments (note 9) The carrying value of investments is tested for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. Whenever a carrying value of an investment exceeds its recoverable amount an impairment loss is recognized in the income statement. The recoverable amount is measured as the higher of fair value less cost to sell and the value in use of the investment. Fair value less cost to sell is the price that would be received to sell the investment in an orderly transaction between market participant, after deducting any direct incremental disposal cost, while value in use is the present value of estimated future cash flows expected to arise from continuing use of the investment.

6.8 Useful Lives of Depreciable Assets

The Group and the Company must estimate the useful life of property, plant and equipment and intangible assets recognized at acquisition or as a result of a business combination. These estimates are revisited at least on an annual basis taking into account new developments and market conditions.

6.9 Provision for Inventories (note 13)

The Group periodically evaluates the adequacy of the provision for slow-moving and obsolete inventories. The relative provision is calculated based on ageing and according to prior experience; for inventories which has recorded no movement for a period of more than one year. The amount provided for in such cases amounts to 100% of carrying value.

6.10 Provision for Staff Retirement Indemnities (note 18) Management estimates the defined benefit liability annually with the assistance of independent actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its defined benefit liability is based on standard rates of inflation and mortality. It also takes into account the Group's specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

6.11 Provision for Doubtful Debts (note 14)

The management reconsiders the recoverability of items included in accounts receivables on an annual basis, taking into consideration any external information (data basis presenting the credibility of clients, communication with lawyers for development on legal cases) in order to decide for the recoverability of those amounts included in accounts receivable. All delayed or doubtful accounts receivable are reviewed at each reporting date in order to decide whether there is a need for a provision. The balance of the provision is adjusted appropriately in order to reflect relative possible exposure. As soon as it is known that a specific account undergoes an unusual credit risk (e.g. low


33

credibility of the client, arguments regarding the existence or the amount of receivable etc.), this account is analyzed further and is recorded as a doubtful debt since the circumstances indicate that the recoverability is not probable.

6.12 Consolidation of entities in which the Group holds less than a majority of voting rights The Group considers that it controls Libytec even though it owns exactly 50% of the voting rights. Since Pharmathen has the contractual right to appoint the majority of BOD members we consider that it has control over Libytec.

6.13 Leases - Group as lessor Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.


34

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are analyzed as follows:

GROUP Land Buildings

Machinery &

Equipment Motor Vehicles Furniture & Fittings

Construction

in Progress Total

Cost as at January 1, 2014 3.840.937 24.025.818 22.054.634 780.176 15.901.077 - 66.602.642

Additions - 377.232 1.313.136 37.833 1.236.250 4.993.494 7.957.946

Exchange differences - 57.533 (58.351) - 81.511 - 80.693

Disposals (408.564) - - - - - (408.564)

As at December 31, 2014 3.432.373 24.460.583 23.309.420 818.009 17.218.837 4.993.494 74.232.717

Accumulated Depreciation as at January 1, 2014 - 3.962.548 11.852.967 492.932 12.494.095 - 28.802.542

Additions (notes 23-26) - 813.248 2.019.053 61.325 1.358.100 - 4.251.726

As at December 31, 2014 - 4.775.796 13.872.020 554.257 13.852.194 - 33.054.268

Net Book Value as at December 31, 2014 3.432.373 19.684.787 9.437.400 263.752 3.366.643 4.993.494 41.178.449

GROUP Land Buildings

Machinery &

Equipment Motor Vehicles Furniture & Fittings

Construction

in Progress Total

Cost as at January 1, 2015 3.432.373 24.460.583 23.309.420 818.009 17.218.837 4.993.494 74.232.716

Additions - 351.679 1.674.462 45.551 1.404.388 8.196.878 11.672.958

Exchange differences - 17.017 74.792 - (41.847) - 49.962

Disposals - (650) - 0 (0) - (650)

Write-offs - (3.856) (3.374) (21.422) (8.542) - (37.194)

As at December 31, 2015 3.432.373 24.824.773 25.055.300 842.139 18.572.836 13.190.372 85.917.792

Accumulated Depreciation as at January 1, 2015 - 4.775.796 13.872.020 554.257 13.852.194 - 33.054.267

Additions (notes 23-26) - 805.064 2.130.829 58.488 1.376.907 - 4.371.287

Write-offs - - - (16.771) (6.874) - (23.644)

As at December 31, 2015 - 5.580.860 16.002.849 595.974 15.222.227 - 37.401.911

Net Book Value as at December 31, 2015 3.432.373 19.243.913 9.052.451 246.165 3.350.609 13.190.372 48.515.881


35

During 2009, the Group capitalized borrowing costs under the provisions of “IAS 23 Borrowing Costs” for the industrial plant operating in Sapes amounting to € 1.092.979. The Company and the Group have no capitalized leased assets. The industrial unit in Sapes has been mortgaged for an amount of € 14.5 million in favor of the National Bank of Greece as security against loans drawn by Pharmathen S.A. and Pharmathen International. Total write-offs of € 37 thousands of the Group mostly relate to scrap motor vehicles of Pharmathen Hellas.

COMPANY Land Buildings

Machinery &

Equipment Motor Vehicles

Furniture &

Fittings Total

Cost as at January 1, 2014 2.999.845 5.149.940 9.615.282 413.418 11.470.753 29.649.238

Additions - 220.198 229.257 29.554 804.825 1.283.834

Disposals (408.564) - - - - (408.564)

As at December 31, 2014 2.591.281 5.370.138 9.844.539 442.972 12.275.578 30.524.508

Accumulated Depreciation as at January 1, 2014 - 1.323.137 7.254.435 328.785 9.739.720 18.646.077

Additions (notes 23-26) - 174.136 461.110 19.373 562.234 1.216.852

As at December 31, 2014 - 1.497.273 7.715.545 348.158 10.301.954 19.862.929

Net Book Value as at December 31, 2014 2.591.281 3.872.865 2.128.994 94.814 1.973.624 10.661.579

COMPANY Land Buildings

Machinery &

Equipment Motor Vehicles

Furniture &

Fittings Total

Cost as at January 1, 2015 2.591.281 5.370.138 9.844.539 442.972 12.275.578 30.524.508

Additions - 191.753 827.873 41.851 1.029.554 2.091.031

Disposals - - - (43.569) - (43.569)

Write-offs - - - - (7.570) (7.570)

As at December 31, 2015 2.591.281 5.561.891 10.672.412 441.255 13.297.562 32.564.400

Accumulated Depreciation as at January 1, 2015 - 1.497.273 7.715.545 348.158 10.301.954 19.862.930

Additions (notes 23-26) - 191.489 440.918 17.863 660.057 1.310.327

Disposals (43.569) (43.569)

Write-offs - - - - (7.570) (7.570)

As at December 31, 2015 - 1.688.762 8.156.463 322.453 10.954.441 21.122.118

Net Book Value as at December 31, 2015 2.591.281 3.873.129 2.515.949 118.802 2.343.121 11.442.282


36

8. INTANGIBLE ASSETS

Intangible assets are analyzed as follows:

Certain amounts shown here do not correspond to the 2014 financial statements and include adjustments made, refer to Note 5.13.

GROUP

Internally Generated

Drugs under

Development Software


Drugs Developed

Property Rights

& Patents Goodwill Total

Cost as at January 1, 2014 Restated 14.072.899 3.942.200 94.036.476 4.621.494 1.281.257 117.954.325

Additions 5.840.702 627.852 15.526.686 1.574.680 - 23.569.920

Transfers (9.517.311) - 9.517.311 - - -

Write-offs (105.423) - - (75.022) - (180.445)

As at December 31, 2014 10.290.867 4.570.052 119.080.473 6.121.152 1.281.257 141.343.800

Accumulated Depreciation as at January 1, 2014 Restated - 3.052.210 68.253.732 3.326.242 - 74.632.184

Additions (notes 23-26) - 385.324 15.574.716 510.653 - 16.470.693

Write-offs - - - (26.002) - (26.002)

As at December 31, 2014 - 3.437.534 83.828.448 3.810.893 - 91.076.876

Net Book Value as at December 31, 2014 Restated 10.290.867 1.132.518 35.252.024 2.310.259 1.281.257 50.266.925

GROUP


Drugs under



Drugs Developed

Property Rights

& Patents Goodwill Total

Cost as at January 1, 2015 10.290.867 4.570.052 119.080.473 6.121.152 1.281.257 141.343.801

Additions 11.677.522 373.579 10.479.595 2.120.005 - 24.650.701

Transfers (835.488) - 835.488 - - -

Write-offs - - - (26.004) - (26.004)

As at December 31, 2015 21.132.902 4.943.631 130.395.556 8.215.153 1.281.257 165.968.498

Accumulated Depreciation as at January 1, 2015 - 3.437.534 83.828.448 3.810.893 - 91.076.875

Additions (notes 23-26) - 426.209 15.010.324 598.113 - 16.034.646

Write-offs - - - (26.001) - (26.001)

As at December 31, 2015 - 3.863.743 98.838.772 4.383.004 - 107.085.519

Net Book Value as at December 31, 2015 21.132.902 1.079.888 31.556.784 3.832.148 1.281.257 58.882.979


37

Certain amounts shown here do not correspond to the 2014 financial statements and include adjustments made, refer to Note 5.13. “Internally Generated Drugs Under Development” may include drug development that fulfill the “IAS 38 Intangible Assets” criteria for recognition but have not been amortized, due to the fact that are either not available for use yet or they are awaiting for licenses to be provided from the respective regulatory authorities. There are no intangible assets with indefinite useful life as of December 31, 2015 and 2014. As a result of the change in accounting policy intangible assets were increased by € 976.237 in 2014 and by €5 44.669 in 2013 for both the group and the company. Goodwill: In 2010, Pharmathen completed the acquisition of 50% shares in Libytec and 43% shares in Vita Sante through its 98,96% subsidiary, Pharmathen Investment Group Public Ltd. The goodwill which arose from the above acquisition amounted to € 287.772 and € 116.046 for Libytec and Vita Sante (which merged with Pharmathen Hellas SA in 2015), respectively and is included in the accompanying statement of financial position. Additionally, the goodwill that arose from the acquisition of Pharmathen International amounted to € 877.439. As at December 31, 2013 goodwill had been written off by amount of € 42.159 which was the relative portion of Proactina S.A, which has been disposed of during the previous year. Goodwill acquired through business combinations is allocated to the Pharmathen Investment Group and Pharmathen International S.A.

COMPANY


Drugs under



Drugs Developed Property Rights & Patents Total

Cost as at January 1, 2014 Restated 14.072.899 2.065.113 93.092.272 2.391.926 111.622.210

Additions 5.133.937 423.872 15.526.686 1.517.500 22.601.995

Transfers (9.517.311) - 9.517.311 - -

Write-offs (105.423) - - - (105.423)

As at December 31, 2014 9.584.101 2.488.985 118.136.269 3.909.426 134.118.782

Accumulated Depreciation as at January 1, 2014 Restated - 1.658.477 68.447.186 1.242.893 71.348.556

Additions (notes 23-26) - 185.392 15.319.786 384.008 15.889.186

As at December 31, 2014 - 1.843.869 83.766.972 1.626.901 87.237.742

Net Book Value as at December 31, 2014 Restated 9.584.101 645.116 34.369.297 2.282.525 46.881.040

COMPANY


Drugs under



Drugs Developed Property Rights & Patents Total

Cost as at January 1, 2015 9.584.101 2.488.985 118.136.269 3.909.426 134.118.782

Additions 12.384.288 290.017 10.479.597 2.120.000 25.273.903

Transfers (835.488) - 835.488 - -

As at December 31, 2015 21.132.902 2.779.002 129.451.355 6.029.426 159.392.685

Accumulated Depreciation as at January 1, 2015 - 1.843.869 83.766.972 1.626.901 87.237.742

Additions (notes 23-26) - 236.177 14.755.393,60 520.226 15.511.795,80

As at December 31, 2015 - 2.080.046 98.522.365 2.147.126 102.749.538

Net Book Value as at December 31, 2015 21.132.902 698.956 30.928.989 3.882.300 56.643.147


38

Pharmathen Investment Group Public Ltd The recoverable amount of the Pharmathen Investment Group, € 41.107.115 as at 31 December 2015, has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. The pre-tax discount rate applied to cash flow projections is 11.0 % and cash flows beyond the five-year period are extrapolated using a 0.5 % growth rate. As a result of the analysis, management did not identify an impairment for this CGU. Pharmathen International S.A Pharmathen International operates the main plant of the Group in Sapes region, Greece. This subsidiary has mainly one client, the parent Company of the Group and its sales are made solely to Pharmathen S.A. Based on five year term business plan, Pharmathen International is expected to have significant cash flows and due to this the recoverable amount is much greater than the carrying value as at December 31, 2015. Key assumptions used in value in use calculations and sensitivity to changes in assumptions: The calculation of value in use is most sensitive to the following assumptions:

1. Discount rates

2. Growth rates used to extrapolate cash flows beyond the forecast period

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. Segment-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.

Growth rate estimates - Rates are based on published industry research. Management recognizes that the speed of technological change and the possibility of new entrants can have a significant impact on growth rate assumptions. The effect of new entrants is not expected to have an adverse impact on the forecasts.

2015 2014

Pharmathen Investment Group Public Ltd (note 9) 403.818 403.818

Pharmathen International S.A 877.439 877.439

Total 1.281.257 1.281.257

Goodwill


39

9. INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries are analyzed as follows:

Investments in subsidiaries are analyzed as follows:

The indirect subsidiaries through Pharmathen Investment Group Public L.t.d and Pharmathen Development L.t.d are as follows:

31.12.2015 31.12.2014

Investments in subsidiaries 46.462.831 41.971.540

Total 46.462.831 41.971.540

COMPANY

Company 31.12.2015 31.12.2014 Country of incorporation 31.12.2015

Pharmathen International S.A 99,8% 99,8% Greece 22.782.682 22.782.682

Pharmathen Investment Group Public Ltd 99,0% 97,4% Cyprus 14.174.929 14.684.158Pharmathen Development 99,3% 98,5% Cyprus 9.505.220 4.504.700

Total 46.462.831 41.971.540

Pharmathen’s direct and

indirect ownership

31.12.2014

31.12.2015 31.12.2014

Balance at January 1 41.971.540 41.971.540

Additions due to participation in share capital increases and direct acquisitions 4.491.291 -

Balance at December 31 46.462.831 41.971.540

COMPANY

Company 31.12.2015 31.12.2014

Country of

incorporation

Pharmathen Hellas S.A. 13.654.751 13.654.751

Libytec Pharmaceutical S.A. 50% 50% Greece 1.302.000 1.302.000Vita Sante S.A. 100% 100% Greece - 522.324

TOTAL 14.956.751 15.479.075

Pharmathen’s Investment Group

direct and indirect ownership

interest

31.12.201431.12.2015

Greece100% 100%


40

Based on the provision of Law 2190/1920 and the Law 2166/1993, the management of the two companies Pharmathen Hellas S.A and Vita Sante S.A, decided to merge the latter company with Pharmathen Hellas S.A as at May 27, 2015. The Statement of Financial Position resulting from the merger of the two companies was approved by Independent Auditor at June 22, 2015. The merger was formally completed on November 23, 2015. Pharmathen Investment Group’s (P.I.G) investments due to the merger of Vita Sante with Pharmathen Hellas decreased by an amount of € 522.324. The difference between net assets of merged entity and the carrying amount of the investment at the merger date was recognized directly in the Pharmathen Hellas’ equity. The loss due to merger was € 789.738 For the Group there has not been any change because the subsidiary was fully consolidated through Pharmathen Investment Group before the merger.

Pharmathen UK holds a 12% interest in Pharmathen International, which, together with a 87,75% interest held by the Company aggregates to a 99,8% interest for the Group in Pharmathen International.

10. INVESTMENTS IN ASSOCIATES

As of December 31st,2015 the Company had a 7,55% interest in Portfarma Ehf, a private not listed company which is located in Iceland and is involved in the pharmaceutical sector. The Company has estimated that the recoverable amount was zero and has completely written off the investment in associate. The impairment loss of €1.511.971 has been classified as other financial expenses. Portpharma acquired all of its shares held by Pharmathen for no consideration. 29.800.492 shares were acquired representing 7,55% of Portpharma’s issued share capital.

Company 31.12.2015 31.12.2014

Country of

incorporation

Pharmathen U.K LtdAdventus India Ltd 100% 100% India 1.000.000 1.000.000

TOTAL 9.500.000 4.500.000

100% 100% U.K 8.500.000 3.500.000

Pharmathen’s Development

Group direct and indirect

ownership interest

31.12.2015 31.12.2014

Company 31.12.2015 31.12.2014 31.12.2015 31.12.2014

Portfarma Ehf. - - - 1.511.971Expermed S.A. 30.000 30.000 30.000 30.000

Total 30.000 30.000 30.000 1.541.971

GROUP COMPANY


41

11. OTHER NON - CURRENT ASSETS

Other non-current assets represent receivables that will be collected after the end of the following year and are analyzed as follows:

The amounts above are net of impairment.

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Guarantees 345.335 299.035 246.479 242.088

Greek bonds - - - -

Other long-term trade receivables - 584.136 - 584.136

Discounting - (61.311) - (61.311)

Total 345.335 821.860 246.479 764.913

GROUP COMPANY

Other long term trade receivables 31.12.2015 31.12.2014 31.12.2015 31.12.2014

Other long term trade receivables - 584.136 - 584.136

Discounting - (61.311) - (61.311)

Total - 522.825 - 522.825

GROUP COMPANY


42

12. DEFERRED INCOME TAXES The movement of deferred income taxes is as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Opening balance (2.599.812) (178.417) (4.477.012) (2.337.061)

Tax (expense) / income (4.372.024) (2.496.464) (4.299.287) (2.194.029)

Tax recognized in equity (20.044) 75.069 (15.220) 54.077

Closing balance, December 31 (6.991.880) (2.599.812) (8.791.519) (4.477.012)

GROUP COMPANY

GROUP 01.01.2014

Recognised in Other

Comprehensive

Income

Recognised in

Profit and

Loss 31.12.2014

Revaluations of land and buildings to fair value(1.144.671) - - (1.144.671)

Decelerated depreciation 2.635.188 - (68.981) 2.566.207

Derecognition of intangible assets 864.813 - (299.138) 565.675

Impairment of receivables 982.395 - (30.130) 952.265

Provision for staff Indemnities 249.498 75.069 33.002 357.568

Provision for bad debts 488.776 - 498.472 987.248

Provision for obsolete inventory 21.638 - 217.102 238.740

Reversal of tax land revaluation 33.693 - - 33.693

Difference in amortised cost 7.324 - 818 8.142

Deferred tax arising on development expenses(4.396.978) - (2.910.622) (7.307.600)

Other 79.906 - 63.015 142.922

Total (178.417) 75.069 (2.496.463) (2.599.812)

Recognized as: Deferred Tax Asset 2.273.671 -

Recognized as: Deferred Tax Liability (378.031) (2.599.812)

GROUP

Recognised in Other

Comprehensive

Income

Recognised in

Profit and

Loss 31.12.2015

Revaluations of land and buildings to fair value(1.144.671) - - (1.144.671)


Derecognition of intangible assets 565.675 - 176.367 742.042


Provision for staff Indemnities 357.569 (20.043) 122.825 460.349

Provision for bad debts 987.248 - 55.626 1.042.874

Provision for obsolete inventory 238.740 - (77.347) 161.393


Difference in amortised cost 8.142 - 1.693 9.835

Deferred tax arising on development expenses(7.307.600) - (4.051.153) (11.358.754)

Other 142.922 (23.741) 119.181

Total (2.599.812) (20.043) (4.372.024) (6.991.880)

Recognized as: Deferred Tax Asset - -

Recognized as: Deferred Tax Liability (2.599.812) (6.991.880)

01.01.2015


43

COMPANY 01.01.2014

Recognised in Other

Comprehensive

Income

Recognised in Profit

and Loss 31.12.2014

Revaluations of land and buildings to fair value (776.071) - - (776.071)

Decelerated depreciation 1.650.441 - 5.259 1.655.699

Derecognition of intangible assets (20.047) - (2.665) (22.712)


Provision for staff Indemnities 218.176 54.077 15.894 288.148

Provision for bad debts 460.371 - 540.971 1.001.341

Provision for obsolete inventory - - 221.002 221.002


Difference in amortised cost 7.324 - 818 8.142

Deferred tax arising on development expenses (4.365.168) - (2.959.024) (7.324.192)

Other (1.714) - - (1.714)

Total (2.337.061) 54.077 (2.194.028) (4.477.012)

Recognized as: Deferred Tax Asset (2.337.061) -

Recognized as: Deferred Tax Liability - (4.477.012)

COMPANY

Recognised in Other

Comprehensive

Income

Recognised in Profit

and Loss 31.12.2015

Revaluations of land and buildings to fair value (776.071) - - (776.071)


Derecognition of intangible assets (22.712) - 4.974 (17.738)


Provision for staff Indemnities 288.148 (15.220) 89.744 362.672

Provision for bad debts 1.001.341 - 52.831 1.054.172

Provision for obsolete inventory 221.002 - (74.521) 146.481


Difference in amortised cost 8.142 - 4.287 12.428

Deferred tax arising on development expenses (7.324.192) - (4.051.153) (11.375.345)

Other (1.714) - - (1.714)

Total (4.477.012) (15.220) (4.299.287) (8.791.519)

Recognized as: Deferred Tax Asset - -

Recognized as: Deferred Tax Liability (4.477.012) (4.477.012)

01.01.2015


44

13. INVENTORIES

The Group’s and Company’s inventories are analyzed as follows:

The movement of provision for obsolete inventory is as follows:

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.13.

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Merchandise-Drugs (at cost) 5.478.694 6.086.305 457.491 1.071.367

Finished and semi finished products (at ne realisable value) 7.505.550 9.175.467 3.600.054 5.163.058

Work in progress (at cost) 3.583.956 2.744.052 2.035.655 2.076.113

Raw materials spare parts and auxiliary materials (at cost) 19.203.622 15.123.612 12.440.279 11.254.771

Prepayments 2.185.012 2.791.925 1.188.218 2.353.353

Provision for obsolete inventory (1.192.708) (1.493.210) (505.104) (1.043.165)

Total 36.764.126 34.428.151 19.216.593 20.875.497

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Balance, January 1 1.493.211 1.406.350 1.043.164 937.107

Additional provision for the year (note 23) 865.483 261.535 461.482 106.057

Release of provision for the year (note 22) (1.165.986) (174.674) (999.543) - Balance, December 31 1.192.708 1.493.211 505.104 1.043.164

GROUP COMPANY


45

14. TRADE AND OTHER ACCOUNTS RECEIVABLE

In the statement of financial position there are two categories of receivables which are analyzed as follows:

Trade accounts receivable are analyzed as follows:

Trade accounts receivable are not interest bearing. Other accounts receivable are analyzed as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Trade accounts receivable 50.518.465 48.402.272 42.873.803 35.781.939

Other accounts receivable 21.020.461 15.076.134 7.301.270 8.533.438

Total 71.538.925 63.478.407 50.175.073 44.315.377

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Trade accounts receivable 47.694.505 46.571.002 46.145.251 39.045.900

Provision for doubtful debts (4.766.226) (4.780.215) (3.744.011) (3.960.247)

Note receivable 235.201 354.855 31.190 31.190

Post-dated cheques receivable 7.354.985 6.256.630 441.373 665.096

Total 50.518.465 48.402.272 42.873.803 35.781.939

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

V.A.T. and other receivable from Public Sector 14.267.398 13.225.985 5.692.642 7.076.840

Accruals 527.796 593.190 435.531 529.089

Other short-term receivables 6.225.267 1.256.959 1.173.097 927.509

Total 21.020.461 15.076.134 7.301.270 8.533.438

GROUP COMPANY


46

The movement of the provision for doubtful debts for the years ended December 31, 2015 and 2014, is as follows:

At December 31, 2015, the trade accounts receivable which has been factored to banks with recourse was approximately € 5.322 thousands for the Group (Pharmathen Hellas). As at December 31, 2014 there were no relevant trade accounts receivable . These balances are reflected as short – term loans. At December 31, 2015, the trade accounts receivable which has been factored to banks without recourse was approximately € 10.414 thousands for the Group and the Company (2014 €4.168 thousands for the Group and the Company).

Additional information regarding intercompany receivables and relevant maturity profiles are provided in notes 29 and 31 respectively. The average credit terms of trade receivables is approximately 95 days (100 days at previous year). Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.23. Accounts receivable are categorized in level 2 within the fair value hierarchy.

15. CASH AND CASH EQUIVALENTS

The Group’s and Company’s bank deposits as at December 31, 2015 and 2014, do not include any restricted balances. Cash and cash equivalents are categorized in level 1 within the fair value hierarchy.

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Balance, January 1 4.780.214 5.752.723 3.960.247 4.129.143

Additional provision for the year 202.248 226.316 - -

Write - offs - (906.093) - (98.331)

Release of provision for the year (216.236) (297.598) (216.236) (70.565)

Other movements - 4.867 - -

Balance, December 31 4.766.226 4.780.215 3.744.011 3.960.247

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Cash in hand 17.618 11.284 7.725 7.160

Cash at banks 30.824.926 9.771.823 28.734.465 7.445.303

Time deposits - 2.450.000 - 1.750.000

Total 30.842.543 12.233.107 28.742.190 9.202.463

GROUP COMPANY


47

16. SHARE CAPITAL AND RESERVES

Share Capital On December 31, 2014, there has been an increase in share capital of € 59.000 following a decision of the extraordinary meeting of Shareholders, based on which 5.900 shares with nominal value of €10 each were issued at a share price of 10 €. As at December 31, 2015 share capital of the Company was € 33.057.374. On June 8, 2015, there has been a decrease in share capital of (€ 948.760) following a decision of the extraordinary meeting of Shareholders, based on which 94.876 own shares with nominal value of € 10 each were cancelled. As at December 31, 2015, the Company’s authorised, issued and fully paid share capital comprised of 3.305.737 shares at a nominal value of each € 10.

Share Premium During 2012, new shares were issued at a share price of € 105,59. Considering that the issue price was higher than its nominal value (€ 10), the share premium amounted to € 9.053.520. During 2015, the reserve was cancelled as a result of the extraordinary meeting of Shareholders referred to the above paragraph.

Share capital Share Premium Treasury Shares Other Reserves Fair Value Reserves Total

Balance as at January 1, 2014 (restared) 33.947.134 9.053.520 - 7.375.071 2.932.388 53.308.113

Addition for the year 59.000 - - 3.162.706 - 3.221.706

Purchase of own shares (note 16) - - (14.408.927) - - (14.408.927)

Balance as at December 31, 2014 (restated) 34.006.134 9.053.520 (14.408.927) 10.537.777 2.932.388 42.120.892

Balance as at January 1, 2015 34.006.134 9.053.520 (14.408.927) 10.537.777 2.932.388 42.120.892

Transfer from retained earnings to other reserves - - - 2.023.295 - 2.023.295

Cancellation of own shares (948.760) (9.053.520) 14.408.927 - - 4.406.647 Balance as at December 31, 2015 33.057.374 - - 12.561.072 2.932.388 48.550.834

COMPANY

Share Capital Share Premium Treasury Shares Other Reserves Fair Value Reserves Pooling of Interest Reserve Total

Balance as at January 1, 2014 (restared) 33.947.134 9.053.520 - 16.980.297 3.122.388 (7.553.310) 55.550.029

Addition for the year 59.000 - - 3.162.706 - - 3.221.706

Purchase of own shares (note 16) - - (14.408.927) - - - (14.408.927)

Balance as at December 31, 2014 (restated) 34.006.134 9.053.520 (14.408.927) 20.143.003 3.122.388 (7.553.310) 44.362.808

Balance as at January 1, 2015 34.006.134 9.053.520 (14.408.927) 20.143.003 3.122.388 (7.553.310) 44.362.808

Addition for the year - - - 2.038.473 - - 2.038.473

Cancellation of own shares (948.760) (9.053.520) 14.408.927 - - - 4.406.647 Balance as at December 31, 2015 33.057.374 - - 22.181.476 3.122.388 (7.553.310) 50.807.928

GROUP


48

Other Reserves Other reserves consists mainly of the statutory reserve and the special reserves. Statutory Reserve Under Greek Corporate Law, corporations are required to transfer a minimum of 5% of their annual net profit as reflected in their statutory books to a statutory reserve until such a reserve equals one third of the outstanding share capital and then this transfer becomes optional. The reserve cannot be distributed during the corporation’s existence. The amount of statutory reserve as at December 31, 2015 amounted to € 4.259.785 and € 4.467.954 for the Group and for the Company respectively (€ 3.147.742 and € 2.974.670 for 2014) Special Reserve According to corporate tax law 3842 companies that have patents in specific drugs in two countries of the OECD (Organisation for Economic Co-operation and Development, e.g Greece and one more) shall be provided with a subtraction from the taxable profit. The subtracted amount is calculated according to profit arising from sales of these particular drugs. This tax benefit exists for the first three years from the giving patent of drugs. The amount of this reserve for the Company as at December 31, 2015, amounted to € 7.003.018 and €4.834.679 as at December 31, 2014. Treasury shares As it is referred above in the paragraph of share capital, during June 2015 the management of the Company decided to purchase back the shares from the previous shareholder. Pursuant to this transaction, the Company purchased 94.876 shares at a total cost of € 14.408.927. The reserve was cancelled as a result of the cancellation of own shares. Fair Value Reserves Land and buildings have been valued as at January 1, 2008, at fair values. As the Group has adopted the IFRS for the first time these fair values have been used as deemed cost in accordance with IFRS. Fair valuation was performed by independent appraisers and the revaluation surplus that resulted from this revaluation as at the conversion date was recorded in a separate account in equity, namely fair value reserve. The amount of the reserve as at December 31, 2015 and 2014, for the Group and the Company was € 3.122.388 and € 2.932.388 respectively. The Group has no intention of distributing these reserves and, accordingly, has not provided for deferred income tax liability for any tax that would be come payable in the event that these reserves are distributed.


49

Dividends Under Greek Corporate law, companies are required each year to declare from their statutory profits, dividends of at least 35% of after-tax statutory profit, after allowing for legal reserve. A dividend of an amount less than 35% of after tax statutory profit and after allowing for legal reserve, can be declared and paid with a 65% affirmative vote of all shareholders only if the difference of the not distributed amount will be transferred to a special reserve account that will be capitalized. However, non distribution of dividends is under the consent of at least 70% of shareholders.

Furthermore, Greek Corporate law requires certain conditions to be met before dividends can be distributed, which are as follows: (a) No dividends can be distributed to the shareholders as long as the company’s net equity, as

reflected in the statutory financial statements, is, or after such distribution, will be less than the outstanding capital plus non-distributable reserves and,

(b) No dividends can be distributed to the shareholders as long as the unamortized balance of

“Establishment Expenses,” as reflected in the statutory financial statements exceeds the aggregate of distributable reserves plus retained earnings.

Pooling of interest reserve The Group’s structure has changed significantly during 2010. Except for the new acquisitions of subsidiaries, the parent company completed step up acquisitions of previously held subsidiaries by acquiring additional interest in these entities, which were previously considered under common control and, thus had been consolidated in the 2009 financial statements. Differences derived from the acquisition of these entities between the carrying value of the net assets acquired and the consideration paid were recorded in a separate reserve within equity, namely “Pooling of Interest reserve”. All differences that arose where treated as a transaction within equity thus creating the pooling of interest reserve.

17. BORROWINGS

Bank borrowings include long- term loans and short-term working capital financing loans which are analyzed as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Short-term loans 31.930.080 28.479.973 21.043.479 17.924.441

Long-term loans 54.198.588 38.488.129 49.467.852 28.444.477

Total 86.128.668 66.968.102 70.511.331 46.368.918

COMPANYGROUP


50

Short – term loans Short – term loans are draw-downs under various lines of credit maintained by the Group with several banks. The use of these facilities is presented below:

The weighted average interest rates on short – term borrowings for the years ended December 31, 2015 and 2014 were 5,55% and 5.98% respectively. Part of total short-term loans for 2015 amounting to € 5.3 million relates to factoring with recourse of Pharmathen Hellas from National Bank of Greece. Long – term loans Long - term loans are analyzed as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Credit lines available 55.600.000 53.000.000 43.000.000 41.500.000 Unused portion (23.669.920) (24.520.027) (21.956.521) (23.575.559)

Balance 31.930.080 28.479.973 21.043.479 17.924.441

GROUP COMPANY

Contract

Amount

Alpha Bank (Emporiki Bank) 5.000.000 06/10/16 Euribor plus margin 1.500.000 2.000.000

Alpha Bank (Emporiki Bank) 4.000.000 12/07/18 Euribor plus margin 3.200.000 4.000.000

Alpha Bank 3.000.000 31/07/19 Euribor plus margin 2.600.000 3.000.000

Piraeus Bank 6.500.000 24/12/17 Euribor plus margin 6.125.000 6.500.000

Eurobank Ergasias 7.500.000 31/12/18 Euribor plus margin 5.300.000 6.500.000

National Bank of Greece 2.700.000 19/06/17 Euribor plus margin 2.700.000 2.700.000

Attica Bank 1.400.000 20/12/15 Euribor plus margin - 713.168

Eurobank Ergasias (Proton Bank) 3.000.000 31/05/18 Euribor plus margin 3.000.000 3.000.000

European Investment Bank 25.000.000 18/02/20 Euribor plus margin 25.000.000 -

Total long- term loans 49.425.000 28.413.168

(6.200.000) (4.487.874)

43.225.000 23.925.294

42.852 31.309 43.267.851 23.956.604

Bank 31.12.2014Interest Rate

COMPANY

Balance

Less: Current portion of long - term loans

Total Interest bearing long - term loans

Maturity 31.12.2015

Amortised cost measurement differences

Total Interest bearing long - term loans measured at amortised cost


51

Alpha Bank (Emporiki Bank) - € 5.000.000 On September 19, 2011, Pharmathen signed a € 5.000.000 bond loan with Emporiki Bank. The bond loan consists of 10 non-convertible bonds with a nominal value of € 500.000 each with a four five term and bears a variable interest of three months Euribor plus a margin of 5,%. The bond loan shall be repaid as follows: ten equal semi-annual installments of € 500.000 where the first installment was paid six months after the issuance date and the last installment is scheduled to be paid five years after the issuance date. Alpha Bank - € 4.000.000 On June 20, 2013, Pharmathen signed a € 4.000.000 bond loan with Alpha Bank. The bond loan consists of 4.000.000 registered bonds, the four have a nominal value of € 1 . The bond loan has a five year term and bears a variable interest of six months Euribor plus margin of 6% and shall be repaid as follows: seven equal semi-annual installments of € 400.000 and one final installment of € 1.200.000 where the first installment was paid eighteen months after the issuance date and the last installment is scheduled to be paid on July 12, 2018. Alpha Bank & Alpha Bank London LTD- € 3.000.000 On July 30, 2014, Pharmathen signed a € 3.000.000 bond loan with Alpha Bank & Alpha Bank London LTD. The bond loan consists of 3.000.000 registered bonds, with a nominal value of € 1 each .The bond loan has a five year term and bears a variable interest of six months Euribor plus margin of 5% and shall be repaid as follows: nine equal semi-annual installments of € 200.000 and one final installment of € 1.200.000 where the first installment was paid six months after the issuance date and the last installment is scheduled to be paid on July 31, 2019. Pireus Bank - € 6.500.000 On December 23, 2014 Pharmathen signed a € 6.500.000 bond loan with Piraeus Bank. The bond loan consists of 6.500.000 registered bonds, with a nominal value of € 1 each. The bond loan has a three year term and bears a variable interest of six months Euribor plus margin of 4,75%. The bond loan shall be repaid as follows: four equal semi-annual installments of € 375.000 and one final installment of € 5.000.000 where the first installment was paid twelve months after the issuance date and the last installment is scheduled to be paid on December 24, 2017. EFG Eurobank Bank & Eurobank Private Bank Luxemburg - € 7.500.000 On March 12, 2014 Pharmathen signed a € 7.500.000 bond loan with Eurobank Ergasias. The bond loan consists of 7.500.000 registered bonds, with a nominal value of € 1, each. The bond loan has a five year term and bears a variable interest of six months Euribor plus margin of 5,75%. The bond loan shall be repaid as follows: four equal semi-annual installment of € 250.000, four equal semi-annual installment of € 300.000, four equal semi-annual installment of € 375.000, four equal semi-annual installment of € 400.000 and four equal semi-annual installment of € 550.000 where the first installment was paid on March 31, 2014 and the last installment is scheduled to be paid on December 31, 2018. National Bank of Greece - € 2.700.000 On June18, 2014, Pharmathen signed a € 2.700.000 loan with National Bank of Greece . The loan has a three year term and bears a variable interest of six months Euribor plus margin of 4,5%. The bond loan is repayable in full on June 19, 2017. Attica Bank - € 1.400.000 On December 20, 2012 Pharmathen signed a € 1.400.000 long term loan with Attica Bank. The long term loan has a three year term and bears a variable interest of three months Euribor plus margin of 2,9%. The loan was fully repaid on December 20, 2015.


52

Eurobank Ergasias (Proton Bank) - € 3.000.000 On May 15, 2013, Pharmathen SA , signed a € 3.000.000 bond loan with Proton bank. The loan has a five year term and bears a variable interest of three months Euribor plus margin of 6%.The loan shall be paid at May 31 2018. European Investment Bank - € 25.000.000 On November 26 2014, Pharmathen signed a € 25.000.000 bond loan with European Investment Bank. The bond loan has a five years term and bears a variable interest of six months Euribor plus margin of 3,269%. The bond loan shall be repaid in eight semi- anuall instalments as follows: € 1.250.000 during the year 2016, € 2.500.000 during the year 2017, € 2.500.000 during the year 2018, € 2.500.000 during the year 2019 and the amount of € 16.250.000 during the year 2020. The Group measures borrowings at amortized cost as per IAS 39 “Financial Instruments Recognition and Measurement” provisions. The total effect of amortised cost measurement on the Group’s liabilities is disclosed in the table above.

The Group fully complies with debt covenant requirements. Summary of subsidiaries’ long-term loans

Pharmathen Hellas EFG Eurobank - € 2.000.000 On March 4, 2013, Pharmathen Hellas, signed a € 2.000.000 long term loan with Eurobank Ergasias SA guaranteed by Pharmathen SA. The loan has a three year term and bears a variable interest of three months Euribor plus margin of 5,25%.The loan shall be repaid as follows: €1.000.000 at April 08 2015 and €1.000.000 at April 08 2016. National Bank of Greece - € 3.000.000 On March 12, 2013, Pharmathen Hellas, signed a € 3.000.000 long term loan with National Bank of Greece guaranteed by Pharmathen SA. The loan has a two year term and bears a variable interest of three months Euribor plus margin of 5,75%.The loan was fully repaid at October 30, 2015.

Contract

Amount Interest Rate 31.12.2015 31.12.2014

EFG Eurobank 2.000.000 08/04/16 Euribor plus margin 1.000.000 2.000.000

National Bank of Greece 8.031.728 31/10/17 Euribor plus margin 2.378.256 3.378.256

National Bank of Greece 3.000.000 31/07/18 Euribor plus margin 1.327.000 1.627.000 National Bank of Greece 3.000.000 31/10/15 Euribor plus margin - 3.000.000

Total long-term loans 4.705.256 10.005.256

Less: Current portion of long- term loans (1.000.000) (6.600.000)

3.705.256 3.405.256

Amortised cost measurement differences 25.480 38.396

Total interest bearing long-term loans measured at amortized cost 3.730.736 3.443.652

SUBSIDIARIES

BALANCE

Total Interest bearing long - term loans

Bank Maturity


53

Pharmathen International

National Bank of Greece - € 8.031.728 On December 10, 2007, Pharmathen International, signed a € 8.031.728 bond loan with the National Bank of Greece guaranteed by Pharmathen SA. The bond loan consists of 4.015.864 bearer bonds with a nominal value of € 2 each. The bond loan has an eight year term and bears a variable interest of six months Euribor plus margin of 5,5%. The bond loan shall be repaid as follows: €1.235.648 during the year 2010, € 617.824 during the year 2011, €400.000 during the year 2012, €400.000 during the year 2013, €2.000.000 during the year 2014, €1.000.000 during the year 2015 and the amount of €2.378.256 during the year 2017. National Bank of Greece - € 3.000.000 On April 9, 2010, Pharmathen International, signed a € 3.000.000 bond loan with the National Bank of Greece guaranteed by Pharmathen SA. The bond loan consists of 60.000 bearer bonds with a nominal value of € 50 each. The bond loan has an eight years term and bears a variable interest of six month Euribor plus margin of 5,5%. The bond loan shall be repaid as follows: €176.500 during the year 2010, € 176.500 during the year 2011, €100.000 during the year 2012, €320.000 during the year 2013, €600.000 during the year 2014, €300.000 during the year 2015, €980.000 during the year 2017,and the amount of €347.000 during the year 2018.

The summary of the Group’ s long-term loans is analyzed as follows:

The maturity of long-term borrowings is as follows:

Loans are categorized in level 2 within the fair value hierarchy.

Mortgages and pledges

Mortgages The industrial unit in Sapes has been mortgaged for an amount of € 14.500.000 in favor of the National Bank of Greece as security against loans drawn Pharmathen International with outstanding balance at December 31, 2015, of € 3.705.256.

31.12.2015 31.12.2014

Total long-term loans 54.130.256 38.418.424 Less: Current portion of long - term loans (7.200.000) (11.087.874)

46.930.256 27.330.550

Amortised cost measurement differences 68.332 69.705

Total interest bearing long-term loans

measured at amortised cost 46.998.587 27.400.256

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Between 1 and 2 years 26.780.256 18.383.256 23.075.000 15.325.000

Between 3 and 5 years 20.218.332 9.016.999 20.192.852 8.631.603 Totals 46.998.588 27.400.255 43.267.852 23.956.603

GROUP COMPANY


54

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.23. 18. PROVISION FOR STAFF RETIREMENT INDEMNITIES Under Greek labor law, employees and workers are entitled to termination payments in the event of dismissal or retirement with the amount of payment varying in relation to employees or workers compensation, length of service and manner of termination (dismissed or retired). Employees or workers who resign or are dismissed with cause are not entitled to termination payments. The indemnity payable in case of retirement is equal to 40% of the amount which would be payable upon dismissal without cause. The local practice in Greece is that pension plans are not funded. In accordance with this practice the Company does not fund these plans. The Company and Group charge operations for benefits earned in each period with a corresponding increase in pension liability. Benefits payment made each period to retirees are charged against this liability.

Benefit liability

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Present value of unfunded obligations 1.951.564 1.575.672 1.169.671 1.084.613

Remeasurement gains / losses as opposed to actuarial gain / losses - 187.307 - -

Net Liability in Statement of Financial Position 1.951.564 1.762.978 1.169.671 1.084.613

GROUP COMPANY

Income Statement 31.12.2015 31.12.2014 31.12.2015 31.12.2014

Service cost 222.816 97.700 118.537 25.180

Interest cost 30.810 25.821 19.004 16.167

Past years service cost - 44.185 - 19.785

Total charge to operations 253.627 167.706 137.541 61.132

GROUP COMPANY

Reconciliation of benefit obligation

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Present Value of benefit obligation at the start of the period 1.762.978 1.306.550 1.084.614 815.491

Service cost 222.816 97.700 118.537 25.180

Interest cost 30.810 25.821 19.004 16.167

Past years service cost - 44.186 - 19.785

(Movement)/absorption of staff - - 41.999 5.287

Actuarial changes arising from changes in financial assumptions (59.768) 172.835 (36.121) 107.769

Experience adjustments (5.272) 115.887 (58.362) 94.934

Present Value of benefit obligation at the end of the period 1.951.564 1.762.978 1.169.671 1.084.614

GROUP COMPANY


55

The principal assumptions that have been used are as follow:

A quantitative sensitivity analysis for significant assumption as at December 31, 2015 is as shown below:

The sensitivity analysis above has been determined based on a method that extrapolates the impact on the net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

19. ACCOUNTS PAYABLE

Accounts payable are analyzed as follows:

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.23. Terms and conditions of the above financial liabilities:

Trade payables are non-interest bearing and are normally settled on approximately 100-day terms

Bank notes payable and post-date cheques payable are non-interest bearing and have an average term of 90-days

For explanations on the Group’s liquidity risk management processes refer to note 29.

Accounts payable are categorized in level 2 within the fair value hierarchy.

Principal Assumptions: 31.12.2015 31.12.2014 31.12.2013

Discount Rate 2,2% 1,9% 3,2%

Rate of compensation increase 0% 0% 0%

Increase in consumer price index 2% 2% 2%

Assumptions GROUP COMPANY

Present Value of benefit obligation at the end of the period 1.951.564 1.169.671

Discount rate 0,5% increase 1.858.733 1.113.618

Discount rate 0,5% decrease 2.053.005 1.230.990

Future salaries increase 0,5% 2.046.872 1.226.236

Future dismissals 0,5% increase 2.229.295 1.336.880

Future dismissals 0,5% decrease 1.651.960 989.085

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Trade payables 38.372.847 27.915.192 27.238.934 22.809.297

Bank notes payable - 289.788 - 50.739

Post dated cheques payable 633.536 681.130 305.444 363.563

Total 39.006.383 28.886.110 27.544.378 23.223.599

GROUP COMPANY


56

20. ACCRUED AND OTHER CURRENT LIABILITIES Accrued and other current liabilities are analysed as follows:

Other current liabilities relate to Social Security Organizations while other accrued expenses relate mostly to accrued customers’ reconciliation credit invoices.

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Notes 5.1 and 5.23. 21. REVENUE

Group’s and Company’s sales are analyzed as follows:

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.1.

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Staff payments due 81.309 67.771 1.353 -

Sundry creditors 108.235 403.078 12.268 236.958

Sales and other taxes due 1.158.365 1.941.227 565.752 492.390

Factoring with recourse - - - -

Dividends due - - - -

Other accrued expenses 5.845.878 8.830.187 6.151.410 8.912.825

Other current liabilities 1.714.410 1.590.401 915.224 814.012

Total 8.908.196 12.832.664 7.646.007 10.456.185

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Sale of goods 171.168.972 154.302.798 136.060.047 130.036.376

Raw materials 5.298.470 3.591.569 8.310.738 5.828.434

Rendering of services 17.708.697 18.505.476 18.779.281 21.118.619

Total 194.176.139 176.399.843 163.150.066 156.983.429

GROUP COMPANY


57

22. OTHER INCOME Other income is analyzed as follows:

Revenue from other income mainly consists of compensation from customer of Pharmathen S.A. (amount €1.500.000) as a result of contract termination. Revenue from services to third parties mainly relates to billing clients for undertaking the licensing of drugs in various constituencies. Revenue from unused provisions relates to the release of provisions for inventories and doubtful receivables in both years 2015 and 2014. As at December 31, 2015 the Company amount of € 1.215.776 relates to € 216.236 of doubtful receivables provision (note 14) and € 999.540 unused inventory provision (note 13), while the Group amount of € 1.462.991 refers to € 1.165.984 for unused inventory provision (note 13), € 216.236 to doubtful receivables provision release (note 14) and € 80.771 to other provisions.

23. COST OF SALES

Certain amounts shown here do not correspond to the 2014 financial statements and reflect adjustments made, refer to Note 5.13

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Subsidies received 40.291 124.470 31.570 64.819

Unused provisions 1.462.994 472.271 1.215.779 70.564

Revenue from services to third parties 562.927 357.544 594.963 525.221

Income from rent 29.310 29.300 212.443 194.216

Other income 1.596.877 489.147 1.659.705 355.711

Total 3.692.399 1.472.731 3.714.460 1.210.531

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Change in inventories 70.438.558 61.602.549 82.308.227 78.849.642

Employee wages and salaries and other benefits 10.109.760 8.905.978 6.154.919 5.660.227

Third party remuneration and expenses 15.586.965 14.961.072 13.715.066 13.136.053

Third party benefits 1.750.060 1.538.703 593.734 557.333

Taxes & duties 47.420 39.423 29.468 27.311

Depreciation (note 7) 3.120.916 3.167.652 487.044 432.255

Amortisation (note 8) 367.816 338.942 259.050 276.751

Provisions for obsolete inventory 865.483 261.534 461.482 106.057

Sundry expenses 1.898.455 1.763.512 715.084 708.731

Total 104.185.433 92.579.365 104.724.074 99.754.361

GROUP COMPANY


58

24. ADMINISTRATIVE EXPENSES

25. SELLING AND DISTRIBUTION EXPENSES

31.12.2015 31.12.2014 31.12.2015 31.12.2014


Third party remuneration and expenses 1.063.624 1.506.284 776.583 1.071.663

Third party benefits 1.096.752 1.066.559 1.092.856 959.050

Taxes & duties 496.001 292.110 371.146 205.153

Depreciation (note 7) 391.500 315.507 167.210 147.601


Sundry expenses 2.254.153 2.274.162 1.771.414 1.708.295

Total 11.238.023 10.935.318 8.961.937 8.038.915

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014


Third party remuneration and expenses 2.194.878 1.831.737 4.142.351 5.266.905

Third party benefits 2.309.929 2.166.722 697.233 826.133

Taxes & duties 1.023.774 1.039.100 48.792 47.870



Transportation expenses 1.212.517 1.047.437 865.640 807.021

Travelling expenses 893.537 984.473 116.464 114.150

Rebate & clawback 6.652.860 4.311.497 1.245.492 979.768

Provisions for trade receivables (note 14) 202.247 226.316 - -

Write off receivables (note 14) - 1.145.224 - 152.788

Sundry expenses 4.114.888 3.517.004 1.135.864 1.133.773

Total 33.608.710 29.716.340 10.992.212 12.306.863

GROUP COMPANY


59

26. RESEARCH AND DEVELOPMENT EXPENSES

Write off refers to internally generated drugs under development which ceased to meet IAS 38 criteria. No amount has been written off from the Group’s accounts (€ 105.423 as at December 31, 2014).

27. FINANCE INCOME / EXPENSES Finance expenses are analyzed as follows:

Other finance expenses relates mostly to imports bank charges and bank commissions. Finance income is analyzed as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Employee wages and salaries and other benefits 922.746 884.612 536.611 667.924

Third party remuneration and expenses 117.442 834.325 1.391.137 1.624.009

Third party benefits 753.238 623.237 618.851 604.910

Taxes & duties 51.721 61.246 46.729 47.784


Amortisation (note 8) 15.073.310 15.394.860 14.881.773 15.143.340

Regulatory fees 1.926.588 2.386.369 1.795.236 1.970.471

Write off (note 8) - 105.423 - 105.423

Sundry expenses 1.442.536 1.221.085 1.411.706 1.219.365

Total 20.722.825 21.971.102 21.115.702 21.796.045

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Interest on long-term loans 2.687.498 2.695.588 2.256.922 1.394.750

Interest on short-term loans 1.482.346 1.763.918 1.090.283 1.485.959

Factoring Costs 801.138 522.559 616.321 489.194

Foreign exchange losses 562.974 458.246 458.102 371.465

Loss due to Bonds sale - 6.457 - -

Other finance expenses 867.395 1.255.782 557.845 443.516

Total 6.401.352 6.702.551 4.979.473 4.184.883

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Bank deposit receipts 64.501 87.934 6.711 59.819

Unwinding of discount 61.311 37.686 61.311 37.686

Foreign exchange gains 569.148 131.435 546.465 115.846

Other financial income - 36.010 - 36.010

Total 694.960 293.065 614.488 249.361

GROUP COMPANY


60

28. INCOME TAXES The income tax expense has been calculated based on the profit before income tax in conjunction with the nominal tax rate applicable. The nominal income tax rate applicable to the Company for its Greek operations is 29% for the years 2015 and 26% for 2014. Tax returns of Group companies are filed annually but the profits or losses declared for tax purposes remain provisional until such time, as the local tax authorities, in which the entities operate, examine the returns and the records of the taxpayer and a final assessment is issued or the statute of limitation has expired. Greek tax regulations and related clauses are subject to interpretation by the tax authorities and administrative courts of law. Tax returns are filed annually but the profits or losses declared for tax purposes remain provisional until such time as the tax authorities examine the returns and the records of the tax payer and a final assessment is issued. Net operating losses which are tax deductible, can be carried forward against taxable profits for a period of five years from the year they are generated. The Company’s subsidiaries have not been audited by the tax authorities for the years presented in note 30 “Contingent Liabilities - Assets” and, therefore, the tax liabilities for the open years have not been finalized.

From the fiscal year 2011 onwards, all Greek Societe Anonyme and limited liability Companies that are required to prepare audited statutory financial statements must in addition obtain a “Tax Certificate” as provided by Article 82 of Law 2238/1999. Pharmathen S.A, Pharmathen Hellas and Pharmathen International are subject to the tax audit based on the provisions of the law as described above.

Income tax for the Group and the Company for the years ended December 31, 2015 and 2014, are analysed as follows:

A reconciliation between the income tax expense and the accounting profit multiplied by tax rates in force is as follows:

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Current income tax 4.208.762 1.898.938 1.627.325 643.892

Deferred income taxes 4.380.147 2.461.525 4.299.287 2.194.028

Total 8.588.909 4.360.464 5.926.612 2.837.921

GROUP COMPANY

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Profit before tax 22.407.155 19.705.039 15.193.645 16.294.301

Tax rate 29% 26% 29% 26%

Attributable tax 6.498.075 5.123.310 4.406.157 4.236.518

Tax allowances on research and development (2.243.779) (1.978.464) (2.243.779) (1.978.464)

Utilisation of witholding taxes - - - -

Adjustments for nominal tax rate changes 401.682 - 624.938 -

Expenses not recognised for tax purposes 1.667.902 1.004.638 1.511.971 579.866

Additional taxes 1.627.325 (19.930) 1.627.325 -

Additional provision for unaudited periods 637.704 230.910 - -Tax Expense 8.588.909 4.360.464 5.926.612 2.837.921

Effective tax rate 38% 22% 39% 17%

GROUP COMPANY


61

Additional taxes refer mainly to the additional amount of tax for the years 2009 and 2010 which has been determined by the Greek tax authorities after the tax inspection during 2015. The relative amount was € 2.585.867. The company had made a provision for anaudited years of amount € 1.041.890. Additional provision for unaudited years concerns the subsidiary company Pharmathen Hellas S.A and it refers to tax year 2010, amounted to € 637.704. According to corporate tax law 2238/1994, companies that perform reasearch and development are entitled to a tax allowance relating to the research expenses that have been audited and confirmed by the General Secretariat for Research and Technology. The amount of the tax allowance is 30% of the total reasearch and development expenses incurred during the year by the company and is subtracted from the taxable profit of the financial year.

29. RISK MANAGEMENT

The Group is exposed to various financial risks such as market risk (variation in foreign exchange rates, interest rates, market prices etc.), credit risk and liquidity risk. Though the exposure is not considered material except in the case of credit risk. The Group’s risk management policy aims at limiting the negative impact on the Group’s financial results which derives from the inability to predict financial markets and the variation in cost and revenue variables. The risk management policy is executed by the Management of the Group. The procedure followed is the following: Evaluation of risks related to the Group’s activities. Methodology planning and selection of any suitable actions for risk reduction. Execute risk management in accordance to the procedure approved by management. The Group’s financial instruments include mainly bank deposits, trade debtors and creditors and loans. The carrying amounts reflected in the accompanying statement of financial position for trade and other accounts receivable, trade and other accounts payable and accrued and other current liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. Management believes that the fair value of variable rate loans and borrowings approximate the amounts presented in the statements of financial position, mainly due to the variable interest rates. Fair value of assets and liabilities All assets and liabilities for which fair value is disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

1. Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

2. Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

3. Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.


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Interest rate sensitivity

At December 31, 2015, the Group is exposed to changes in market interest rates through its bank borrowings, its cash and cash equivalents which are subject to variable interest rates. The following table presents the sensitivity of the net profit for the year and equity to a reasonable change in interest rates of +0,5% or -0,5%. These changes are considered to be reasonably possible based on observation of the current market conditions.

Liquidity risk The Group manages its liquidity by carefully monitoring scheduled debt servicing payments for long – term financial liabilities as well as cash – outflows due in day - to - day business. Liquidity needs are monitored in various time bands, on a daily and weekly basis. The Group ensures that sufficient available credit facilitations exist, so that it is capable of covering the short-term enterprising needs, after calculating the cash inputs resulting from its operation as well as its cash in hand and cash equivalent. The capital for the long-term needs of liquidity is ensured in addition by a sufficient sum of lending capital and the possibility to be sold long-term financial elements. The Group uses factoring to avoid greater liquidity risks for specific liable debtors. Maturity of the financial assets (not impaired, after considering the discounting effect) as of December 31, 2015 and 2014, for the Group and the Company is analysed as follows:

Maturity of the financial obligations as of December 31, 2015 and 2014, for the Group and the Company is analysed as follows:

0,50% (0,50%) 0,50% (0,50%)

Income statement (208.492) 208.492 (222.975) 222.975

Other comprehensive income (208.492) 208.492 (222.975) 222.975

0,50% (0,50%) 0,50% (0,50%)

Income Statement (167.360) 167.360 (144.035) 144.035

Other comprehensive income (167.360) 167.360 (144.035) 144.035

GROUP

01.01.2015-31.12.2015 01.01.2014-31.12.2014

COMPANY

01.01.2015-31.12.2015 01.01.2014-31.12.2014

31.12.2015 31.12.2014 31.12.2015 31.12.2014

3 months or Less 38.457.809 42.619.612 39.983.963 29.161.207

3 to 6 months 15.189.566 12.056.511 8.859.157 12.957.253

6 months to 1 year 10.818.080 8.066.500 660.657 1.572.563

More than 1 year 7.418.806 1.557.643 917.775 1.389.267

TOTAL: 71.884.261 64.300.266 50.421.552 45.080.290

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Within 6 to 12

6 months Months

Long-term loans 8.866.368 5.068.529 33.856.140 - 47.791.037

Other short - term liabilities 6.050.666 8.889.175 - - 14.939.841

Trade payables 28.886.110 - - - 28.886.110

Short-term loans 322.493 28.515.473 - - 28.837.966

Total 44.125.637 42.473.177 33.856.140 - 120.454.954

GROUP

31.12.2014

Short-Term Long-Term

1-5 years5 years or

longerTotal

Within 6 to 12

6 months Months

Long-term loans 4.959.647 4.620.180 51.074.646 - 60.654.473

Other short - term liabilities 8.205.593 2.299.526 - - 10.505.119

Trade payables 38.892.790 113.593 - - 39.006.383

Short-term loans 12.582.241 23.258.023 1.881.092 - 37.721.356

Total 64.640.271 30.291.322 52.955.738 - 147.887.331

GROUP

31.12.2015


1-5 years5 years or

longerTotal

Within 6 to 12

6 months months

Long-term loans 3.196.735 3.632.473 29.911.338 - 36.740.546

Trade payables 23.223.599 - - - 23.223.599

Short-term loans 166.916 17.924.441 - - 18.091.357

Other short-term liabilities 3.674.186 7.742.047 - - 11.416.233

Total 30.261.436 29.298.961 29.911.338 - 89.471.735

COMPANY

31.12.2014


1-5 years5 years or

longerTotal

Within 6 to 12

6 months months

Long-term loans 3.825.307 4.514.282 47.082.998 - 55.422.587

Trade payables 23.482.615 4.061.763 - - 27.544.378

Short-term loans 7.975.107 14.056.835 1.303.629 - 23.335.571

Other short-term liabilities 7.646.010 - - - 7.646.010

Total 42.929.039 22.632.880 48.386.627 - 113.948.546

COMPANY

31.12.2015


1-5 years5 years or

longerTotal


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Interests for the following years are calculated according to interest rates as per December 31, 2015. Foreign exchange losses Currency risk is the risk that the fair values or the cash flows of a financial instrument fluctuate due to foreign currency changes. The Group currently holds an investment in Iceland and as a result is exposed to currency risk due to changes between the functional euro currency and Iceland Krona. Also, the Group makes payments in various currencies such as the Canadian dollar, British pound, and US dollar. However, the Group does not believe that payments and the investment in foreign currency are material and that any significant negative result on income could derive to the Group from foreign exchange. Credit risk Credit risk is the risk of financial loss to the Company and the Group if counterparty fails to meet its contractual obligations. Maximum exposure to credit risk at the reporting date to which the Company and the Group are exposed is the carrying value of financial assets. Trade accounts receivable could potentially adversely affect the liquidity of the Company and the Group. However, due to the large number of customers and the diversification of the customer base, there is no concentration of credit risk with respect to these receivables. The Group and the Company have established specific credit policies under which customers are analysed for creditworthiness and there is an effective management of receivables in place both before and after they become overdue and doubtful. In monitoring credit risk, customers are grouped according to their credit risk characteristics, aging profile and existence of previous financial difficulties. Customers that are characterized as doubtful are reassessed at each reporting date for the estimated loss that is expected and an appropriate impairment allowance is established. In addition to the above the Group assignes to financial institutions a proportion of 45% approximately of foreign receivables invoices which are deemed as factoring without recourse. Apart from this, the rest foreign receivables and a huge proportion of local receivables is already insured with insurance organizations. Capital management The primary objective of the Group’s and the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratio in order to support its business and maximize shareholder value. The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. An important means of managing capital is the use of the gearing ratio (ratio of net debt to total capital) which is monitored at a Group level. Net debt includes interest bearing loans, less cash and cash equivalents and other financial assets. The table below shows the gearing ratio evolution for the Group and the Company.

31.12.2015 31.12.2014 31.12.2015 31.12.2014

Total debt 86.128.668 66.968.102 70.511.331 46.368.918

Less: Cash & cash equivalents (30.842.543) (12.233.106) (28.742.190) (9.202.463)

Net debt 55.286.125 54.734.996 41.769.141 37.166.455

Equity 99.664.114 87.280.054 97.295.689 89.644.004

Total capital (Net debt and equity) 154.950.239 142.015.050 139.064.830 126.810.459

Gearing ratio 36% 39% 30% 29%

GROUP COMPANY


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30. CONTINGENT ASSETS / LIABILITIES

Unaudited tax years for the Group as at December 31, 2015, are analysed as follows:

The Group has no other contingent liabilities as at December 31, 2015, while guarantees relate to public sector utilities used by the Group for the amount of € 107.401 and € 237.934 for rental agreements. In addition to these, the Group has issued letters of guarantee for an amount of approximately € 3.3 million.

31. RELATED PARTIES

Related parties as per IAS 24 ”Related parties are all subsidiaries and affiliated companies mentioned in note 9 Investments as well as members of the board of Directors presented below. Chairman of The Board: Mr Katsos Vasileios Vice Chairwoman and Managing Director: Mrs Katsou Helen Members of the Board: Mrs Katsou Aggeliki Mr Damanakis Emanouil Mr Fakas Evangelos

There where no board remunerations for the year ended December 31, 2014. Group’s related parties have been identified based on the requirements of IAS 24 “Related Party Disclosures”. Transactions with related parties are the following:

Company Unaudited Financial Periods

Pharmathen Hellas 2010

Pharmathen International 2010

Libytec 2010


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Pharmathen’s purchases and sales with related parties are analysed as follows:

Amounts owed to and by the related parties as a result of Pharmathen’s transactions with them are analysed as follows:

PHARMATHEN S.A PHARMATHEN HELLAS

PHARMATHEN

INTERNATIONAL PORTPHARMA EHF INDIA PHARMATHEN UK VITA SANTE LIBYTEC TOTAL

PHARMATHEN S.A - 11.516.830 8.724.601 593.444 6.765 - 1.800 213.459 21.056.899

PHARMATHEN HELLAS 2.963.572 - - - - - - 37.086 3.000.658

ADVENTUS INDIA 1.242.255 - - - - - - - 1.242.255

PHARMATHEN UK 2.108.849 - - - - - 2.108.849

PHARMATHEN INTERNATIONAL 35.906.883 - - - - - - - 35.906.883 TOTAL 42.221.559 11.516.830 8.724.601 593.444 6.765 - 1.800 250.545 63.315.544

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PURCHASES

31.12.2014


PHARMATHEN

INTERNATIONAL PORTPHARMA EHF INDIA PHARMATHEN UK VITA SANTE LIBYTEC TOTAL

PHARMATHEN S.A - 12.860.718 8.836.740 224.708 7.849 - - 153.489 22.083.504

PHARMATHEN HELLAS 1.294.009 - - - - - - 64.509 1.358.519

ADVENTUS INDIA 1.402.150 - - - - - - - 1.402.150

PORTPHARMA EHF 1.615 - - - - - - - 1.615

PHARMATHEN UK 2.679.830 - - - - - - - 2.679.830

PHARMATHEN INTERNATIONAL 40.135.762 2.940 - - - - - - 40.138.702

PHARMATHEN INDUSTRIAL - - - - - - - - -

LIBYTEC 37.210 121.403 - - - - - - 158.613 TOTAL 45.550.576 12.985.061 8.836.740 224.708 7.849 - - 217.999 67.822.933

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PURCHASES

31.12.2015


PHARMATHEN

INTERNATIONAL

PHARMATHEN

DEVELOPMENT INDIA PORTPHARMA EHF VITA SANTE LIBYTEC TOTAL

PHARMATHEN S.A - 5.593.122 - - - 325.865 154.170 250.008 6.323.165

PHARMATHEN HELLAS 530.028 - - - - - 95.126 271.211 896.365

PHARMATHEN UK - - - 13.214 - - - - 13.214


INDIA 298.127 - - - - - - - 298.127 TOTAL 3.514.077 5.634.326 - 13.214 - 325.865 249.296 521.219 10.257.997

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The credit terms followed by the Group relating to intercompany payable and receivable amounts are approximately the same as third parties’ terms and conditions.

The main transactions between the Group companies are described below:

Pharmathen S.A. Pharmathen S.A. provides contract manufacturing services (facon services) to Pharmathen Hellas S.A. Furthermore Pharmathen S.A. provides generic drugs and raw materials to Pharmathen Hellas and Pharmathen International. Pharmathen S.A. also provides accounting services to Pharmathen International S.A. and Vita Sante and warehousing services to Pharmathen Hellas and Vita Sante.

Pharmathen Hellas S.A. Pharmathen Hellas S.A. provides raw materials and generecic drugs to Pharmathen S.A. and also provides sales services (commision fees) to Pharmathen S.A. Pharmathen International S.A. Pharmathen International S.A. provides manufacturing services (facon services), generic drugs and warehousing services to Pharmathen S.A. Adventus India Adventus India provides services such as development of chemical compounds (A.P.I development) to Pharmathen S.A and Industrial S.A Pharmathen U.K Pharmathen U.K provides marketing and promotional services to Pharmathen S.A. Terms of conditions of transactions with related parties The sales to and purchases from related parties are made at terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end will be settled in cash. For the year ended December 31, 2015, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2014: € Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.


PHARMATHEN

INTERNATIONAL

PHARMATHEN

DEVELOPMENT INDIA PORTPHARMA EHF VITA SANTE LIBYTEC TOTAL

PHARMATHEN S.A - 7.541.645 7.054.486 - 343.334 134.384 - 716.289 15.790.137

PHARMATHEN HELLAS - - - - - - - - -

PORTPHARMA EHF 17.628 - - - - - - - 17.628

PHARMATHEN UK - - - - - - - - -


LIBYTEC - 68.041 - - - - - - 68.041

INDIA - - - - - - - - -

VITA SANTE - - - - - - - - -

PRO ACTINA - - - - - - - - TOTAL 5.388.269 7.653.844 7.054.486 - 343.334 134.384 - 716.289 21.290.607

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32. DIVIDEND PROPOSALS

The dividends proposal for 2015 will be decided at the annual general meeting the Board of Directors. Please find below table refering to dividends paid in the prior years.

33. EVENTS AFTER THE REPORTING PERIOD

As at April 8, 2016 Pharmathen S.A. transferred the remaining participation of 7.55% to Portfarma Ehf (29.800.492 shares) without any charge or consideration to Portfarma Ehf. As of December 31st 2015 the Company had written off its participation in the associate ( note 10). Apart from the aforementioned events, there are no events after the financial position date, which concern either the Group or the Company and whose disclosure is required by the International Financial Reporting Standards.

Financial year : 2015 2014 2013 2012

Dividends paid : 1.800.869 6.607.756 3.000.000 3.000.000

PHARMATHEN PHARMACEUTICALS S.A. Financial ......2015/12/31 · PHARMATHEN PHARMACEUTICALS S.A....

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