Quarterly Report • Oct 26, 2017
Quarterly Report
Open in ViewerOpens in native device viewer
FIRST NINE MONTHS 2017
| € (thousands) | First nine months 2017 |
% | First nine months 2016 |
% | Change 2017/2016 |
% |
|---|---|---|---|---|---|---|
| Total revenue | 963,827 | 100.0 | 862,370 | 100.0 | 101,457 | 11.8 |
| Italy | 198,554 | 20.6 | 177,211 | 20.5 | 21,343 | 12.0 |
| International | 765,273 | 79.4 | 685,159 | 79.5 | 80,114 | 11.7 |
| € (thousands) | First nine months 2017 |
% of revenue |
First nine months 2016 |
% of revenue |
Change 2017/2016 |
% |
|---|---|---|---|---|---|---|
| Revenue | 963,827 | 100.0 | 862,370 | 100.0 | 101,457 | 11.8 |
| EBITDA(1) | 341,961 | 35.5 | 279,952 | 32.5 | 62,009 | 22.1 |
| Operating income | 307,502 | 31.9 | 252,406 | 29.3 | 55,096 | 21.8 |
| Net income | 219,806 | 22.8 | 182,317 | 21.1 | 37,489 | 20.6 |
(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
| € (thousands) | 30 September | 31 December | Change | % |
|---|---|---|---|---|
| 2017 | 2016 | 2017/2016 | ||
| Net financial position(2) | (321,729) | (198,771) | (122,958) | 61.9 |
| Shareholders' equity | 1,054,896 | 903,940 | 150,956 | 16.7 |
(2) Short‐term financial investments, cash and cash equivalents, less bank overdrafts and loans which include the measurement at fair value of hedging derivatives.
| € (thousands) | Third quarter | Third quarter | Change | |||||
|---|---|---|---|---|---|---|---|---|
| 2017 | % | 2016 | % | 2017/2016 | % | |||
| Total revenue | 312,959 | 100.0 | 274,506 | 100.0 | 38,453 | 14.0 | ||
| Italy | 56,139 | 17.9 | 54,944 | 20.0 | 1,195 | 2.2 | ||
| International | 256,820 | 82.1 | 219,562 | 80.0 | 37,258 | 17.0 |
| € (thousands) | Third quarter 2017 |
% of revenue |
Third quarter 2016 |
% of revenue |
Change 2017/2016 |
% |
|---|---|---|---|---|---|---|
| Revenue | 312,959 | 100.0 | 274,506 | 100.0 | 38,453 | 14.0 |
| EBITDA(1) | 117,929 | 37.7 | 91,878 | 33.5 | 26,051 | 28.4 |
| Operating income | 104,304 | 33.3 | 82,190 | 29.9 | 22,114 | 26.9 |
| Net income | 72,819 | 23.3 | 59,599 | 21.7 | 13,220 | 22.2 |
(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
The financial results obtained in the first nine months of the year emphasize the continued growth of the group, with revenues and profitability increasing significantly. Consolidated revenue is € 963.8 million, up by 11.8% compared to the same period of the preceding year. International sales grow by 11.7%. EBITDA, at 35.5% of sales, is € 342.0 million, an increase of 22.1% over the nine months of 2016 and operating income, at 31.9% of sales, is € 307.5 million, an increase of 21.8% over the same period of the preceding year. Net income, at 22.8% of sales, is € 219.8 million, an increase of 20.6% over the first nine months of 2016.
Net financial position at 30 September 2017 records a net debt of € 321.7 million compared to net debt of € 198.8 million at 31 December 2016. During the period dividends were distributed and the acquisition of the marketing rights to the metoprolol based products from AstraZeneca was concluded for an overall disbursement of € 339.0 million. Shareholders' equity increases to € 1,054.9 million.
In January the European Union Commission granted the European marketing authorization for its orphan medicinal product Cystadrops® 3.8mg/mL. Cystadrops® is the first eye‐drop solution containing cysteamine hydrochloride approved in the European Union for "the treatment of corneal cystine crystal deposits in adults and children from 2 years of age with cystinosis". The European Commission had granted Cystadrops® orphan drug designation in November 2008. Cystadrops® eye‐drop solution was developed specifically for cystinosis patients by Orphan Europe (Recordati Group). Cystinosis is a rare congenital lysosomal storage disorder recognized as a severe life threatening condition. It is characterized by an accumulation of cystine crystals which negatively affects all organs in the body, especially the kidneys and eyes. Cystinosis benefits from systemic treatment with cysteamine orally administered. However, oral cysteamine does not adequately address ocular cystinosis because of the non‐ vascularization of cornea. Without a proper, continued, local eye treatment, cystine crystals accumulate in the cornea, leading to severe consequences and possibly to blindness in the long term.
In February an exclusive worldwide licensing agreement covering the know‐how developed by the Meyer Hospital in Florence (Italy) for the development of a treatment for pre‐term babies affected by retinopathy of prematurity (ROP) was signed. The treatment is currently being investigated in a phase II clinical trial by the Meyer Hospital, while Recordati will complete the clinical development and the regulatory steps necessary to obtain the marketing approval for the drug. Retinopathy of prematurity (ROP) is a potentially blinding eye disorder that primarily affects premature infants weighing about 1.25 kg or less that are born before 31 weeks of gestation. This disorder, which usually develops in both eyes, is a rare condition, however presenting as one of the most common causes of visual loss in childhood that can lead to lifelong vision impairment and blindness. Furthermore, within the deal, Recordati shall support other Meyer projects in the rare disease area over a period of three years based on a mutually agreed plan. This collaboration between public and private institutions recognizes the important results obtained by the internal research conducted by the pediatric hospital in Florence.
In May Recordati signed an agreement with AstraZeneca for the acquisition of the rights to Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol succinate and felodipine) treatments in Europe. The transaction was successfully concluded on 30 June (on 10 July for part of the transaction related to Romania). The consideration for the acquisition of the assets is of \$ 300 million (€ 267 million). In addition, royalties for the use of the existing product brands will be due to AstraZeneca for an agreed period. Overall net sales in Europe in 2016 of the brands object of the transaction are of around € 100 million. Metoprolol succinate is a beta‐blocker mainly indicated for the control of a range of conditions including hypertension, angina pectoris, disturbances of cardiac rhythm, maintenance treatment after myocardial infarction, and functional heart disorders with palpitations. It is a widely used drug in all European countries which will enable us to reinforce our product portfolios in a number of our European subsidiaries, in particular in Poland, France and Germany. Furthermore,
existing sales of the metoprolol brands will provide the base to enter new markets and thus complete our European geographical footprint. Recordati has significant experience in the marketing of treatments for cardiovascular disease with an existing portfolio of medicines for hypertension and related conditions as well as an established salesforce across European markets.
On May 31, 2017, Recordati S.p.A. issued and privately placed a bond for a total of € 125.0 million with Pricoa Capital Group. The main terms and conditions provide for a 2.07% fixed interest rate and a duration of 15 years with repayment in annual instalments starting on 31 May 2025. The transaction, the object of which is to provide the necessary liquidity to support the growth of the group, was able to take advantage of the favourable market conditions.
In June Recordati signed an exclusive license agreement with MimeTech, an Italian development stage company founded by scientists from the University in Florence, for the development and subsequent commercialization on a global basis of a low molecular weight peptidomimetic of human nerve growth factor (NGF) for the treatment of neurotrophic keratitis, which already received an Orphan Drug Designation in the EU. Additional indications linked to NGF defects are also contemplated in the scope of the partnership. Under the terms of the agreement Recordati made an upfront payment upon signature of the contract and further milestone payments shall be linked to the development process and commercial performance. Neurotrophic keratitis is a rare degenerative corneal disease which in its more severe forms affects less than one person out of 10,000 worldwide, and is initiated by an impairment of trigeminal nerve. Impairment or loss of corneal sensory innervation is responsible for corneal epithelial defects, ulcer, and perforation. The most common causes of loss of corneal innervation are: viral infection (herpes simplex and herpes zoster keratoconjunctivitis), chemical burns, physical injuries, and corneal surgery. Neuroma, meningioma, and aneurysms may also determine a compression of the trigeminal nerve or ganglion and produce an impairment of corneal sensitivity. Furthermore, systemic diseases such as diabetes, multiple sclerosis, and leprosy may decrease sensory nerve function or damage sensory fibres compromising corneal sensitivity. The corneal epithelium is the first cell layer of the disease showing changes and defects, with poor predisposition to self‐healing. The progression of the disease may lead to corneal ulcers, melting, and perforation leading to dramatic impairment to patients' sight.
During July Gedeon Richter Plc. was granted marketing authorization from the European Commission for Reagila® (cariprazine), a novel antipsychotic for the treatment of schizophrenia in adult patients, valid for all European Union Member States. In August 2016 Richter and Recordati had signed an exclusive license agreement to commercialize cariprazine in Western Europe, Algeria, Tunisia and Turkey. The European application for the treatment of schizophrenia included results from three placebo and partly active controlled positive trials in over 1,800 patients and one long‐term trial, using the change from baseline in the scale, assessing the severity of schizophrenia symptoms, i.e. the Positive and Negative Syndrome Scale (PANSS) total score and the time to relapse as primary efficacy endpoints. A clinical trial with positive results was also carried out in patients suffering from predominant negative symptoms of schizophrenia. The high relevance of these results is the base for a publication in The Lancet (Cariprazine versus risperidone monotherapy for treatment of predominant negative symptoms in patients with schizophrenia: a randomised, double‐blind, controlled trial; The Lancet Volume 389, No. 10074, p1103–1113, 18 March 2017).
Net consolidated revenue in the first nine months of 2017 is € 963.8 million, up 11.8% over the same period of the preceding year, with an increase in international sales of 11.7% to € 765.3 million, which represent 79.4% of total sales. Pharmaceutical sales are € 932.8 million, up by 12.0%. Pharmaceutical chemicals sales are € 31.0 million, up by 3.8%, and represent 3.2% of total revenues. The first nine months 2017 revenues include an overall amount of
€ 47.8 million which correspond to revenues generated by the Italian company Italchimici S.p.A. and the Swiss company Pro Farma AG, acquired in 2016 and consolidated respectively as from 1 June and 1 July of that year, as well as to the sales as from 1 July of the metoprolol based products acquired from AstraZeneca. Excluding these acquisitions sales growth would have been of 6.2%.
The group's pharmaceutical business, which represents 96.8% of total revenue, is carried out in the main European markets, including Central and Eastern Europe, in Russia, Turkey, North Africa, the United States of America, Canada, Mexico and in some South American countries through our own subsidiaries and in the rest of the world through licensing agreements with pharmaceutical companies of high standing.
The performance of products sold directly in more than one country (corporate products) during the first nine months of 2017 is shown in the table below.
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Zanidip® (lercanidipine) | 96,103 | 89,990 | 6,113 | 6.8 |
| Zanipress® (lercanidipine+enalapril) | 53,708 | 50,777 | 2,931 | 5.8 |
| Urorec® (silodosin) | 69,532 | 63,253 | 6,279 | 9.9 |
| Livazo® (pitavastatin) | 29,193 | 26,970 | 2,223 | 8.2 |
| Seloken®/Seloken® ZOK/Logimax® (metoprolol/metoprolol+felodipine) |
22,659 | ‐ | 22,659 | n.s. |
| Other corporate products* | 202,611 | 175,220 | 27,391 | 15.6 |
| Drugs for rare diseases | 161,266 | 140,642 | 20,624 | 14.7 |
* Include the OTC corporate products for an amount of € 76.3 million in 2017 and € 60.4 million in 2016 (+26.3%).
Zanidip® is a specialty containing lercanidipine, Recordati's original calcium channel blocker for the treatment of hypertension. Our lercanidipine based products are sold directly to the market by our own marketing organizations in Europe, including Central and Eastern Europe, in Russia, in Turkey and in North Africa. In the other markets they are sold by licensees, and in some of the above co‐marketing agreements are in place.
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Direct sales | 53,319 | 47,718 | 5,601 | 11.7 |
| Sales to licensees | 42,784 | 42,272 | 512 | 1.2 |
| Total lercanidipine sales | 96,103 | 89,990 | 6,113 | 6.8 |
Lercanidipine direct sales are up by 11.7% mainly due to the sales in Switzerland which are made directly to the market by our subsidiary there as from September of the preceding year. Sales increase mainly in Germany and in France, where the brand Lercan® is now sold directly by our subsidiary following the termination of the license agreement with Pierre Fabre. Sales to licensees, which represent 44.5% of total lercanidipine sales, are up by 1.2%.
Zanipress® is an original specialty also indicated for the treatment of hypertension developed by Recordati which consists of a fixed combination of lercanidipine with enalapril. This product is successfully marketed directly by Recordati and/or by its licensees in 29 countries.
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Direct sales | 42,397 | 36,884 | 5,513 | 14.9 |
| Sales to licensees | 11,311 | 13,893 | (2,582) | (18.6) |
| Total lercanidipine+enalapril sales | 53,708 | 50,777 | 2,931 | 5.8 |
Direct sales of Zanipress® in the first nine months of 2017 are up by 14.9% mainly due to the performance of the product in Germany, France and Switzerland. Sales to licensees represent 21.1% of total Zanipress® sales and are down by 18.6% mainly due to lower sales to licensees in Germany.
Urorec® (silodosin) is a specialty indicated for the treatment of symptoms associated with benign prostatic hyperplasia (BPH). Currently the product has been successfully launched in 35 countries with sales of € 69.5 million in the first nine months of 2017, up 9.9% due to the good performance of the product in all main markets.
Sales of Livazo® (pitavastatin), a statin indicated for the reduction of elevated total and LDL cholesterol, in Spain, Portugal, Ukraine, Greece, Switzerland, Russia and Turkey, are € 29.2 million in the first nine months of 2017, up by 8.2% due to the performance of the product mainly in Spain, Greece and Switzerland and to the launch in Turkey and Russia.
On 30 June the agreement with AstraZeneca for the acquisition of the rights to Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol succinate and felodipine) treatments in Europe was concluded. Revenues generated by these products in the European countries covered by the agreement are consolidated as from 1 July and are of € 22.7 million at 30 September. These products contribute significantly to the growth of our subsidiaries mainly in Germany, Poland, France, the Czech Republic and Romania.
In the first nine months of 2017 sales of other corporate products totaled € 202.6 million, up by 15.6% compared to the same period of the preceding year. These comprise both prescription and OTC products and are: Lomexin® (fenticonazole), Urispas® (flavoxate), Kentera® (oxybutynin transdermal patch), TransAct® LAT (flurbiprofen transdermal patch), Rupafin®/Wystamm® (rupatadine), Lopresor® (metoprolol), Procto‐Glyvenol® (tribenoside), Tergynan® (fixed association of anti‐infectives) as well as CitraFleet®, Casenlax®, Fleet enema, Phosphosoda®,
Ruflor®/Reuteri® (lactobacillus Reuteri) and Lacdigest® (tilactase), gastroenterological products, Polydexa®, Isofra® and Otofa®, ENT anti‐infective products, the Hexa line of products indicated for seasonal disorders of the upper respiratory tract, Abufene®, a product for menopausal symptoms, Muvagyn® a topical product for gynecological use and Virirec® (alprostadil), a topical product for erectile dysfunction.
Our specialties indicated for the treatment of rare and orphan diseases, marketed directly throughout Europe, in the Middle East, in the U.S.A., Canada, Mexico and in some South American countries and through partners in other parts of the world, generated sales of € 161.3 million in the first nine months of 2017, up by 14.7% due to the good performance of the business in all areas.
The pharmaceutical sales of the Recordati subsidiaries, which include the abovementioned product sales, are shown in the following table.
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Italy | 192,705 | 171,205 | 21,500 | 12.6 |
| France | 91,692 | 84,723 | 6,969 | 8.2 |
| Germany | 87,105 | 72,745 | 14,360 | 19.7 |
| U.S.A. | 83,359 | 77,402 | 5,957 | 7.7 |
| Russia, other C.I.S. countries and Ukraine | 79,275 | 56,087 | 23,188 | 41.3 |
| Turkey | 65,394 | 65,787 | (393) | (0.6) |
| Spain | 59,615 | 55,846 | 3,769 | 6.7 |
| North Africa | 31,210 | 34,314 | (3,104) | (9.0) |
| Portugal | 30,114 | 29,457 | 657 | 2.2 |
| Other Western European countries | 38,659 | 27,452 | 11,207 | 40.8 |
| Other C.E.E. countries | 31,736 | 24,636 | 7,100 | 28.8 |
| Other international sales | 141,937 | 132,835 | 9,102 | 6.9 |
| Total pharmaceutical revenue | 932,801 | 832,489 | 100,312 | 12.0 |
Both years include sales as well as other income.
Sales in countries affected by currency exchange oscillations are shown hereunder in their relative local currencies.
| Local currency (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Russia (RUB) | 4,375,516 | 3,586,394 | 789,122 | 22.0 |
| Turkey (TRY) | 244,380 | 200,563 | 43,818 | 21.9 |
| U.S.A. (USD) | 95,686 | 88,378 | 7,308 | 8.3 |
Net revenues in Russia and in Turkey exclude sales of products for rare diseases.
Sales of pharmaceuticals in Italy are up by 12.6% compared to those of the same period of the preceding year mainly thanks to the revenues generated by Italchimici S.p.A., consolidated as from 1 June 2016. Worth mentioning is the good performance of Urorec® and Cardicor® (bisoprolol) and the significant growth of the treatments for rare diseases.
Pharmaceutical sales in France are up by 8.2% due mainly to the good performance of Urorec®, methadone and Zanextra®, in addition to the sales of Lercan® (lercanidipine) which is now sold directly by our subsidiary following
the termination of the license agreement with Pierre Fabre, and to those of the metoprolol based products acquired from AstraZeneca and consolidated as from 1 July. The treatments for rare diseases are also growing strongly.
In Germany sales are up by 19.7% mainly thanks to the significant sales growth of Zanipress®, Ortoton® (methocarbamol) and lercanidipine, and to the sales generated by the metoprolol based products acquired from AstraZeneca and consolidated as from 1 July.
The group's pharmaceutical business in the U.S.A. is dedicated to the marketing of products for the treatment of rare diseases. Sales in the first nine months of 2017 are € 83.4 million, up by 7.7%. The main products are Panhematin® (haemin for injection) for the amelioration of recurrent attacks of acute intermittent porphyria, Cosmegen® (dactinomycin for injection) used in the treatment of three rare cancers and Carbaglu® (carglumic acid), indicated for the treatment of acute hyperammonaemia associated with NAGS deficiency.
Revenue generated in Russia, Ukraine and in the countries within the Commonwealth of Independent States (C.I.S.) is € 79.3 million, up by 41.3% compared to the same period of the preceding year and includes estimated currency exchange gains of € 9.8 million. Sales in Russia, in local currency, are RUB 4.375.5 million, up by 22.0% over the same period of the preceding year thanks to the growth of all the main products including the corporate products Procto‐Glyvenol®, Urorec®, Zanidip®, Tergynan®, Polydexa® and Isofra®, and to the launch of Livazo®. Sales generated in Ukraine and in the C.I.S. countries, mainly Kazakhstan and Belarus, are growing and have reached € 10.2 million.
Sales in Turkey are down by 0.6% due entirely to a negative currency exchange effect estimated to be of € 12.9 million. In local currency sales of our Turkish subsidiary grow by 21.9% thanks to the good performance of all the corporate products, in particular Lercadip®, Urorec®, Procto‐Glyvenol®, Zanipress® and Gyno Lomexin®, as well as the launch of Livazo®, and of the local products Mictonorm® (propiverine), Cabral® (phenyramidol) and Pankreoflat® (pancreatin, dimeticone).
In Spain sales are € 59.6 million, up by 6.7% mainly due to the performance of Virirec®, Livazo®, Urorec® and Casenlax®. Sales of treatments for rare diseases are also growing significantly.
Sales in North Africa are € 31.2 million, down by 9.0%, and comprise both the export sales generated by Laboratoires Bouchara Recordati in these territories, in particular in Algeria, and sales generated by Opalia Pharma, the group's Tunisian subsidiary. The sales reduction is due mainly to lower sales of Zanidip® and Calperos® (calcium, vitamin D3) in Algeria. Sales in Tunisia in the first nine months of 2017, in local currency, are up by 16.2%.
Sales in Portugal are up by 2.2% thanks mainly to the good performance of the local product Egostar®, a vitamin D3 supplement.
Sales in other countries in Western Europe, up by 40.8%, comprise sales of products for the treatment of rare diseases by Orphan Europe in these countries and sales generated by the Recordati subsidiaries in the United Kingdom, Ireland, Greece and Switzerland. The increase in sales is to be attributed mainly to the revenues generated by the Swiss company Pro Farma which was consolidated as from 1 July 2016, to direct sales in the market of the corporate products Zanidip®, Zanipress® and Urispas® which were previously sold by licensees, as well as to the growth of Livazo® and to the consolidation as from 1 July of the metoprolol based products acquired from AstraZeneca. Worth mentioning is the good performance of the Greek subsidiary.
Sales in other Central and Eastern European countries include the sales of Recordati subsidiaries in Poland, the Czech Republic, Slovakia and Romania, in addition to sales generated by Orphan Europe in this area. In the first nine months of 2017 overall sales are up by 28.8% thanks mainly to the revenue contribution as from 1 July generated
by the sales of the metoprolol based products acquired from AstraZeneca. Sales of the treatments for rare diseases in these countries are up by 26.8%.
Other international sales are up by 6.9% as compared to the same period of the preceding year and comprise the sales to, and other revenues from, our licensees for our corporate products, Laboratoires Bouchara Recordati's and Casen Recordati's export sales, Orphan Europe's exports worldwide excluding the U.S.A., and Recordati Rare Diseases exports. The growth is to be attributed mainly to the revenues generated, as from 1 July, by the sales of the metoprolol based products acquired from AstraZeneca in countries where the group is not present directly with its own subsidiaries.
The following table shows the profit and loss accounts, including their expression as a percent of sales and change versus the first nine months of 2016:
| € (thousands) | First nine months 2017 |
% of revenue |
First nine months 2016 |
% of revenue |
Change 2017/2016 |
% |
|---|---|---|---|---|---|---|
| Revenue | 963,827 | 100.0 | 862,370 | 100.0 | 101,457 | 11.8 |
| Cost of sales | (287,596) | (29.8) | (267,301) | (31.0) | (20,295) | 7.6 |
| Gross profit | 676,231 | 70.2 | 595,069 | 69.0 | 81,162 | 13.6 |
| Selling expenses | (246,544) | (25.6) | (226,403) | (26.3) | (20,141) | 8.9 |
| R&D expenses | (72,145) | (7.5) | (60,198) | (7.0) | (11,947) | 19.8 |
| G&A expenses | (48,670) | (5.0) | (47,097) | (5.5) | (1,573) | 3.3 |
| Other income (expense), net | (1,370) | (0.1) | (8,965) | (1.0) | 7,595 | (84.7) |
| Operating income | 307,502 | 31.9 | 252,406 | 29.3 | 55,096 | 21.8 |
| Financial income (expense), net | (11,753) | (1.2) | (8,626) | (1.0) | (3,127) | 36.3 |
| Pretax income | 295,749 | 30.7 | 243,780 | 28.3 | 51,969 | 21.3 |
| Provision for income taxes | (75,943) | (7.9) | (61,463) | (7.1) | (14,480) | 23.6 |
| Net income | 219,806 | 22.8 | 182,317 | 21.1 | 37,489 | 20.6 |
| Attributable to: | ||||||
| Equity holders of the parent | 219,778 | 22.8 | 182,298 | 21.1 | 37,480 | 20.6 |
| Minority interests | 28 | 0.0 | 19 | 0.0 | 9 | 47.4 |
Revenue for the period is € 963.8 million, an increase of € 101.5 million compared to the first nine months of 2016. For a detailed analysis please refer to the preceding "Review of Operations".
Gross profit is € 676.2 million with a margin of 70.2% on sales, an increase over that of the same period of the preceding year due to the further growth of products with higher margins and to the positive effect of the metoprolol based products acquired from AstraZeneca and consolidated as from 1 July.
Selling expenses increase less than sales and are therefore down as a percent of revenue compared to the same period of the preceding year thanks to the increased efficiency of the group's commercial organizations.
R&D expenses are € 72.1 million, up by 19.8% compared to those recorded in the first nine months of 2016 due to the initiation of new development programs, the amortization of the acquired rights to the metoprolol based products and the agreement with MimeTech for the development and subsequent marketing on a global basis of a new compound for the treatment of neurotrophic keratitis, for which an amount of € 7.0 million was due up‐front at the signing of the contract.
G&A expenses are up by 3.3% but diminish as percent of sales to 5.0%.
Net other expense is significantly reduced as compared to that of the same period of the preceding year due to the extraordinary costs incurred in 2016 following the acquisition of the companies Italchimici S.p.A. and Pro Farma AG.
Net financial charges are € 11.8 million, an increase of € 3.1 million compared to the same period of the preceding year due to the interest on the new medium/long term loans granted and the higher currency exchange rate losses.
The effective tax rate during the period is 25.7%, slightly above that of the same period of the preceding year.
Net income at 22.8% of sales is € 219.8 million, an increase of 20.6% over the same period of the preceding year.
The net financial position is set out in the following table:
| € (thousands) | 30 September 2017 |
31 December 2016 |
Change 2017/2016 |
% |
|---|---|---|---|---|
| Cash and short‐term financial investments | 297,930 | 138,493 | 159,437 | 115.1 |
| Bank overdrafts and short‐term loans | (33,038) | (15,689) | (17,349) | 110.6 |
| Loans – due within one year | (51,705) | (40,428) | (11,277) | 27.9 |
| Net liquid assets | 213,187 | 82,376 | 130,811 | 158.8 |
| Loans – due after one year (1) | (534,916) | (281,147) | (253,769) | 90.3 |
| Net financial position | (321,729) | (198,771) | (122,958) | 61.9 |
(1) Includes change in fair value of the relative currency risk hedging instruments (cash flow hedge).
At 30 September 2017 the net financial position shows a net debt of € 321.7 million compared to net debt of € 198.8 million at 31 December 2016. During the period dividends were distributed for a total of € 72.1 million and an amount of \$ 300.0 million (€ 266.9 million) was paid for the acquisition from AstraZeneca of the European marketing rights to the products Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol succinate and felodipine).
On May 31, 2017, Recordati S.p.A. issued and privately placed a bond for a total of € 125.0 million with Pricoa Capital Group. The main terms and conditions provide for a 2.07% fixed interest rate and a duration of 15 years with repayment in annual instalments starting on 31 May 2025. The transaction, the object of which is to provide the necessary liquidity to support the growth of the group, was able to take advantage of the favourable market conditions.
During the third quarter Recordati S.p.A. stipulated three new loan agreements for an overall amount of € 175.0 million with banks of high standing: a € 75.0 million loan granted by Mediobanca until July 2024, a € 50.0 million loan granted by UBI Banca until September 2022 and a € 50.0 million loan granted by UniCredit until September 2021.
Tax liabilities shown in the consolidated balance sheet at 30 September 2017 include those payable to the controlling company FIMEI S.p.A. for an amount of € 7.4 million. This amount refers to tax liabilities computed by the parent Recordati S.p.A. based on estimated taxable income and transferred to the controlling company consequent to the participation in a tax consolidation grouping under tax laws in Italy.
Except for the above, to our knowledge, no transactions or contracts have been entered into with related parties that can be considered significant, in value or conditions, or which could in any way materially affect the accounts.
The following table shows the profit and loss accounts, including their expression as a percent of sales and change versus the third quarter of 2016:
| € (thousands) | Third quarter | % of | Third quarter | % of | Change | % |
|---|---|---|---|---|---|---|
| 2017 | revenue | 2016 | revenue | 2017/2016 | ||
| Revenue | 312,959 | 100.0 | 274,506 | 100.0 | 38,453 | 14.0 |
| Cost of sales | (90,854) | (29.0) | (86,829) | (31.6) | (4,025) | 4.6 |
| Gross profit | 222,105 | 71.0 | 187,677 | 68.4 | 34,428 | 18.3 |
| Selling expenses | (78,023) | (24.9) | (71,188) | (25.9) | (6,835) | 9.6 |
| R&D expenses | (24,993) | (8.0) | (18,572) | (6.8) | (6,421) | 34.6 |
| G&A expenses | (14,829) | (4.7) | (15,299) | (5.6) | 470 | (3.1) |
| Other income (expense), net | 44 | 0.0 | (428) | (0.2) | 472 | (110.3) |
| Operating income | 104,304 | 33.3 | 82,190 | 29.9 | 22,114 | 26.9 |
| Financial income (expense), net | (4,762) | (1.5) | (2,648) | (1.0) | (2,114) | 79.8 |
| Pretax income | 99,542 | 31.8 | 79,542 | 29.0 | 20,000 | 25.1 |
| Provision for income taxes | (26,723) | (8.5) | (19,943) | (7.3) | (6,780) | 34.0 |
| Net income | 72,819 | 23.3 | 59,599 | 21.7 | 13,220 | 22.2 |
| Attributable to: | ||||||
| Equity holders of the parent | 72,811 | 23.3 | 59,594 | 21.7 | 13,217 | 22.2 |
| Minority interests | 8 | 0.0 | 5 | 0.0 | 3 | 60.0 |
Net revenue is € 313.0 million, up by 14.0% over the third quarter 2016. Pharmaceutical sales are € 305.1 million, up by 14.8%. Pharmaceutical chemical sales are € 7.9 million, down by 9.4%.
Gross profit is € 222.1 million with a margin of 71.0% on sales, an increase over that of the same period of the
preceding year due to the further growth of products with higher margins and to the positive consolidation effect of the metoprolol based products acquired from AstraZeneca.
Selling expenses increase less than sales and are therefore down as a percent of revenue compared to the same period of the preceding year thanks to the increased efficiency of the group's commercial organizations.
R&D expenses are € 25.0 million, up by 34.6% compared to those recorded in the third quarter of 2016 due to the initiation of new development programs and to the amortization of the acquired rights to the metoprolol based products.
G&A expenses are down by 3.1% and diminish as percent of sales to 4.7%.
Net financial charges are € 4.8 million, an increase of € 2.1 million compared to the same period of the preceding year due to interest expense on the new medium/long term loans and to the higher currency exchange rate losses.
Net income at 23.3% of sales is € 72.8 million, an increase of 22.2% over the same period of the preceding year.
The group's business continued to perform very well during October and for the full year 2017, including the consolidation as from July of the sales of the metoprolol based products acquired from AstraZeneca, the expectation is to achieve sales of between € 1,290 and 1,300 million, EBITDA of between € 450 and 460 million, EBIT of between € 400 and 410 million and net income of between € 290 and 295 million.
Milan, 26 October 2017
on behalf of the Board of Directors the Vice Chairman and Chief Executive Officer Andrea Recordati
The consolidated financial statements are presented in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) issued or revised by the International Accounting Standards Board (IASB) and adopted by the European Union, and were prepared in accordance with the IAS 34 requirements for interim reporting.
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2017
| € (thousands) | First nine months | First nine months |
|---|---|---|
| 2017 | 2016 | |
| Revenue | 963,827 | 862,370 |
| Cost of sales | (287,596) | (267,301) |
| Gross profit | 676,231 | 595,069 |
| Selling expenses | (246,544) | (226,403) |
| R&D expenses | (72,145) | (60,198) |
| G&A expenses | (48,670) | (47,097) |
| Other income (expense), net | (1,370) | (8,965) |
| Operating income | 307,502 | 252,406 |
| Financial income (expense), net | (11,753) | (8,626) |
| Pretax income | 295,749 | 243,780 |
| Provision for income taxes | (75,943) | (61,463) |
| Net income | 219,806 | 182,317 |
| Attributable to: | ||
| Equity holders of the parent | 219,778 | 182,298 |
| Minority interests | 28 | 19 |
| Earnings per share | ||
| Basic | € 1.064 | € 0.886 |
| Diluted | € 1.051 | € 0.872 |
Earnings per share (EPS) are based on average shares outstanding during each year, 206,627,645 in 2017 and 205,859,219 in 2016, net of average treasury stock which amounted to 2,497,511 shares in 2017 and to 3,265,937 shares in 2016.
Diluted earnings per share is calculated taking into account stock options granted to employees.
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2017
| € (thousands) | 30 September | 31 December |
|---|---|---|
| 2017 | 2016 | |
| Non‐current assets | ||
| Property, plant and equipment | 102,804 | 110,202 |
| Intangible assets | 518,199 | 279,884 |
| Goodwill | 544,452 | 556,566 |
| Other investments | 24,352 | 19,199 |
| Other non‐current assets | 6,361 | 5,428 |
| Deferred tax assets | 64,783 | 37,231 |
| Total non‐current assets | 1,260,951 | 1,008,510 |
| Inventories | 169,652 | 158,800 |
|---|---|---|
| Trade receivables | 246,238 | 205,988 |
| Other receivables | 27,812 | 30,974 |
| Other current assets | 6,987 | 5,481 |
| Fair value of hedging derivatives (cash flow hedge) | 5,154 | 12,497 |
| Short‐term financial investments, | ||
| cash and cash equivalents | 297,930 | 138,493 |
| Total current assets | 753,773 | 552,233 |
| Total assets | 2,014,724 | 1,560,743 |
|---|---|---|
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2017
| € (thousands) | 30 September | 31 December |
|---|---|---|
| 2017 | 2016 | |
| Shareholders' equity | ||
| Share capital | 26,141 | 26,141 |
| Additional paid‐in capital | 83,719 | 83,719 |
| Treasury stock | (19,110) | (76,761) |
| Hedging reserve (cash flow hedge) | (5,313) | (7,420) |
| Translation reserve | (113,198) | (78,309) |
| Other reserves | 39,427 | 35,295 |
| Retained earnings | 823,314 | 756,004 |
| Net income for the year | 219,778 | 237,406 |
| Interim dividend | 0 | (72,245) |
| Group shareholders' equity | 1,054,758 | 903,830 |
| Minority interest | 138 | 110 |
| Shareholders' equity | 1,054,896 | 903,940 |
| Non‐current liabilities | ||
| Loans – due after one year | 534,829 | 293,644 |
| Staff leaving indemnities | 21,797 | 21,675 |
| Deferred tax liabilities | 17,972 | 27,659 |
| Other non‐current liabilities | 2,515 | 2,515 |
| Total non‐current liabilities | 577,113 | 345.493 |
| Current liabilities | ||
| Trade payables | 131,993 | 124,644 |
| Other payables | 81,377 | 77,957 |
| Tax liabilities | 30,682 | 20,432 |
| Other current liabilities | 953 | 562 |
| Provisions | 44,723 | 27,977 |
| Fair value of hedging derivatives (cash flow hedge) | 8,244 | 3,621 |
| Loans – due within one year | 51,705 | 40,428 |
| Bank overdrafts and short‐term loans | 33,038 | 15,689 |
| Total current liabilities | 382,715 | 311,310 |
| Total equity and liabilities | 2,014,724 | 1,560,743 |
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 SEPTEMBER 2017
| € (thousands) | First nine months 2017 |
First nine months 2016 |
|---|---|---|
| Net income for the period | 219,806 | 182,317 |
| Gains/(losses) on cash flow hedges | 2,107 | (812) |
| Gains/(losses) on translation of foreign financial statements |
(34,889) | (9,946) |
| Other gains/(losses) | 3,764 | (5,491) |
| Income and expense for the period recognized directly in equity |
(29,018) | (16,249) |
| Comprehensive income for the period | 190,788 | 166,068 |
| Attributable to: | ||
| Equity holders of the parent | 190,760 | 166,049 |
| Minority interests | 28 | 19 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
| € (thousands) | Share capital |
Additional paid‐in |
Treasury stock |
Hedging reserve |
Translation reserve |
Other reserves |
Retained earnings |
Net income for the |
Interim dividend |
Minority Interest |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| capital | period | ||||||||||
| Balance at 31.12.2015 | 26,141 | 83,719 (35,061) | (3,290) | (66,918) | 42,543 | 685,587 | 198,792 (61,606) | 85 | 869,992 | ||
| Allocation of 2015 net income: |
|||||||||||
| ‐ Dividends | 2,425 | (125,516) 61,606 | (61,485) | ||||||||
| ‐ Retained earnings | 73,276 | (73,276) | |||||||||
| Change in the reserve for share based payments |
872 | 1,900 | 2,772 | ||||||||
| Purchase of own shares | (10,918) | (10,918) | |||||||||
| Disposal of own shares | 28,400 | (6,540) | 21,860 | ||||||||
| Other changes | (16) | (16) | |||||||||
| Comprehensive income for the year |
(812) | (9,946) | (5,491) | 182,298 | 19 | 166,068 | |||||
| Balance at 30.9.2016 | 26,141 | 83,719 (17,579) | (4,102) | (76,864) | 37,924 | 756,632 | 182,298 | 0 | 104 | 988,273 | |
| Balance at 31.12.2016 | 26,141 | 83,719 (76,761) | (7,420) | (78,309) | 35,295 | 756,004 | 237,406 (72,245) | 110 | 903,940 | ||
| Allocation of 2016 net income: |
|||||||||||
| ‐ Dividends | (34,280) | (110,102) 72,245 | (72,137) | ||||||||
| ‐ Retained earnings | 127,304 | (127,304) | |||||||||
| Change in the reserve for share based payments |
368 | 2,604 | 2,972 | ||||||||
| Disposal of own shares | 57,651 | (28,255) | 29,396 | ||||||||
| Other changes | (63) | (63) | |||||||||
| Comprehensive income for the year |
2,107 | (34,889) | 3,764 | 219,778 | 28 | 190,788 | |||||
| Balance at 30.9.2017 | 26,141 | 83,719 (19,110) | (5,313) | (113,198) | 39,427 | 823,314 | 219,778 | 0 | 138 | 1,054,896 |
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2017
| € (thousands) | First nine months 2017 |
First nine months 2016 |
|---|---|---|
| Operating activities | ||
| Cash flow | ||
| Net Income | 219,806 | 182.317 |
| Depreciation of property, plant and equipment | 10,735 | 9.074 |
| Amortization of intangible assets | 23,724 | 18.472 |
| Write‐downs | 0 | 78 |
| Total cash flow | 254,265 | 209.941 |
| (Increase)/decrease in deferred tax assets | (28,216) | (2.106) |
| Increase/(decrease) in staff leaving indemnities | 122 | 422 |
| Increase/(decrease) in other non‐current liabilities | (11,104) | (712) |
| 215,067 | 207.545 | |
| Changes in working capital | ||
| Trade receivables | (40,250) | (16.504) |
| Inventories | (10,852) | (5.171) |
| Other receivables and other current assets | 1,656 | (97) |
| Trade payables | 7,349 | 6.518 |
| Tax liabilities | 10,250 | 21.353 |
| Other payables and other current liabilities | 3,812 | (794) |
| Provisions | 16,746 | 2.475 |
| Changes in working capital | (11,289) | 7.780 |
| Net cash from operating activities | 203,778 | 215.325 |
| Investing activities | ||
| Net (investments)/disposals in property, plant and equipment | (8,555) | (15.426) |
| Net (investments)/disposals in intangible assets | (271,671) | (17.945) |
| Investments in equity | 0 | (119.496) (1) |
| Net (investments)/disposals in equity investments | 28 | 0 |
| Net (increase)/decrease in other non‐current receivables | (933) | (510) |
| Net cash used in investing activities | (281,131) | (153.377) |
| Financing activities | ||
| Net short‐term financial position* of acquired companies | 0 | (21.675) |
| Medium/long term loans granted | 300,117 | 179 |
| Re‐payment of loans | (30,573) | (24.678) |
| Increase in treasury stock | 0 | (10.918) |
| Decrease in treasury stock | 29,396 | 21.860 |
| Effect on shareholders' equity of application of IAS/IFRS | 2,972 | 2.772 |
| Other changes in shareholders' equity | (63) | (16) |
| Dividends paid | (72,137) | (61.485) |
| Change in translation reserve | (10,271) | (5.839) |
| Net cash from/(used in) financing activities | 219,441 | (99.800) |
| Changes in short‐term financial position | 142,088 | (37.852) |
| Short‐term financial position at beginning of year * | 122,804 | 215.676 |
| Short‐term financial position at end of period * | 264,892 | 177.824 |
* Includes cash and cash equivalents net of bank overdrafts and short‐term loans.
(1) Acquisition of Italchimici S.p.A. (105,000): Working capital 2,859, Short‐term financial position* 21,769, Fixed assets (36,448), Goodwill (103,860), Personnel leaving indemnity 1,311, Deferred tax liabilities 9,369.
Acquisition of Pro Farma AG (14,496): Working capital (745), Short‐term financial position* (94), Fixed assets (3,154), Goodwill (10,503).
RECORDATI S.p.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017
The consolidated financial statements at 30 September 2017 comprise Recordati S.p.A. (the Company) and subsidiaries controlled by the Company. The companies included in the consolidated accounts, the consolidation method applied, their percentage of ownership and a description of their activity are set out in attachment 1. During the period ended 30 September 2017 the consolidation perimeter underwent two organizational changes: the Luxembourg company Recordati S.A. Chemical and Pharmaceutical Company was incorporated into the Parent with retroactive fiscal and accounting effect to January 1, and the non operational company Recordati Portuguesa Ltda was liquidated. Furthermore, Recordati Rare Diseases Canada Inc., which operates in the segment dedicated to rare diseases, was established.
The recognition in the accounts of the Italian company Italchimici S.p.A. and the Swiss company Pro Farma AG with its Austrian subsidiary Pro Farma GmbH, acquired respectively in May and July of 2016, is now definite, and the assets and liabilities recognized on a temporary basis in the 2016 financial statements are confirmed.
These financial statements are presented in euro (€) and all amounts are rounded to the nearest thousand euro unless otherwise stated.
The first nine months consolidated financial statements were prepared in accordance with the IAS 34 requirements for interim reporting. The statements do not include the full information required for the annual financial statements and must therefore be read together with the annual report for the full year ended 31 December 2016, prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and adopted by the European Union.
The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Valuation exercises, in particular complex calculations such as those required to identify impairment loss, are carried out in depth only for the preparation of the year‐end consolidated financial statements, except when there is an indication that an asset has suffered an impairment loss which would require an immediate estimate of the loss.
Disclosure of the net financial position and of events subsequent to the end of the period are included under the preceding management review.
Net revenue for the first nine months of 2017 is € 963.8 million (€ 862.4 million in the same period of the preceding year) and can be broken down as follows:
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
|---|---|---|---|
| Net sales | 953,207 | 851,391 | 101,816 |
| Royalties | 3,300 | 4,349 | (1,049) |
| Up‐front payments | 3,291 | 3,903 | (612) |
| Other revenue | 4,029 | 2,727 | 1,302 |
| Total revenue | 963,827 | 862,370 | 101,457 |
Overall operating expenses in the first nine months of 2017 are € 656.3 million, an increase as compared to the € 610.0 million in the same period of the preceding year and are analyzed by function. Personnel costs are € 198.5 million and include a cost for stock options of € 3.0 million. Total depreciation and amortization charges are € 34.5 million, an increase of € 6.9 million over those of the first nine months 2016.
Other income (expense) comprises non‐recurring events, operations and matters which are not often repeated in the ordinary course of business. In the first nine months of 2017 the net amount is other expense of € 1.4 million which includes ancillary costs of € 0.8 million associated with the acquisition from AstraZeneca of the European marketing rights to the products Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol succinate and felodipine).
In the first nine months of 2017 and in the same period of 2016 financial items record a net expense of € 11.8 million and € 8.6 million respectively and are comprised as follows:
| € (thousands) | First nine months 2017 |
First nine months 2016 |
Change 2017/2016 |
|---|---|---|---|
| Currency exchange gains (losses) | (2,290) | (316) | (1,974) |
| Interest expense on loans | (7,307) | (5,740) | (1,567) |
| Net interest income (expense) on short‐term | |||
| financial position | (2,008) | (2,368) | 360 |
| Interest cost in respect of defined benefit plans | (148) | (202) | 54 |
| Total financial income (expense), net | (11,753) | (8,626) | (3,127) |
The composition and variation of property, plant and equipment are shown in the following table:
| € (thousands) | Land & buildings |
Plant & machinery |
Other equipment |
Advances/ construction in progress |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2016 | 79,409 | 223,397 | 64,871 | 7,007 | 374,684 |
| Additions | 942 | 1,844 | 1,803 | 4.200 | 8,789 |
| Disposals | (82) | (681) | (1,214) | (90) | (2,067) |
| Other changes | (2,665) | 1,024 | 546 | (6,529) | (7,624) |
| Balance at 30 September 2017 | 77,604 | 225,584 | 66,006 | 4,588 | 373,782 |
| Accumulated depreciation | |||||
| Balance at 31 December 2016 | 39,286 | 175,238 | 49,958 | 0 | 264,482 |
| Depreciation for the period | 1,917 | 5,924 | 2,894 | 0 | 10,735 |
| Disposals | (61) | (614) | (1,167) | 0 | (1,842) |
| Other changes | (639) | (1,294) | (464) | 0 | (2,397) |
| Balance at 30 Sepbember 2017 | 40,503 | 179,254 | 51,221 | 0 | 270,978 |
| Carrying amount at | |||||
| 30 September 2017 | 37,101 | 46,330 | 14,785 | 4,588 | 102,804 |
| 31 December 2016 | 40,123 | 48,159 | 14,913 | 7,007 | 110,202 |
The additions during the period are € 8.8 million and refer to investments in the Italian plants and in the headquarters building for an amount of € 4.6 million.
The composition and variation of intangible assets are shown in the following table:
| € (thousands) | Patent rights and marketing authorizations |
Distribution, license, trademark and similar rights |
Other | Advance payments |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2016 | 331,194 | 190,565 | 18,221 | 16,732 | 556,712 |
| Additions | 266,881 | 3,574 | 122 | 1,388 | 271,965 |
| Disposals | (48) | (300) | 0 | (2) | (350) |
| Other changes | (14,136) | 1,488 | (135) | (777) | (13,560) |
| Balance at 30 September 2017 | 583,891 | 195,327 | 18,208 | 17,341 | 814,767 |
| Accumulated amortization | |||||
| Balance at 31 December 2016 | 141,883 | 118,577 | 16,368 | 0 | 276,828 |
| Amortization for the period | 13,748 | 9,630 | 346 | 0 | 23,724 |
| Disposals | (47) | 0 | 0 | 0 | (47) |
| Other changes | (2,082) | (1,634) | (221) | 0 | (3,937) |
| Balance at 30 September 2017 | 153,502 | 126,573 | 16,493 | 0 | 296,568 |
| Carrying amount at | |||||
| 30 September 2017 | 430,389 | 68,754 | 1,715 | 17,341 | 518,199 |
| 31 December 2016 | 189,311 | 71,988 | 1,853 | 16,732 | 279,884 |
During the period an agreement was entered into with AstraZeneca for the acquisition of the rights to Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol
succinate and felodipine) treatments in Europe. Metoprolol succinate is a beta‐blocker for the control of hypertension, angina and heart failure. The amount associated with this acquisition booked to additions during the period is of € 266.9 million.
Net goodwill at 30 September 2017 amounts to € 544.5 million, a decrease of € 12.1 million as compared to that at 31 December 2016, and is attributed to the operational areas, which represent the same number of cash generating units:
The recognition in the accounts of the goodwill associated with the companies acquired in 2016, the Italian company Italchimici S.p.A. and the Swiss company Pro Farma AG with its Austrian subsidiary Pro Farma GmbH, are now definite, as prescribed by IFRS 3.
Regarding the Italian company, the measurement of the fair value of the company's assets and liabilities at the date of acquisition which was recognized provisionally in the 2016 financial statements is confirmed. The process did not result in the identification of any item to which allocate the amount paid the company and the entire difference between the amount paid and the book value of the assets and liabilities acquired was allocated to goodwill as it is believed that the value of the acquisition resides in its strategic nature and in the possibility of generating operating synergies.
Also with respect to the Swiss company Pro Farma AG and its Austrian subsidiary Pro Farma GmbH, the measurement of the fair value of the company's assets and liabilities at the date of acquisition which was recognized provisionally in the 2016 financial statements is confirmed. The process resulted in the identification of an increased value of the intangible assets acquired, and in particular of Urocit®, the fair value of which is higher than its book value. Therefore, an amount of € 2.3 million of the difference between the amount paid and the book value of the assets and liabilities acquired was allocated to this intangible asset to bring its book value in line with its fair value. An amount of € 0.3 million was allocated to the relative deferred tax liabilities and the remaining € 8.5 million were allocated to goodwill.
Goodwill related to acquisitions made in countries outside the European Monetary Union is calculated in local currency and converted into Euro at the period‐end exchange rate. Conversion at 30 September 2017 resulted in an overall net decrease of € 12.1 million, compared to that at 31 December 2016, to be attributed to the acquisitions in Turkey (decrease of € 7.9 million), Tunisia (decrease of € 3.6 million), Russia (decrease of € 1.0
million), Switzerland (decrease of € 0.5 million), Poland (increase of € 0.4 million) and the Czech Republic (increase of € 0.5 million).
In compliance with IFRS 3 goodwill is not systematically amortized. Instead, it is tested for impairment on an annual basis or more frequently if specific events or circumstances indicate a possible loss of value. During the period no events or circumstances arose to indicate possible value loss related to any of the abovementioned items.
At 30 September 2017 other investments amount to € 24.4 million and increase by € 5.2 million compared to those at 31 December 2016.
The main investment is that made in the U.K. company PureTech Health plc, specialized in investment in start‐ up companies dedicated to innovative therapies, medical devices and new research technologies. Starting 19 June 2015 the shares of the company were admitted to trading on the London Stock Exchange. At 30 September 2017 the overall fair value of the 9.554.140 shares held is of € 14.3 million. The € 1.1 million increase in value compared to that at 31 December 2016 is booked as revenue for the period recognized directly in equity, net of the relative tax effect, and shown on the statement of comprehensive income.
This account also comprises € 10.0 million relative to an investment made during 2012 in Erytech Pharma S.A., a late development stage French biopharmaceutical company focused on orphan oncology and rare diseases. The investment, originally structured as a non‐interest bearing loan, was converted into 431,034 shares of the company in May 2013. As compared to 31 December 2016 the value of the investment was increased by € 4.1 million to bring it in line with its fair value. This amount, net of its tax effect, is booked to equity and shown on the statement of comprehensive income.
At 30 September 2017 deferred tax assets are € 64.8 million, a net increase of € 27.6 million compared to those at 31 December 2016. Deferred tax liabilities are € 18.0 million, a net decrease of € 9.7 million compared to those at 31 December 2016. Both changes were mainly determined by the revaluation, for tax purposes, of the goodwill and some intangible assets connected with the acquisitions of Italchimici S.p.A. and of Pro Farma AG.
Shareholders' Equity at 30 September 2017 is € 1,054.9 million, an increase of € 151.0 million compared to that at 31 December 2016 for the following reasons:
• dividend paid (decrease of € 72.1 million).
The Italian subsidiary of Orphan Europe is 99% owned giving rise to a minority interest of € 138.0 thousand.
As at 30 September 2017 the Company has two stock option plans in favor of certain group employees in place, the 2010‐2013 plan, under which options were granted on 9 February 2011, on 8 May 2012, on 17 April 2013 and on 30 October 2013 and the 2014‐2018 plan under which options were granted on 29 July 2014 and on 13 April 2016. The strike price of the options is the average of the parent company's listed share price during the 30 days prior to the grant date. Stock options are vested over a period of five years and those not exercised within the eighth year of the date of grant expire. Options cannot be exercised if the employee leaves the company before they are vested. Stock options outstanding at 30 September 2017 are analyzed in the following table.
| Strike price (€) |
Options outstanding at 1.1.2017 |
Options granted during 2017 |
Options exercised during 2017 |
Options cancelled or expired |
Options outstanding at 30.9.2017 |
|
|---|---|---|---|---|---|---|
| Date of grant | ||||||
| 9 February 2011 | 6.7505 | 597,500 | ‐ | (393,000) | ‐ | 204,500 |
| 8 May 2012 | 5.3070 | 1,425,000 | ‐ | (831,000) | ‐ | 594,000 |
| 17 April 2013 | 7.1600 | 120,000 | ‐ | (72,500) | (10,000) | 37,500 |
| 30 October 2013 | 8.9300 | 155,000 | ‐ | (75,000) | ‐ | 80,000 |
| 29 July 2014 | 12.2900 | 4,530,000 | ‐ | (1,335,000) | (174,000) | 3,021,000 |
| 13 April 2016 | 21.9300 | 3,973,000 | ‐ | (216,000) | (234,000) | 3,523,000 |
| Total | 10,800,500 | ‐ | (2,922,500) | (418,000) | 7,460,000 |
At 30 September 2017, 968,762 own shares are held as treasury stock, a decrease of 2,922,500 shares as compared to those at 31 December 2016. The change is to be attributed to the disposal of 2,922,500 shares for an overall value of € 29.4 million to service the exercise of stock options issued under the stock option plans. The overall purchase cost of the shares held in treasury stock is € 19.1 million with an average unit price of € 19.73.
At 30 September 2017 medium and long‐term loans are € 586.5 million. The net increase of € 252.4 million compared to those at 31 December 2016 is determined by new loans for an amount of € 300.1 million, reimbursements during the period for an amount of € 30.6 million and by a decrease of € 17.1 million arising from the conversion of loans in foreign currency.
On 29 September 2017 the Parent undersigned a loan agreement with UniCredit for an amount of € 50.0 million, disbursed net of up‐front commissions of 0.15%. The main terms and conditions provide for variable interest rate fixed at the six months Euribor plus a spread of 55 basis points with semi‐annual payments of interest and the repayment of capital on 29 September 2021. The loan is entirely covered with an interest rate swap, qualifying as a cash flow hedge, effectively converting the interest charges from variable to a fixed rate of 0.698%. loan. The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
On 7 September 2017 the Parent undersigned a loan agreement with UBI Banca for an amount of € 50.0 million, disbursed net of up‐front commissions of 0.10%. The main terms and conditions provide for variable interest rate fixed at the six months Euribor plus a spread of 50 basis points with semi‐annual payments of interest and the repayment of capital on 7 September 2022. The loan is entirely covered with an interest rate swap, qualifying as a cash flow hedge, effectively converting the interest charges from variable to a fixed rate of 0.714%. loan. The measurement at fair value at 30 September 2017 of the swap generated an asset of € 0.1 million which is recognized directly as an increase in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current assets (see Note 17). The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
On 28 July 2017 the Parent undersigned a loan agreement with Mediobanca for an amount of € 75.0 million. The main terms and conditions provide for variable interest rate fixed at the six months Euribor plus a spread of 95 basis points and a duration of 7 years with annual repayments of capital from July 2018 through July 2024. The loan is entirely covered with an interest rate swap, qualifying as a cash flow hedge, effectively converting the interest charges from variable to a fixed rate of 1.29%. loan. The measurement at fair value at 30 September 2017 of the swap generated a liability of € 0.4 million which is recognized directly as a decrease in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current liabilities (see Note 17). The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
In May 2017 the Parent privately placed guaranteed senior notes for an overall amount of € 125.0 million at 2.07% fixed interest rate with repayment in annual instalments starting on 31 May 2025 through 31 May 2032. The note purchase agreement covering the notes includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
The main long‐term loans outstanding are:
a) A loan agreement with Banca Nazionale del Lavoro undersigned by the Parent company in December 2016 for an amount of € 25.0 million, disbursed net of expenses and commissions of € 0.1 million. The main terms and conditions provide for variable interest rate fixed at the six months Euribor plus a spread of 40 basis points and a duration of 4 years with semi‐annual repayments of capital from March 2019 through September 2020. The loan is entirely covered with an interest rate swap, qualifying as a cash flow hedge,
effectively converting the interest charges from variable to a fixed rate of 0.41%. The measurement at fair value at 30 September 2017 of the swap generated a liability of € 0.1 million which is recognized directly as a decrease in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current liabilities (see Note 17). The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions are amply fulfilled.
The above conditions are amply fulfilled.
The above conditions are amply fulfilled.
The above conditions are amply fulfilled.
• the ratio of consolidated operating income to consolidated net interest expense (for a period of twelve consecutive months) must exceed 3.00 to 1.00.
The above conditions were amply fulfilled during the period.
The above conditions are amply fulfilled.
The above conditions were amply fulfilled during the period.
j) A loan agreement with Centrobanca undersigned by the Parent company on 30 November 2010 to fund a three‐year research and investment program. The loan, for which Centrobanca received funding from the European Investment Bank, amounts to € 75.0 million of which € 30.0 million were cashed in during 2010 and € 45.0 million in the first quarter of 2011, net of the € 0.3 million expenses. The main terms and conditions provide for a variable interest rate and a duration of 12 years with semi‐annual repayments of capital from June 2012 through December 2022. The residual amount of the loan amounts to € 37.4 million at 30 September 2017. During the month of June 2012 interest on the whole loan was covered with an interest rate swap qualifying as a cash flow hedge. The current interest rate on the loan is 2.575%. The measurement at fair value of the hedging instrument at 30 September 2017 generated a liability of € 1.6 million which is recognized directly as a decrease in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current liabilities (see Note 17). The loan agreement
includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
The staff leaving indemnity fund at 30 September 2017 is of € 21.8 million and is measured as prescribed by IAS 19.
Other non‐current liabilities at 30 September 2017 are € 2.5 million and refer entirely to the debt for the acquisition of a further 10% of the share capital of Opalia Pharma which, in line with the put and call options in the purchase agreement, is expected to be settled not before the next 12 months.
Inventories are € 169.7 million, an increase of € 10.9 million compared to those stated at 31 December 2016.
Trade receivables at 30 September 2017 are € 246.2 million, an increase of € 40.2 million compared to that at 31 December 2016 due to the significant increase in sales. Trade receivables are stated net of a € 16.0 million provision for doubtful accounts which reflects the collection risk connected with certain customers and geographic areas. Days sales outstanding are 68.
Other receivables, at € 27.8 million, decrease by € 3.2 million compared to those at 31 December 2016.
Other current assets are € 7.0 million and refer mainly to prepaid expenses.
Trade payables, which include the accrual for invoices to be received, are € 132.0 million.
Other payables are € 81.4 million, an increase of € 3.4 million compared to those at 31 December 2016, and relate mainly to amounts owed to personnel and social security institutions. This account also includes:
Tax payables are € 30.7 million, an increase of € 10.3 million compared to those at 31 December 2016.
Provisions are € 44.7 million, a decrease of € 16.7 million compared to those at 31 December 2016, mainly due to the provision to cover risks connected with fiscal cases.
The cross currency swaps covering the cash flows related to the notes issued and privately placed on 30 September 2014, for an amount of \$ 75 million, measured at fair value at 30 September 2017 give rise to a € 5.1 million asset recognized under current assets as 'Fair value of hedging derivatives (cash flow hedge)'. This amounts represents the potential benefit of a lower value in euros of the future dollar denominated capital and interest flows, in view of the revaluation of the foreign currency subsequent to the moment in which the loan and hedging instrument were negotiated. In particular, the change in fair value of the hedging instrument covering the \$ 50 million tranche of the loan, provided by Mediobanca, was positive for an amount of € 3.5 million, and that covering the \$ 25 million tranche of the loan, provided by UniCredit, yielded a € 1.6 million positive value change.
The measurement at fair value of the interest rate swap covering the medium/long‐term loan agreement stipulated between the Parent and UBI Banca gave rise to a € 0.1 million asset at 30 September 2017 recognized under current assets as 'Fair value of hedging derivatives (cash flow hedge)'. This amount represents the opportunity of paying the rates agreed instead of the current expected future rates for the duration of the loan.
The measurement at fair value of the interest rate swaps covering the cash flows related to medium and long‐ term loans gave rise to a net € 3.0 million liability at 30 September 2017 recognized under current liabilities as 'Fair value of hedging derivatives (cash flow hedge)'. This amount represents the unrealized opportunity of paying the current expected future rates instead of the rates agreed. The amount refers to the interest rate swaps to cover the interest rate risk associated with the loans granted by Centrobanca (€ 1.6 million), UniCredit (€ 0.4 million), Mediobanca (€ 0.4), ING Bank (€ 0.4 million), Banca Nazionale del Lavoro (2013 loan € 0.1 million, 2016 loan € 0.1 million), and by Intesa Sanpaolo (€ 0.1 million).
In November 2016, following two loan agreements undersigned by the U.S. company Recordati Rare Diseases and the Parent for a nominal total of \$ 70 million (corresponding to the two tranches of the notes issued by Recordati Rare Diseases in 2013), two cross currency swaps were provided by Unicredit which effectively convert the loan into a total of € 62.9 million, of which € 35.9 million at a fixed interest rate of 1.56% per year corresponding to the tranche expiring in 2023 and € 27.0 million at a fixed interest rate of 1.76% per year for the tranche expiring in 2025. At 30 September 2017 the fair value of the hedging instruments is a liability of € 5.2 million, recognized directly in equity.
Short term financial investments, cash and cash equivalents at 30 September 2017 are € 297.9 million, an increase of € 159.4 million compared to those at 31 December 2016. They are mostly denominated in Euro, U.S. Dollars and Pounds Sterling and comprise mainly current accounts and short‐term deposits.
Bank overdrafts and short‐term loans are € 33.0 million at 30 September 2017 and are comprised mainly of temporary use of lines of credit, current account overdrafts and interest accrued on existing loans. At 30 September 2017 a total of 20 million Turkish Lira, for an equivalent amount of € 4.8 million, were drawn down on the revolving line of credit obtained in July 2017 by Recordati Ilaç, the subsidiary in Turkey, for a maximum amount of 40 million Turkish Lira. This short‐term financing instrument, which has 24 months maximum duration, provides flexibility by combining the fact that it's non‐revocable with the variability of the draw‐
downs based on specific financial needs. The agreement contains financial covenants in line with those already in place for other loans.
The financial information reported by line of business and by geographical area, in compliance with IFRS 8 – Operating segments, is prepared using the same accounting principles and reporting standards used for the preparation and disclosure of the Group consolidated financial statements. Following the acquisition of Orphan Europe two main business segments can be identified, the pharmaceutical segment and the orphan drugs segment.
The following table shows financial information for these two business segments as at 30 September 2017 and includes comparative data.
| € (thousands) | Pharmaceutical segment* |
Orphan drugs segment |
Non‐allocated | Consolidated accounts |
|---|---|---|---|---|
| First nine months 2017 | ||||
| Revenues | 802,561 | 161,266 | ‐ | 963,827 |
| Expenses | (568,965) | (87,360) | ‐ | (656,325) |
| Operating income | 233,596 | 73,906 | ‐ | 307,502 |
| First nine months 2016 | ||||
| Revenues | 721,728 | 140,642 | ‐ | 862,370 |
| Expenses | (533,638) | (76,326) | ‐ | (609,964) |
| Operating income | 188,090 | 64,316 | ‐ | 252,406 |
* Includes the pharmaceutical chemicals operations
| € (thousands) | Pharmaceutical segment* |
Orphan drugs segment |
Non‐allocated ** |
Consolidated accounts |
|---|---|---|---|---|
| 30 September 2017 | ||||
| Non‐current assets | 1,048,636 | 187,963 | 24,352 | 1,260,951 |
| Inventories | 152,426 | 17,226 | ‐ | 169,652 |
| Trade receivables | 203,724 | 42,514 | ‐ | 246,238 |
| Other current assets | 28,641 | 6,158 | 5,154 | 39,953 |
| Short‐term investments, cash and | ||||
| cash equivalents | ‐ | ‐ | 297,930 | 297,930 |
| Total assets | 1,433,427 | 253,861 | 327,436 | 2,014,724 |
| Non‐current liabilities | 37,741 | 2,815 | 536,557 | 577,113 |
| Current liabilities | 251,931 | 37,797 | 92,987 | 382,715 |
| Total liabilities | 289,672 | 40,612 | 629,544 | 959,828 |
| Net capital employed | 1,143,755 | 213,249 | ||
| 31 December 2016 | ||||
| Non‐current assets | 788,083 | 201,228 | 19,199 | 1,008,510 |
| Inventories | 140,939 | 17,861 | ‐ | 158,800 |
| Trade receivables | 174,540 | 31,448 | ‐ | 205,988 |
| Other current assets | 32,782 | 3,673 | 12,497 | 48,952 |
| Short‐term investments, cash and | ||||
| cash equivalents | ‐ | ‐ | 138,493 | 138,493 |
| Total assets | 1,136,344 | 254,210 | 170,189 | 1,560,743 |
| Non‐current liabilities | 48,602 | 2,926 | 293,965 | 345,493 |
| Current liabilities | 213,723 | 37,848 | 59,739 | 311,310 |
| Total liabilities | 262,325 | 40,774 | 353,704 656,803 | |
| Net capital employed | 874,019 | 213,436 |
* Includes the pharmaceutical chemicals operations.
** Non‐allocated amounts include: other equity investments, short‐term investments, cash and cash equivalents, loans, hedging instruments, bank overdrafts and short‐term loans.
The pharmaceutical chemicals operations are considered part of the pharmaceutical segment as they are prevalently dedicated to the production of active ingredients for this business, both from a strategic and organizational point of view.
On 29 September 2006 the Parent received a notice of tax assessment from the Internal Revenue Service stating certain additional taxes for the fiscal year 2003 in the amount of: corporate tax of € 2.3 million, IRAP of € 0.2 million and VAT of € 0.1 million and additional tax liabilities of € 2.6 million. The Company believed no amount was due as it considered the assessment flawed both from a legitimacy as well as a substantive point of view, and was supported in its position by professional opinion. An appeal was therefore filed with the Provincial Tax Commission of Milan. The first degree judgement before the Provincial Tax Commission was concluded partially in the Company's favour with decision n. 539/33/07 dated 11 October 2007, filed on 16 October 2007. An appeal was filed against that judgment with the Regional Tax Commission of Milan firstly by the Milan office of the Tax Authorities with notice served on 8 November 2008 and secondly by the Company with notice served on 7 January 2009. With a decision dated June 10, 2009 n. 139/32/09, filed on November 27, 2009 the Regional Tax Commission of Milan rejected the interlocutory appeal presented by the Company and accepted the principal appeal of the Agenzia delle Entrate di Milano (Inland Revenue of Milan). On the
basis of that decision, the claims included in the above mentioned tax assessment for the year 2003 have been essentially fully confirmed and the Company has paid all amounts due. On 26 May 2010 the Company appealed that decision before the Corte Suprema di Cassazione (Supreme Court of Cassation). On 20 April 2017 the hearing took place and as a result with the decision n. 20805/17, handed down on 6 September 2017, the Court came to the decision to almost reject all the Company's arguments.
On 24 September 2014 the Italian Tax Police (Guardia di Finanza) visited Recordati S.p.A. as part of the general tax inspection regarding IRES (corporate income tax) and IRAP (regional value added tax) for the years 2010 through 2012. The 2010 inspection was concluded with a formal notice of assessment issued on 23 September 2015 in which the tax inspectors considered a cost item for services rendered for an amount of € 50,000 not to be sufficiently documented and therefore not deductible for income tax purposes. On 19 October 2015 the Company applied for a voluntary assessment procedure, which ended with the payment of the taxes and penalties owed by the Company.
On 26 July 2016, on the basis of the same tax audit of the Parent above mentioned, the Italian Tax Police issued a Tax Audit Report for the 2011 tax year, and subsequent notice of assessment issued by the Internal Revenue Service, which, based on the issues raised in the Tax Audit Report, disallowed costs for services rendered for an amount of € 50,000 ‐ an issue with regard to which a notice of assessment was already issued for 2010 ‐ being not sufficiently documented. On 15 December 2016 the Company settled the dispute by accepting the remark in the notice of assessment without any challenging.
On 25 September 2017, again within the same tax audit of the Parent above mentioned, the Italian Tax Police issued a Tax Audit Report for the 2012 tax year, which shall be followed up by a notice of assessment by the Internal Revenue Service, disallowing costs for services rendered for an amount of € 50,000 ‐ an issue with regard to which notices of assessment were already issued for the previous tax periods ‐ being not sufficiently documented and therefore not deductible for income tax purposes.
In December 2015 the same Italian Tax Police (Guardia di Finanza) notified the Parent of their intention to commence a general income tax inspection covering the years 2009 through 2014 involving the group companies which reside in Ireland and in Luxembourg, Recordati Ireland Ltd and Recordati S.A. Chemical and Pharmaceutical Company respectively. The declared intention of the inspection is to evaluate the operational context of the foreign companies in order to verify whether said companies are in reality only formally localized abroad but are substantially managed/administered from Italy. On 28 February 2017 the Italian Tax Police (Guardia di Finanza) prescribed the extension of the income tax inspection to include the year 2015. After having analysed the documents and completed the investigation process, the Italian Tax Police finally revealed to Recordati Ireland Ltd., on 6 September 2017, their reasons for considering the Irish company subject to tax in Italy for corporate tax purposes in the reference period, resulting in an assessment of taxes allegedly owed to Italy, in the amount of € 109,4 million, against taxes of € 51,8 million already paid in Ireland. Similarly, the Italian Tax Police finally revealed to Recordati S.A. Chemical and Pharmaceutical Company, on 6 September 2017, their reasons for considering the Luxembourg company subject to tax in Italy for corporate tax purposes in the reference period, resulting in an assessment of taxes allegedly owed to Italy, in the amount of € 7.2 million. The Company, supported in its position by professional opinion, maintains that the companies under inspection operate in such a way as to justify the correctness of the fiscal policy adopted.
SUBSIDIARIES INCLUDED IN THE CONSOLIDATED ACCOUNTS AT 30 SEPTEMBER 2017
| Consolidated Companies | Head Office | Share Capital | Currency | Consolidation Method |
|---|---|---|---|---|
| RECORDATI S.P.A. Development, production, marketing and sales of pharmaceuticals and pharmaceutical chemicals |
Italy | 26,140,644.50 | Euro | Line‐by‐line |
| INNOVA PHARMA S.P.A. Marketing and sales of pharmaceuticals |
Italy | 1,920,000.00 | Euro | Line‐by‐line |
| CASEN RECORDATI S.L. Development, production, marketing and sales of pharmaceuticals |
Spain | 238,966,000.00 | Euro | Line‐by‐line |
| BOUCHARA RECORDATI S.A.S. Development, production, marketing and sales of pharmaceuticals |
France | 4,600,000.00 | Euro | Line‐by‐line |
| RECORDATI RARE DISEASES COMERCIO DE MEDICAMENTOS LTDA Dormant, holds pharmaceutical marketing rights in Brazil |
Brazil | 166.00 | BRL | Line‐by‐line |
| RECORDATI RARE DISEASES INC. Development, production, marketing and sales of pharmaceuticals |
U.S.A. | 11,979,138.00 | USD | Line‐by‐line |
| RECORDATI IRELAND LTD Development, production, marketing and sales of pharmaceuticals |
Ireland | 200,000.00 | Euro | Line‐by‐line |
| RECORDATI S.A. Marketing and sales of pharmaceuticals |
Switzerland | 2,000,000.00 | CHF | Line‐by‐line |
| LABORATOIRES BOUCHARA RECORDATI S.A.S. Development, production, marketing and sales of pharmaceuticals |
France | 14,000,000.00 | Euro | Line‐by‐line |
| RECORDATI PHARMA GmbH Marketing and sales of pharmaceuticals |
Germany | 600,000.00 | Euro | Line‐by‐line |
| RECORDATI PHARMACEUTICALS LTD Marketing and sales of pharmaceuticals |
United Kingdom | 15,000,000.00 | GBP | Line‐by‐line |
| RECORDATI HELLAS PHARMACEUTICALS S.A. Marketing and sales of pharmaceuticals |
Greece | 10,050,000.00 | Euro | Line‐by‐line |
| JABA RECORDATI S.A. Marketing and sales of pharmaceuticals |
Portugal | 2,000,000.00 | Euro | Line‐by‐line |
| JABAFARMA PRODUTOS FARMACÊUTICOS S.A. Marketing of pharmaceuticals |
Portugal | 50,000.00 | Euro | Line‐by‐line |
| BONAFARMA PRODUTOS FARMACÊUTICOS S.A. Marketing of pharmaceuticals |
Portugal | 50,000.00 | Euro | Line‐by‐line |
| RECORDATI ORPHAN DRUGS S.A.S. Holding company |
France | 57,000,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE SWITZERLAND GmbH Marketing and sales of pharmaceuticals |
Switzerland | 20,000.00 | CHF | Line‐by‐line |
| ORPHAN EUROPE MIDDLE EAST FZ LLC Marketing and sales of pharmaceuticals |
United Arab Emirates |
100,000.00 | AED | Line‐by‐line |
| ORPHAN EUROPE NORDIC A.B. Marketing and sales of pharmaceuticals |
Sweden | 100,000.00 | SEK | Line‐by‐line |
| ORPHAN EUROPE PORTUGAL LDA Marketing and sales of pharmaceuticals |
Portugal | 5,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE S.A.R.L. Development, production, marketing and sales of pharmaceuticals |
France | 320,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE UNITED KINGDOM LTD Marketing and sales of pharmaceuticals |
United Kingdom | 50,000.00 | GBP | Line‐by‐line |
| ORPHAN EUROPE GERMANY GmbH Marketing and sales of pharmaceuticals |
Germany | 25,600.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE SPAIN S.L. Marketing and sales of pharmaceuticals |
Spain | 1,775,065.49 | Euro | Line‐by‐line |
| Consolidated Companies | Head Office | Share Capital | Currency | Consolidation Method |
|---|---|---|---|---|
| ORPHAN EUROPE ITALY S.R.L. Marketing and sales of pharmaceuticals |
Italy | 40,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE BENELUX BVBA Marketing and sales of pharmaceuticals |
Belgium | 18,600.00 | Euro | Line‐by‐line |
| FIC MEDICAL S.A.R.L. Marketing of pharmaceuticals |
France | 173,700.00 | Euro | Line‐by‐line |
| HERBACOS RECORDATI s.r.o. Development, production, marketing and sales of pharmaceuticals |
Czech Republic | 25,600,000.00 | CZK | Line‐by‐line |
| RECORDATI SK s.r.o. Marketing and sales of pharmaceuticals |
Slovakia | 33,193.92 | Euro | Line‐by‐line |
| RUSFIC LLC Marketing and sales of pharmaceuticals |
Russian Federation | 3,560,000.00 | RUB | Line‐by‐line |
| RECOFARMA ILAÇ Ve Hammaddeleri Sanayi Ve Ticaret L.Ş. Marketing of pharmaceuticals |
Turkey | 10,000.00 | TRY | Line‐by‐line |
| RECORDATI ROMÂNIA S.R.L. Marketing and sales of pharmaceuticals |
Romania | 5,000,000.00 | RON | Line‐by‐line |
| RECORDATI İLAÇ Sanayi Ve Ticaret A.Ş. Development, production, marketing and sales of pharmaceuticals |
Turkey | 120,875,367.00 | TRY | Line‐by‐line |
| RECORDATI POLSKA Sp. z o.o. Marketing and sales of pharmaceuticals |
Poland | 4,500,000.00 | PLN | Line‐by‐line |
| ACCENT LLC Holds pharmaceutical marketing rights |
Russian Federation | 20,000.00 | RUB | Line‐by‐line |
| RECORDATI UKRAINE LLC Marketing of pharmaceuticals |
Ukraine | 1,031,896.30 | UAH | Line‐by‐line |
| CASEN RECORDATI PORTUGAL Unipessoal Lda Marketing and sales of pharmaceuticals |
Portugal | 100,000.00 | Euro | Line‐by‐line |
| OPALIA PHARMA S.A. Development, production, marketing and sales of pharmaceuticals |
Tunisia | 9,656,000.00 | TND | Line‐by‐line |
| OPALIA RECORDATI S.A.R.L. Marketing of pharmaceuticals |
Tunisia | 20,000.00 | TND | Line‐by‐line |
| RECORDATI RARE DISEASES S.A. DE C.V. Marketing of pharmaceuticals |
Mexico | 16,250,000.00 | MXN | Line‐by‐line |
| RECORDATI RARE DISEASES COLOMBIA S.A.S Marketing of pharmaceuticals |
Colombia | 150,000,000.00 | COP | Line‐by‐line |
| ITALCHIMICI S.p.A. (1) Marketing of pharmaceuticals |
Italy | 7,646,000.00 | EUR | Line‐by‐line |
| PRO FARMA AG (1) Marketing of pharmaceuticals |
Switzerland | 3,000,000.00 | CHF | Line‐by‐line |
| PRO FARMA GmbH (1) Marketing of pharmaceuticals |
Austria | 35,000.00 | EUR | Line‐by‐line |
| RECORDATI RARE DISEASES CANADA Inc. (2) Marketing of pharmaceuticals |
Canada | 350,000.00 | CAD | Line‐by‐line |
(1) Acquired in 2016
(2) Established in 2017
| PERCENTAGE OF OWNERSHIP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated companies | Recordati S.p.A. (Parent) |
Recordati Pharma GmbH |
Bouchara Recordati S.A.S. |
Casen Recordati S.L. |
Recordati Orphan Drugs S.A.S. |
Orphan Europe S.A.R.L. |
Herbacos Recordati s.r.o. |
Recordati Ilaç A.Ş. |
Opalia Pharma S.A. |
Pro Farma AG |
Total |
| INNOVA PHARMA S.P.A. | 100.00 | 100.00 | |||||||||
| CASEN RECORDATI S.L. | 100.00 | 100.00 | |||||||||
| BOUCHARA RECORDATI S.A.S. | 100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES COMERCIO DE MEDICAMENTOS LTDA |
99.398 | 0.602 | 100.00 | ||||||||
| RECORDATI RARE DISEASES INC. | 100.00 | 100.00 | |||||||||
| RECORDATI IRELAND LTD | 100.00 | 100.00 | |||||||||
| RECORDATI S.A. | 100.00 | 100.00 | |||||||||
| LABORATOIRES BOUCHARA RECORDATI S.A.S. |
100.00 | 100.00 | |||||||||
| RECORDATI PHARMA GmbH | 55.00 | 45.00 | 100.00 | ||||||||
| RECORDATI PHARMACEUTICALS LTD |
100.00 | 100.00 | |||||||||
| RECORDATI HELLAS PHARMACEUTICALS S.A. |
100.00 | 100.00 | |||||||||
| JABA RECORDATI S.A. | 100.00 | 100.00 | |||||||||
| JABAFARMA PRODUTOS FARMACÊUTICOS S.A. |
100.00 | 100.00 | |||||||||
| BONAFARMA PRODUTOS FARMACÊUTICOS S.A. |
100.00 | 100.00 | |||||||||
| RECORDATI ORPHAN DRUGS S.A.S. |
90.00 | 10.00 | 100.00 | ||||||||
| ORPHAN EUROPE SWITZERLAND GmbH |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE MIDDLE EAST FZ LLC |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE NORDIC A.B. | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE PORTUGAL LDA |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE S.A.R.L. | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE UNITED KINGDOM LTD |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE GERMANY GmbH |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE SPAIN S.L. | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE ITALY S.R.L. | 99.00 | 99.00 | |||||||||
| ORPHAN EUROPE BENELUX BVBA |
99.46 | 0.54 | 100.00 | ||||||||
| FIC MEDICAL S.A.R.L. | 100.00 | 100.00 |
| PERCENTAGE OF OWNERSHIP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated companies | Recordati S.p.A. (Parent) |
Recordati Pharma GmbH |
Bouchara Recordati S.A.S. |
Casen Recordati S.L. |
Recordati Orphan Drugs S.A.S. |
Orphan Europe S.A.R.L. |
Herbacos Recordati s.r.o. |
Recordati Ilaç A.Ş. |
Opalia Pharma S.A. |
Pro Farma AG |
Total |
| HERBACOS RECORDATI s.r.o. | 100.00 | 100.00 | |||||||||
| RECORDATI SK s.r.o. | 100.00 | 100.00 | |||||||||
| RUSFIC LLC | 100.00 | 100.00 | |||||||||
| RECOFARMA ILAÇ Ve Hammaddeleri Sanayi Ve Ticaret L.Ş. |
100.00 | 100.00 | |||||||||
| RECORDATI ROMÂNIA S.R.L. | 100.00 | 100.00 | |||||||||
| RECORDATI İLAÇ Sanayi Ve Ticaret A.Ş. |
100.00 | 100.00 | |||||||||
| RECORDATI POLSKA Sp. z o.o |
100.00 | 100.00 | |||||||||
| ACCENT LLC | 100.00 | 100.00 | |||||||||
| RECORDATI UKRAINE LLC | 0.01 | 99.99 | 100.00 | ||||||||
| CASEN RECORDATI PORTUGAL Unipessoal Lda |
100.00 | 100.00 | |||||||||
| OPALIA PHARMA S.A. | 90.00 | 90.00 | |||||||||
| OPALIA RECORDATI S.A.R.L. |
1.00 | 99.00 | 100.00 | ||||||||
| RECORDATI RARE DISEASES S.A. DE C.V. |
99.998 | 0.002 | 100.00 | ||||||||
| RECORDATI RARE DISEASES COLOMBIA S.A.S. |
100.00 | 100.00 | |||||||||
| ITALCHIMICI S.p.A. (1) | 100.00 | 100.00 | |||||||||
| PRO FARMA AG (1) | 100.00 | 100.00 | |||||||||
| PRO FARMA GmbH (1) | 100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES CANADA Inc.(2) |
100.00 | 100.00 |
(1) Acquired in 2016 (2) Established in 2017
The manager responsible for preparing the company's financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154‐bis of the Consolidated Law on Finance, that the accounting information contained in this report corresponds to the document results, books and accounting records.
Milan, 26 October 2017
Signed by Fritz Squindo Manager responsible for preparing the Company's financial reports
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.