Biohit Oyj

Annual Report • Mar 1, 2011

	Page
Report of the Board of Directors	3
Corporate governance	9
Consolidated statement of comprehensive income	13
Consolidated balance sheet	14
Consolidated statement of changes in shareholders' equity	15
Consolidated cash flow statement	16
Notes to the consolidated financial statements	17
Key ratios	34
Shares and shareholders	35
Formulas for the key ratios	37
Parent company income statement	37
Parent company balance sheet	38
Parent company cash flow statement	38
Notes to the parent company's financial statements	39
Board of Directors' dividend proposal	45
Signatures to the financial statements	45
Auditor's report	46

REPORT OF THE BOARD OF DIRECTORS 2010

SUMMARY

• • Net sales EUR 40.0 million (EUR 35.4 million 1-12/2009)
• • Operating profit EUR 0.5 million (EUR 1.2 million)
• • Profit before taxes EUR 0.4 million (EUR 0.7 million)
• • International operations accounted for 95.6 per cent (95.8%) of net sales
• • Earnings per share EUR 0.00 (EUR 0.03)

For Biohit, 2010 was the best year in the company's history in terms of net sales growth, and the third consecutive year of profitable operations. It was also a year of major changes. Growing internationalisation and increasing competition prompted Biohit to rethink and revise its strategy, operating model, and organisation.

The demand for Biohit's products perked up at the end of 2009 and continued throughout 2010. Market recovery also drove our performance: net sales grew by 13.2 per cent from the previous year to EUR 40.0 million. This growth could be partly attributed to post-recession investment activity but also to a genuine increase in demand. The diagnostics business was able to grow its sales by 23.7 per cent. The liquid handling business also saw strong sales development – 12.7 per cent.

The maintenance business grew by 7.6 per cent during the year. The company believes the maintenance and calibration service business continues to offer good growth potential and we have therefore identified it as one of our strategic growth areas. Maintenance also represents an important interface with end-users.

The operating result of EUR 0.5 million recorded in 2010 failed to reach the previous year's level. Profitability was reduced by the costs arising from the expansion of our international sales organisation, and costs from the Acetium launch, as well as costs arising from higher freight and raw material expenses.

THE GROUP'S KEY FIGURES

	1-12/	1-12/	Change	1-12/
	2010	2009	%	2008
Net sales, MEUR	40.0	35.4	13.2	35.1
Operating profit/loss, EUR million	0.5	1.2	-57.4	1.3
% of net sales	1.3%	3.4%		3.7%
Profit/loss before taxes	0.4	0.7	-42.0	1.0
Profit/loss for the period	0.1	0.4	-84.3	0.9
Investments, gross, EUR million	2.6	2.4	5.3	1.2
% of net sales	6.4%	6.9%		3.5%
R&D expenditure, EUR million	2.5	2.4	4.6	2.0
% of net sales	6.4%	6.8%		5.8%
Average number of personnel	412	370	11.5	369
Number of personnel at
end of period	431	383	12.4	360
Equity ratio, %	44.5%	46.8%		46.5%
Earnings per share, EUR	0.00	0.03	-84.3	0.07
Shareholders' equity per
share, EUR	1.01	0.99	2.0	0.97
Average number of shares
during the period	12,937,627	12,937,627	0	12,937,627
Number of shares at
end of period	12,937,627	12,937,627	0	12,937,627

SEGMENT REPORTING

Biohit reports on its business segments, which are the liquid handling and diagnostics businesses. In addition, the company reports its net sales by main market area.

NET SALES AND RESULT

In the reporting period, the Biohit Group's net sales were up 13.2 per cent on the corresponding period in 2009, totalling EUR 40.0 million (EUR 35.4 million). International operations accounted for 95.6 per cent (95.8%) of net sales

The operating profit for the period amounted to EUR 0.5 million (EUR 1.2 million) and profit before taxes to EUR 0.4 million (EUR 0.7 million). Earnings per share were EUR 0.00 (EUR 0.03).

The trend in net sales outperformed expectations during the period. Growth was boosted by the fact that net sales in the comparison period were lower than usual. Net sales have grown in all the main market areas, particularly Asia and North America.

Profitability in the reporting period was weakened by the investments made to strengthen the sales and marketing organisation, and the costs associated with the launch of the Acetium capsule. The result for the period was improved by currency exchange gains allocated to financial items.

Key figures by segment

Sales and maintenance of liquid handling products accounted for 94.4 per cent of net sales during the reporting period. The liquid handling business generated net sales of EUR 37.8 million during the period (EUR 33.6 million) with maintenance services accounting for 18.1 per cent (18.9%). Net sales in the diagnostics business totalled EUR 2.2 million (EUR 1.8 million), with Acetium sales representing 4.3 per cent (0.0%). The liquid handling business grew by 12.7 per cent and the diagnostics business by 23.7 per cent.

The operating profit of the liquid handling business amounted to EUR 3.4 million (EUR 3.2 million), while the operating loss of the diagnostics business totalled EUR 2.9 million (loss EUR 2.0 million).

The increase in fixed costs before any net sales growth can be attributed to the new product launches in the diagnostics business.

Group net sales by business segment

	1-12 2010	1-12 2009
	MEUR	MEUR	Change %
Liquid Handling	37.8	33.6	12.7%
Diagnostics	2.2	1.8	23.7%
Total	40.0	35.4	13.2%

Consolidated operating result by business segment

	1-12 2010	1-12 2009
	MEUR	MEUR	Change %
Liquid Handling	3.4	3.2	4.2%
Diagnostics	-2.9	-2.0	-40.1%
Total	0.5	1.2	-57.3%

Group net sales by main market areas

Net sales, MEUR	1-12/2010	1-12/2009	Change %
Europe	20.8	19.4	7.2%
America	7.6	6.2	23.4%
Asia	6.2	4.7	31.6%
Other	5.4	5.1	6.5%
Group, total	40.0	35.4	13.2%

The impact of currency exchange rates

Net sales in the reporting period were up by 13.2%, and measured in comparable currencies the net sales growth was 9.6%. Changes in currency exchange rates did not have a material impact on results. Biohit reports the impact of exchange rates on intra-Group items under financial items, which in the reporting period included EUR 0.5 million in exchange rate changes with a positive impact on results.

BALANCE SHEET

On 31 December 2010, the balance sheet total was EUR 29.4 million (EUR 27.4 million) and the equity ratio was 44.5 per cent (46.8%).

FINANCING

Cash flow in the reporting period was EUR -0.0 million (EUR 0.3 million). Net cash flow from operating activities amounted to EUR 2.0 million (EUR 2.8 million). At the end of the period, the Group's liquid assets totalled EUR 2.2 million (EUR 2.0 million on 31 December 2009). The current ratio was 2.2 (1.4). The increase in the current ratio was caused by the termination of the EUR 4.05 million convertible bond, issued in 2005 and maturing in October 2010, and the issue of a new, corresponding convertible bond. In the future, stronger efforts will be made to use cash flows generated by the business to finance investments.

RESEARCH AND DEVELOPMENT

Research and development expenditure during the reporting period amounted to EUR 2.5 million (EUR 2.4 million), representing 6.4% of net sales (6.8%). EUR 0.6 million (EUR 0.4 million) in development expenditure was capitalised during the period.

INVESTMENTS

Gross investments during the reporting period totalled EUR 2.6 million (EUR 2.4 million) or 6.4 per cent of net sales (6.9%). Investments were primarily made in production technology in Kajaani, increasing the production capacity of disposable pipette tips.

PERSONNEL

During the period, the average number of personnel employed by the Group was 412 (370) of whom 192 (174) were employed by the parent company and 220 (196) by the subsidiaries. The number of personnel has increased particularly in the Asian units due to new actions taken.

SHORT-TERM RISKS AND UNCERTAINTY FACTORS

On 27 January 2011, the Board of Directors of Biohit adopted Biohit's risk management policy in which the Group's risks are divided into business risks (including risks associated with business operations), financial risks (including liquidity and interest rate risks), operational risks, and loss risks. The company manages these risks and makes every effort to minimise their impact as cost-efficiently as possible. The company reports the key risks affecting the calendar year under 'Short-term risks and uncertainty factors'.

Business operations in 2011 involve material risks: both business risks and financial risks.

Costs arising from the Group's business growth represent the most essential risk associated with the Group's business operations. Although the Group's net sales grew significantly in 2010, the proportion of fixed costs has also grown considerably. The Group's business development and new product launches require continuous investments that also represent a challenge in terms of the Group's financial position. In 2011, the company will pay special attention to operational efficiency and to improving the Group's operating result.

Growth in the diagnostics business is a key requirement for strengthening the entire Group's operating conditions. Long-term failure to meet these growth expectations might also result in a EUR 2.6 million impairment of goodwill associated with the diagnostics products. The company has taken determined measures to strengthen the diagnostics business: the sales and marketing organisations of liquid handling and diagnostics products have been combined, product commercialisation plans have been clarified, and decisions have been made to prioritise certain market areas. Consequently, the company estimates that the significance of the risks associated with the diagnostics business development and previously reported risks has not grown.

The company conducts a large part of its business in currencies other than the euro; therefore the strengthening of the euro could have a negative impact on the company's profitability. Exchange rate fluctuations related to intra-Group receivables are recorded under financial items. A significant amount of these exchange rate changes have not materialised due to the subsidiaries' weak liquidity, which is why the strengthening of the euro could have a negative impact on results. During the first quarter of this year, the company will take the necessary measures to minimise the impact of this currency exchange rate risk. The company hedges against the currency risks associated with external receivables by making procurements in currencies other than the euro and by making every effort to build a cost structure in which a significant proportion of fixed costs are in non-euro currencies.

OUTLOOK FOR 2011

For Biohit's business, the previous two years have been quite exceptional. The recession and the period of growth that followed the recession represent uncertainty factors that complicate forecasts for market development this year. Investment in research and development has clearly been stepped up in some market areas.

The company expects to see sustained growth in the liquid handling business this year, with growth being generated by the Asian units in particular. Furthermore, the arrangements made in the North American distribution network provide good potential for strong sustained growth in the North American markets.

The recession has not affected the diagnostics business development in the same way it affected the growth in the liquid handling business. In 2010, Biohit invested heavily in domestic markets and expects these investments to produce results in 2011. Similarly, shifting the focus more towards foreign markets gives good reason to assume that the growth in the diagnostics business will continue this year. The majority of the net sales is expected to come from the sale of diagnostic tests. The net sales growth generated by Acetium depends materially on whether or not co-operation with bigger players leads to its international distribution.

The Group's total net sales are expected to grow by more than 10% this year, and the total operating result is expected to account for approximately 5% of net sales. However, positive development in net sales will only emerge after the first quarter.

STRATEGY AND OBJECTIVES

Biohit began a major strategy revision in June 2010. The cornerstones of the strategy until 2013 are a process-driven operating model, customer focus, and operational efficiency. Customer focus will be reflected in new product development and will translate into a stronger market presence.

The short-term objective is to reach a profitable growth of more than 10 per cent annually, and to raise the total operating result to approximately 5 per cent of total net sales in 2011.

The medium-term objective is to grow total net sales to EUR 70 million in 2013.

The net sales target for the liquid handling business for 2013 is EUR 50 million, representing an annual growth of more than 10 per cent. Our objective is to be the leading electronic pipette manufacturer in all market areas globally. We particularly seek to gain a stronger position in the North American, South American, and Asian markets. To reach these goals, we must ensure the following:

• • Research and development and business development must be based on customer-oriented, innovative solutions serving customers' real needs.
• • The product range must be renewed and expanded more quickly and cost-efficiently.
• • OEM and service businesses will account for a larger proportion of net sales.

Strong sales growth is sought particularly in the diagnostics business. The net sales target for 2013 is EUR 20 million, which means an annual growth of more than 80 per cent. Key means to achieving this target include:

• • Emphasis in the core business on key products: the GastroPanel and Acetium products.
• • More resources allocated to product group commercialisation.
• • The current product range will be developed.
• • Effective use of the company's existing sales and marketing network to find the right local partners.

MAIN EVENTS IN THE REPORTING PERIOD

Liquid handling business

Biohit's liquid handling business develops, manufactures, and markets laboratory equipment and accessories for the pharmaceutical, food, and other industries. Biohit's products are also used in research institutions, universities, and hospitals. The product range includes mechanical and electronic pipettes as well as disposable tips. While the majority of the products are marketed under the Biohit brand, the company also manufactures customised OEM (original equipment manufacturer) products that complement the diagnostic test and analysis systems of many global companies. In addition, the company offers maintenance, calibration, and training services for liquid handling products through its distributor network.

Liquid Handling	2010	2009	2008	2007	2006
Net sales, MEUR	37.8	33.6	33.6	31.1	29.5
Change from the
previous year, %	12.7%	-0.1%	7.1%	5.2%	8.9%
Operating result, MEUR	3.4	3.2	3.7	2.5	2.2
Change from the
previous year, %	4.2%	-12.0%	34.2%	11.4%	-1.9%
Operating result, %	8.9%	9.6%	10.9%	8.7%	7.5%

In 2010, sales developed favourably in the liquid handling business in all product groups. Net sales were up by 12.7% on the previous year. After the recession, pipette sales showed particularly good development and the highest year-on-year growth. Growth was particularly strong in Asia, but sales picked up in North America, too.

During the year, Biohit placed special emphasis on the marketing and sales of disposable pipette tips. In addition, the company expanded its own sales network in the growing Asian markets and strengthened its distributor network in several countries, including Turkey, Italy, Spain, and Australia. The company also enhanced its co-operation with major partners, and focused on marketing directed at end-customers.

Diagnostics business

Biohit's diagnostics business develops, manufactures, and markets tests and analysis systems for the diagnosis and prevention of diseases of the gastrointestinal tract. The tests and systems are based on innovations and reliable research data. The product range includes GastroPanel examinations and ColonView quick tests for primary healthcare; lactose intolerance and Helicobacter pylori quick tests for specialised healthcare; and instruments and analysis systems for laboratories. The company also markets GastroPanel laboratory analysis packages. In addition to GastroPanel test kits, this package includes liquid handling products, instruments, and software, as well as installation, training, and maintenance services. The GastroPanel laboratory concept is geared towards facilitating the efficient introduction of GastroPanel examinations. In addition, Biohit's service laboratory offers analyses of tests developed by Biohit, and determination of carcinogenic acetaldehyde in foodstuffs and alcoholic beverages (www.biohit.com/diagnostics/determination-of-acetaldehyde).

The prescription-free Acetium capsule developed by the company reduces the carcinogenic acetaldehyde in the gastrointestinal tract. The International Agency for Research on Cancer, a part of the World Health Organisation (WHO), has classified the acetaldehyde included in and generated endogenously from alcoholic beverages as a Group I carcinogen. The capsule was developed in cooperation with researchers at the University of Helsinki and Biohit's scientific advisors. Acetium is recommended for people suffering from gastric mucosal injury and a functional disorder (atrophic gastritis) caused by a Helicobacter pylori infection or autoimmune disease and the resulting anacidic stomach, as well as for users of anti-acid medication (Proton Pump Inhibitors, H2 blockers) (see www.acetium.com and check your exposure to acetaldehyde).

Diagnostiikka	2010	2009	2008	2007	2006
Net sales, MEUR	2.2	1.8	1.5	1.7	1.9
Change from the previous
year, %	23.7%	20.5%	-9.2%	-10.8%	22.3%
Operating result, MEUR	-2.9	-2.0	-2.4	-2.9	-2.4
Change from the
previous year, %	-40.1%	13.4%	19.6%	-24.0%	-2.9%
Operating result, %	-127.3%	-112.4%	-156.4%	-176.7%	-127.0%

Sales in the diagnostics business grew 23.7 per cent year-on-year and consisted primarily of test kit sales.

During the year, Biohit invested in the commercialisation of diagnostic tests. The availability of the GastroPanel examination in Finland improved when Terveystalo, a private healthcare company operating nationwide, included the examination in its service offering.

Biohit also launched a new version of the fecal occult blood (FOB) test ColonView. The new test kit includes a 2-in-1 test cassette, which makes the analysis procedure even easier than before. ColonView can be used, for example, for colorectal cancer screening programmes, and in healthcare centres and private clinics.

In early 2010, Biohit announced its new innovation that helps reduce carcinogenic acetaldehyde in the stomach. The Acetium capsule is classified as medical equipment and it is sold in pharmacies without a prescription. The product was launched for consumers in Finland at the end of May and its sales have not as yet had a significant impact on the net sales for the reporting period. In addition, launch-related costs have weakened the operating result for the period.

In addition to consumer advertising, the company has focused especially on the availability of Acetium in pharmacies during the launch stage. Acetium capsules are distributed nationwide through Tamro Oyj, one of Finland's leading pharmaceutical wholesalers, and are already available in more than 600 pharmacies around the country. However, if the set growth expectations are to be met, it is necessary to continuously invest in marketing targeted at both professionals (physicians, pharmacists) and consumers.

ADMINISTRATION

Annual General Meeting

The Annual General Meeting was held on 23 April 2010. A decision was made at the AGM to amend section 5, paragraph 1 of the Articles of Association to state that the Board of Directors consists of 5-7 ordinary members. The AGM appointed Jukka Ant-Wuorinen, Kalle Kettunen, Eero Lehti, Reijo Luostarinen, Mikko Salaspuro, and Osmo Suovaniemi as members of the Board, as well as Ainomaija Haarla, whose term began after the amendment of the Articles of Association entered into force on 14 May 2010.

The AGM appointed authorised public accountants Ernst &Young Oy as the company auditor, with Erkka Talvinko, Authorised Public Accountant, as chief auditor.

A decision was also made to amend section 10, paragraph 1 of the Articles of Association regarding notice of meeting to comply with the new provisions of the Limited Liability Companies Act.

A decision was also made to authorise the Board of Directors to decide on the extension of the convertible bond in accordance with the provisions of chapter 10, section 1 of the Limited Liability Companies Act on the granting of special rights.

Change of President and CEO in June

Professor Osmo Suovaniemi, founder of Biohit and its long-serving President and CEO, stepped down from his position in June. The company's Board of Directors appointed Jussi Heiniö, 48, LLM, as the new President and CEO as of 10 June 2010. Heiniö has been in Biohit's employ since 1997 and has previously served as VP of Administration and Legal Affairs and deputy CEO. Osmo Suovaniemi has not left the company; instead, he continues to take an active part in the development of business strategies and innovations in his role as Chairman of the Board of Scientific Advisors. In addition, he continued to serve as an ordinary member of Biohit Oyj's Board of Directors.

A new operating model introduced

During 2010, Biohit worked on devising a shared strategy for the entire Group. In connection with this work, the company began the reorganisation of the operating model applied in the liquid handling business in July and in the diagnostics business in October. The composition and the roles and responsibilities of management teams were specified in more detail to enhance the efficiency of business control. In addition, the sales and marketing managements of the liquid handling and diagnostics businesses were merged at the year-end. The new business plans will be communicated and deployed across the entire Group. The objective is to develop the company's business cost-efficiently in a genuinely international direction, by utilising the Group's own resources and large network of subsidiaries.

New units in Asia

Biohit's subsidiary in India and a representative office in Singapore launched operations at the beginning of the year. The purpose of these new units is to support Biohit product sales in the growing Asian markets.

More information on the administration of the Biohit Group in 2010 is available in the Corporate Governance Statement 2010.

SHARE TURNOVER AND PRICE DEVELOPMENT

Biohit Oyj's shares are divided into series A and series B shares. There are 2,975,500 series A shares and 9,962,127 series B shares, making a total of 12,937,627 shares. Series A shares confer 20 votes per share and Series B shares 1 vote per share. The dividend paid for Series B shares is, however, two (2) per cent of the nominal value higher than that paid for Series A shares. The total market capitalisation value (supposing that the market capitalisation value for series A and B shares is equal) at the end of the period was EUR 27.2 million (EUR 19.4 million on 31 December 2009).

Biohit Oyj's series B shares are quoted on NASDAQ OMX Helsinki in the Small cap/Healthcare group under the code BIOBV.

BIOBV/NASDAQ OMX Helsinki	1-12/2010	1-12/2009
High, EUR	4.91	1.90
Low, EUR	1.50	1.27
Average, EUR	3.42	1.55
Closing price, EUR	2.10	1.50
Total turnover, EUR	32,166,841	2,599,021
Total turnover, no. of shares	9,415,015	1,996,489

Shareholders

At the end of the reporting period on 31 December 2010, the company had 4,602 shareholders (3,516 on 31 December 2009). Private households held 72.82% (72.93%), companies 23.62% (23.60%), and public sector organisations 2.65% (3.03%) of the shares. Foreign ownership or nominee registrations accounted for 0.86% (0.36%) of shares.

Further information about the shares, major shareholders, and management's shareholdings is available on the company's website at www.biohit.com/investors.

Convertible bond

On 3 August 2010, under the authorisation granted at the Annual General Meeting, Biohit Oyj's Board of Directors decided to issue a convertible bond of EUR 4.05 million to Finnish institutional investors. The convertible bond was issued on 28 October 2010. The fixed coupon rate of the bond is 6.5% and it has a maturity of five years. The bond will not be publicly traded.

This new bond replaced Biohit Oyj's earlier convertible bond in the same amount, which matured in October 2010. The issue is part of a set of measures aimed at optimising the company's long-term financing plan.

The issue was chiefly organised by Pohjola Corporate Finance Oy.

MAJOR EVENTS AFTER THE CLOSE OF THE PERIOD

After the reporting period, the sale of Acetium began in the highly-populated German market. During the first phase, the product will be marketed mainly through online pharmacies. In Germany, nine million pharmacy customers, or some 18 per cent of all internet users, purchase their pharmaceuticals through an online pharmacy. Online pharmacies are allowed to sell both prescription and nonprescription (OTC) drugs in Germany.

Helsinki, 28 February 2011

Biohit Oyj Board of Directors

BIOHIT'S CORPORATE GOVERNANCE STATEMENT 2010

Biohit Oyj has prepared this Corporate Governance Statement on the basis of Section 51 of the Corporate Governance Code for listed companies released by the Securities Market Association.

The Corporate Governance Statement has been issued separately from the Report of Biohit Oyj's Board of Directors. The Board of Directors reviewed the Statement in its meeting on 28 February 2011.

The Report of the Board of Directors, the Auditor's Report and the full Corporate Governance Statement are available on Biohit's website at www.biohit.com/investors.

RULES OBSERVED BY BIOHIT

Biohit Oyj is a Finnish public limited company whose Series B share is quoted on NASDAQ OMX Helsinki in the Small cap/Healthcare group. The Biohit Group (hereinafter referred to as 'Biohit') comprises the parent company Biohit Oyj and its foreign subsidiaries, which primarily focus on sales and marketing for Biohit Oyj's products. Biohit is headquartered in Helsinki.

Biohit's administration complies with current legislation, standards and recommendations concerning public listed companies, the regulations of NASDAQ OMX Helsinki Oy, and Biohit Oyj's Articles of Association. Biohit Oyj also follows the Finnish Corporate Governance Code ("corporate governance code") for listed companies that was approved by the Securities Market Association in October 2008 and came into force on 1 January 2009. The Corporate Governance Code is available from www.cgfinland.fi.

BIOHIT'S ADMINISTRATIVE BODIES IN 2010

The highest decision-making power at Biohit is exercised by its shareholders at the Annual General Meeting. The company's Board of Directors supervises the administration and organisation of the company and the Group's earnings trend. The President and CEO is responsible for the operative management of the company, and he is assisted by two Management Teams.

Annual General Meeting

In 2010, Biohit's Annual General Meeting was held on 23 April 2010 in Helsinki. 2,975,490 Series A shares and 5,125,474 Series B shares were represented at the meeting, corresponding to 62.62% of all the company's shares and 93.04% of the votes. Over half of the members of the Board, all new candidates proposed for Board membership and the chief auditor attended the meeting. Biohit did not hold extraordinary general meetings during the reporting year.

Board of Directors

The Board of Directors, which comprises 5-7 members elected by the Annual General Meeting, is responsible for the administration and appropriate organisation of Biohit's business operations. The BOD elects a chairman amongst its members.

The membership commences from the election by the AGM and lasts until the next AGM.

The Board of Directors is responsible for Biohit's administration and appropriate organisation of business operations. The areas of responsibility laid down in the written rules of procedure approved by the Board are as follows:

• • To develop shareholder value.
• • To ensure the appropriate organisation of accounting and financial management.
• • To adopt the parent company and consolidated financial statements and the Report of the Board of Directors for the financial year ended.
• • To confirm the interim reports for each quarter at the end of March, June and September.
• • To decide on Biohit's business plan, budget and investment plan.
• • To decide on Biohit's financing and risk management policies.
• • To approve management remuneration and incentive schemes.
• • To appoint the President and CEO.
• • To decide on Biohit's strategy, organisational structure, investments and other wide-reaching and significant issues.

The decision-making of the BOD is based on the reports drawn up by the operative management concerning the activities and development of the Group and its business areas.

The Chairman is responsible for calling Board meetings and arranging Board activities. In general, the Board convenes once a month, that is, 10–12 times per year. The meeting schedule for the entire term is confirmed in advance. When necessary, Board meetings are held more frequently or by teleconference.

The Board of Directors of Biohit Oyj convened 13 times in 2010 (10 times in 2009) with an average attendance rate of 90% (87%).

Members of the Board of Directors

The following persons were elected by the 2010 Annual General Meeting to serve as members of Biohit's Board of Directors in 2010:

Reijo Luostarinen, born in 1939, D.Sc. (Econ.), Professor Emeritus

• Member of the Board since 1993, Chairman
• Independent of major shareholders but not independent of the company.
• Professor and Director of International Business at the Helsinki School of Economics (HSE)
• Attended Board meetings 12 times in 2010.

Jukka Ant-Wuorinen, born 1950, M.Sc. (Econ.)

• Member of the Board since 2009, Vice-Chairman
• Independent of major shareholders and of the company.
• Chairman of the Boards of ANTON Invest Oy, Newcodent Oy and Rukasuites
• Attended Board meetings 13 times in 2010.

Ainomaija Haarla, born in 1953, D. Sc. (Tech.), MBA

• Member of the Board since 2010
• Independent of major shareholders and of the company.
• President and CEO of Technology Academy Finland.
• Chairman of the Board of Korona Invest Oy and Board member of Neste Oil Oyj, Altia Plc and Euro-CASE.
• Attended Board meetings 9 times in 2010 (her term began on 14 May 2010).

Kalle Kettunen, born 1964, M.Sc. (Eng.), MBA

• Member of the Board since 2008
• Independent of major shareholders and of the company.
• CEO of Telko Oy
• Attended Board meetings 12 times in 2010.

Eero Lehti, born 1944, M.Sc. (Soc.Sc.)

• Member of the Board since 2009
• Independent of major shareholders and of the company.
• Member of Parliament since 2007
• Founder of Taloustutkimus Oy and the Chairman of its Board
• Head owner of Suomen Lehtiyhtymä Oy and the Chairman of its Board
• Attended Board meetings 8 times in 2010.

Mikko Salaspuro, born 1939, M.D., Professor

• Member of the Board since 2008
• Independent of major shareholders but not independent of the company.
• Specialist in internal medicine, gastroenterologist, and Professor of Alcohol Diseases at the University of Helsinki
• Attended Board meetings 12 times in 2010.

Osmo Suovaniemi, born in 1943, MD, Ph.D, Professor

• Member of the Board since 1988
• Non-independent of major shareholders and of the company.
• Founder of Biohit and its former President and CEO
• Attended Board meetings 12 times in 2010.

During the year, Reijo Luostarinen served as the Chairman of Biohit Oyj's Board of Directors and Jukka Ant-Wuorinen as the Vice Chairman.

Board Committees

The scope of Biohit's business operations does not require the appointment of an Audit Committee, and no other committees have been appointed to assist the Board.

President and CEO

The President and CEO is responsible for the day-to-day management of the company in accordance with the instructions and regulations given by the Board of Directors. The President and CEO of the parent company is elected by the Board and also acts as Group President. The President and CEO informs the BOD immediately of changes that are of crucial importance to the company and its activities. The terms of the President's employment are laid down in a written contract that is approved by the Board of Directors. The President cannot be elected Chairman of the Board.

Until 9 June 2010, the President and CEO of the company was Board member, Professor Osmo Suovaniemi. As of 10 June 2010, the President and CEO is Jussi Heiniö:

Jussi Heiniö, born in 1962, LLM

• With Biohit Oyj since 1997
• Before joining Biohit Mr. Heiniö was an attorney, a junior lawyer undergoing court training, and later a judge in the District Court of Vantaa, Finland.

Group Management Teams

Biohit has two Management Teams, one focusing on the liquid handling business and its development as well as Group-level administration, and the other focusing on the diagnostics business and its development.

Both Management Teams were reorganised in 2010 in line with the Group's new strategy.

As of the beginning of July 2010, the Liquid Handling Management Team's composition and areas of responsibility were as follows: Jussi Heiniö (President & CEO), Erkki Vesanen (Product Portfolio Management), Kalle Härkönen (Operations), Jukka-Pekka Haapalahti (Sales and Marketing), Seppo Riikonen (Quality and Risk Management), Tiina Hankonen (Finance, ICT and HR) and Josefin Hoviniemi (Communications).

The Liquid Handling Management Team convened a total of 20 times in 2010.

As of the beginning of October, the Diagnostics Management Team's composition and areas of responsibility were as follows: Jussi Heiniö (President & CEO), Yrjö E K Wichmann (General Manager until 31.12.2010), Lea Paloheimo (Product Portfolio Management), Kalle Härkönen (Operations), Jukka-Pekka Haapalahti (Sales and Marketing), Terhi Lampén (Marketing), Seppo Riikonen (Quality and Risk Management), Tiina Hankonen (Finance, ICT and HR) and Josefin Hoviniemi (Communications).

The Diagnostics Management Team convened a total of 11 times in 2010.

During the year, members of the Management Teams also included Osmo Suovaniemi (President and CEO until 9 June 2010), Petteri Rehu (Finance, until 31 March 2010), Päivi Siltala (Sales and Marketing, until 26 March 2010), Mikko Patrakka (Sales and Marketing, until 6 May 2010); Marjo Nikulin (diagnostics production, until 30 September 2010) and Tapani Tiusanen (diagnostics instrument and software development, until 30 September 2010). Yrjö Wichmann who was in charge of the diagnostics business resigned from his duties on 31 December 2010 under a joint agreement between Biohit Oyj's Board of Directors and the President and CEO.

Managing Directors of subsidiaries

The Managing Directors of subsidiaries are responsible for the management of subsidiary operations and report to the President and CEO of the parent company.

The subsidiaries are responsible for the sales and marketing of Biohit's products in their market areas. The subsidiaries' Managing Directors operate under the management and control of the President and CEO.

In 2010, Managing Directors of the subsidiaries were Venkat Rao, (India), Ian Hemmings (UK), Hideaki Mizoguchi, (Japan), Eirik Pettersen, (China), Régis Carnis, (France), Matthias Beuse, (Germany), Victor Peppi, (Russia) and Robert P. Gearty, (US).

Personal data and shareholdings of Biohit's Board of Directors and operative management are available on the Internet at: www.biohit.com/investors.

REMUNERATION IN 2010

Members of the Board of Directors

The Annual General Meeting approves the fees of Biohit Oyj's Board of Directors. A decision was made at the Annual General Meeting of 23 April 2010 to pay a monthly fee of EUR 1,550 to the Chairman of the Board and a monthly fee of EUR 1,300 to other Board members.

Other remuneration to Board members than the Board membership fee are paid based on time charging, and the Board has approved the invoicing principles.

In addition, an employment contract was signed on 10 June 2010 with Board member, Professor Osmo Suovaniemi, under which Suovaniemi is paid a monthly fee approved by the Board of Directors for his services as a strategic advisor to the Board. In 2010, this fee was EUR 14,000 a month in addition to car and phone benefit.

President and CEO and other company management

The Board approves the President and CEO's fees and terms of employment. The salary paid to the company's current President and CEO in 2010 was EUR 16,000 a month in addition to car and phone benefit. The term of notice in the President and CEO's employment contract is six months. If the company terminates the contract without grounds specified in the Employment Contracts Act, the President and CEO will be entitled to a severance pay equivalent to 9 months' salary.

The President approves the fees and terms of employment of Management Team members. Biohit's Board of Directors approves the principles of the incentive schemes for Management Team members and the President. Bonuses are determined on the basis of the net sales and earnings trends of each person's area of responsibility. The maximum bonus that can be received depends on each person's monthly salary and can total no more than three month's salary.

No bonus was approved for the President and Management Team members in 2010.

The President and CEO approves the salaries of the subsidiaries' Managing Directors in accordance with the instructions provided by the BOD of Biohit Oyj. Incentives related to profit are dependent on the development of the sales and profitability of various product groups.

Biohit does not employ any incentive schemes that pay management in the company's own shares.

Pension plans

No other notable pension arrangements, beyond those mandated by law, have been made with the Managing Directors of Group companies.

Remuneration and other benefits 2010

During the financial year ended on 31 December 2010, remuneration paid to the members of the Board of the parent company totalled EUR 104,000 (EUR 87,000 in 2009).

President and CEO's salaries include Osmo Suovaniemi's salary from 1 Jan. 2010 to 9 June 2010, EUR 90,000, and Jussi Heiniö's salary from 10 June 2010 to 31 Dec. 2010, EUR 119,000. Under the Board of Directors' decision, Osmo Suovaniemi has been employed as a member of the Board of Scientific Advisors, and in this role his salary from 10 June to 31 Dec. 2010 was EUR 113,000. Of remuneration related to subsidiary boards, EUR 27,000 (EUR 20,000) has been paid to Jussi Heiniö and 27,000 (40,000) to Osmo Suovaniemi.

The salaries and fees of the Group's Managing Directors totalled EUR 801,000 (EUR 839,000 in 2009). No other notable pension arrangements, beyond those mandated by law, have been made with the Managing Directors of Group companies.

Remuneration paid to other Management Team members totalled EUR 1,002,000 (EUR 854,000 in 2009).

MAIN CHARACTERISTICS OF THE INTERNAL CONTROL OF THE FINANCIAL REPORTING PROCESS AND RISK MANAGEMENT

Biohit's internal control is responsible for ensuring that the Group carries out its business operations within the framework of the regulations and laws in force and in accordance with the instructions of the Board of Directors. Internal control seeks to ensure that the Group operates with maximum efficiency and that the objectives set in the strategy ratified by the Board of Directors are achieved at different levels of the organisation. Risk management is geared towards supporting the achievement of these objectives by anticipating and managing business-related risks.

Control environment

Biohit's business operations and administration aim to realise the company's values, of which the most important is to promote health and wellbeing with innovations. Biohit's business operations are divided into its liquid handling business and diagnostics business, in which the company engages in both manufacturing operations and international marketing and sales.

Biohit's control environment is defined by the Board of Directors, which, as the highest administrative body, is responsible for organising internal control. The President and CEO is responsible for maintaining the efficiency of the control environment and the functionality of internal control. Biohit's financial department is responsible for the functionality of financial reporting as well as the interpretation and application of financial statement standards in line with the separately ratified instructions.

Risk assessment

In the assessment of risks related to financial reporting, Biohit's objective is to identify the major risks associated with the Group's business operations and environment. The cost-effective management and monitoring of these risks will then ensure that the company's strategic and operational targets can be reached as intended.

The Board of Directors carries the main responsibility for risk assessment and monitoring the implementation of risk management. The President and CEO works with the parent company's operative management and subsidiaries' managements to ensure that the Group's risk management is duly arranged. The parent company's operative management is responsible for identifying and managing the risks involved within each business area, while subsidiaries' managements are responsible for those in their own market areas.

Risk management is one of the areas covered by Biohit's internal control processes, which regularly monitor the risks associated with the company's business operations, identify any changes and, if necessary, take appropriate action to hedge against them. Risk management focuses on ensuring the continuity of business operations and preventing financial misconduct.

Control measures

Internal control measures are integrated into the Group's general business management and reporting process. Subsidiaries report on business and earnings trends and the most significant deviations to Group Management on a monthly and quarterly basis. The Group's Management Team reports to the BOD on the overall development of business; these two bodies, together with the President and CEO, decide on overall corporate strategies and procedures guiding the operations of the Group.

The BODs of subsidiaries follow the development of business and ensure that the instructions and other guidelines accepted and provided by the parent company are followed. As a rule, each subsidiary's Board of Directors convenes after the end of each quarter. Subsidiary Boards work with financial reports and the written quarterly reports drawn up by subsidiary management.

Biohit's steering and control is carried out in accordance with the management system described above. The company provides reporting systems necessary for business and financial management.

The financial department of the parent company provides instructions for drawing up annual and interim financial statements and prepares the consolidated financial statements. The parent company's financial department retains central control of funding and administrative matters within the framework of the instructions provided by the Board of Directors and the President and CEO, and is also responsible for the management of interest and exchange rate risks. The Managing Directors of subsidiaries ensure that subsidiaries' reporting is carried out in accordance with the instructions given by the Group's Management Team. The parent company's administration department controls and provides instructions on Group-level personnel policies and any agreements made within the Group.

Disclosure policy

Biohit aims to proactively communicate about the company's operations to all its stakeholders in a consistent and timely manner. The company seeks to take the special needs and interests of all its stakeholders into account in its communications in order to increase confidence in the company and thereby promote its business operations. Biohit's Board of Directors has ratified the disclosure policy with a view to ensuring the accuracy and reliability of the information that is released. The policy also specifies who is responsible for communications in different situations.

Biohit's financial department regularly disseminates information on financial administration reporting-related processes in order to ensure the real-time availability of information as required for efficient internal control. Financial administration guidelines and the company's information release policy aim to ensure the promptness and comprehensiveness of communications and the release of information required for internal control purposes.

Monitoring

The efficiency of the internal control related to financial reporting is overseen by the Board of Directors, the President and CEO, the members of the Management Teams and the Managing Directors of the subsidiaries. The main focus of control comprises following weekly and monthly financial reports and forecasts and the analysis of deviations from business plans. Monitoring is performed as a rule at all Board and Management Team meetings where reports are reviewed, and is supported by regular contact between Group Management and the company's auditor and the analysis of deviations on at least a quarterly basis. The frameworks of the audits of the Group's subsidiaries and the key audit areas are defined jointly by the Group's financial management and the chief auditor.

Biohit has not appointed a separately organised function for internal auditing purposes. The Group's financial management holds primary responsibility for the practical implementation of the internal audit.

The Group has all the internal control reporting systems required for financial management and monitoring business development. The reporting systems produce monthly financial data for the fi-

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

nancial management to ensure that the financial management instructions approved by the parent company on, for example, authorisations are being adhered to. The Group's auditor and the auditors of each subsidiary evaluate the effectiveness of the internal control system both in connection with the external audit and through spot checks throughout the financial year.

AUDIT IN 2010

The auditor elected by the AGM is responsible for Biohit's statutory audit. According to the Articles of Association, the company needs to have one auditing body approved by the Central Chamber of Commerce.

Biohit's auditor in 2010 was authorised public accountants Ernst & Young Oy, with Erkka Talvinko, Authorised Public Accountant, as chief auditor.

Auditors' fees

The Group's invoiced auditors' fees for the financial year 2010 totalled EUR 138,000 (EUR 124,000 in 2009). Authorised public accountants Ernst &Young Oy were also paid a total of EUR 29,000 (EUR 28,000 in 2009) for other services.

INSIDERS

Biohit applies the Guidelines for Insiders approved by NASDAQ OMX Helsinki Oy, as well as any relevant amendments.

Biohit's Communications Director is responsible for the company's insider control. She/he ensures that insiders are aware of insider regulations and adhere to trading restrictions. Insiders are not allowed to trade Biohit Oyj securities for 21 days before the publication of the company's financial statement bulletin and interim reports. Insiders participating in projects are not allowed to sell or purchase shares in Biohit before an announcement has been made of the continuation or discontinuation of a project.

Information on the shareholdings of Biohit's insiders and their trading activity is available on Biohit's website at www.biohit.com/investors.

1000€	Note number		01.01.–31.12.2010 01.01.–31.12.2009
Net sales	2.3	40,044	35,366
Other operating income	2.4	217	162
Change in inventories of finished
goods and work in progress		-430	-278
Materials and services	2.5	-7,773	-6,471
Employee benefit expenses	2.6, 2.9	-17,120	-14,899
Depreciation and amortisation	2.7	-1,671	-1,718
Other operating expenses	2.8, 2.9	-12,760	-10,972
Operating profit		507	1,190
Financial income	2.10	663	372
Financial expenses	2.10	-782	-893
Profit before taxes		388	669
Income taxes	2.11	-327	-282
Profit for the period		61	387
Other comprehensive income
Translation differences		190	-130
Total comprehensive income		251	257
Distribution of income
To equity holders of the parent company		61	387
Total		61	387
Distribution of comprehensive income
To equity holders of the parent company		251	257
Total		251	257
Earnings per share are calculated from the
earnings attributable to equity holders of the
parent company.
Earnings per share, diluted and undiluted,	EUR 2.12	0,00	0,03

CONSOLIDATED BALANCE SHEET

1000€	Note number	31.12.2010	31.12.2009
Assets
Non-current assets
Goodwill	2.13	2,638	2,638
Intangible assets	2.13	3,177	2,349
Tangible assets	2.14	6,531	6,460
Financial assets	2.15, 2.18	12	9
Deferred tax assets	2.16	1,849	1,937
Total non-current assets		14,206	13,393
Current assets
Inventories	2.17	5,238	5,138
Trade and other receivables	2.15, 2.18	7,779	6,888
Financial assets recognised at fair
value through profit or loss	2.15, 2.19	500	400
Cash and cash equivalents	2.15, 2.19	1,659	1,580
Total current assets		15,177	14,006
Total assets		29,383	27,399

1000€	Note number	31.12.2010	31.12.2009
Shareholders' equity and liabilities
Shareholders' equity
Share capital	2.20	2,199	2,199
Translation differences	2.20	-134	-323
Fund for investments of non-restricted equity	2.20	12,407	12,404
Retained earnings		-1,469	-1,530
Shareholders' equity attributable to
parent company shareholders		13,003	12,749
Total shareholders' equity		13,003	12,749
Non-current liabilities
Pension obligations	2.21	155	118
Non-current interest-bearing liabilities
Capital loans	2.15, 2.23	696	775
Other interest-bearing liabilities	2.15, 2.23	7,849	3,079
Total interest-bearing liabilities	2.15, 2.23	8,544	3,854
Other liabilities	2.15, 2.24	701	672
Total non-current liabilities		9,400	4,645
Current liabilities
Trade payables	2.15, 2.24	1,854	1,409
Current interest-bearing liabilities	2.15, 2.23	920	5,118
Provisions	2.22	50	-
Other liabilities	2.15, 2.24	4,156	3,478
Total current liabilities		6,980	10,005
Total shareholders' equity and liabilities		29,383	27,399

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

1000€		Shareholders' equity attributable to parent company shareholders
				Fund for investments of		Total shareholders'
	Note number	Share capital	Translation differences	non-restricted equity	Retained earnings	equity
Balance at 1 Jan 2009		2,199	-194	12,404	-1,917	12,492
Total comprehensive income
for the period	2.20	-	-130	-	387	257
Balance at 31 Dec 2009		2,199	-324	12,404	-1,530	12,749
In thousands of euros			Shareholders' equity attributable to	parent company shareholders
				Fund for investments of		Total shareholders'
	Note number	Share capital	Translation differences	non-restricted equity	Retained earnings	equity
Balance at 1 Jan 2010		2,199	-324	12,404	-1,530	12,749
Change in the equity component of
the convertible bonds				4		4
Total comprehensive income
for the period	2.20	-	190	-	61	251
Balance at 31 Dec 2010		2,199	-134	12,407	-1,469	13,003

CONSOLIDATED CASH FLOW STATEMENT

1000€	Note number	2010	2009
Cash flows from operating activities
Profit for the period		61	387
Adjustments to profit for the period
Depreciation and amortisation	2.7	1,671	1,718
Unrealised exchange rate gains and	losses	-113	199
Financial income and expenses		232	321
Income taxes		327	282
Total adjustments to profit for the period		2,117	2,519
Change in working capital
Increase (-) or decrease (+) in current
non-interest-bearing receivables		-1,030	-141
Increase (-) or decrease (+) in inventories		-100	631
Increase (+) or decrease (-) in current
non-interest-bearing liabilities		1,235	109
Total change in working capital		105	599
Interest paid		-515	-517
Interest received		3	12
Realised exchange rate gains and losses		397	175
Income taxes paid		-207	-380
Net cash flows from operating activities		1,961	2,796

1000€	Note number	2010	2009
Cash flows from investing activities
Investments in tangible and
intangible assets		-1,778	-2,020
Proceeds from sales of tangible	and
intangible assets			- 1
Investments in funds and deposits		-100	-
Capital gains from investments in	funds
and deposits			- 116
Net cash flows from investments		-1,878	-1,903
Cash flows from financing activities
Payments of finance lease liabilities		-262	-118
Proceeds from loans		5,650	-
Repayments of loans		-5,498	-478
Net cash flows from financing activities		-109	-596
Change in cash and cash equivalents		-26	298
Cash and cash equivalents at
beginning of period		1,580	1,310
Effect of exchange rates on cash
and cash equivalents		105	-28
Cash and cash equivalents at end of period	2.19	1,659	1,580

2. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 COMPANY PROFILE

Biohit Oyj is a Finnish public company that manufactures liquid handling and diagnostics products and diagnostics analysis systems for use in research institutions, healthcare and industrial laboratories. The parent company is domiciled in Helsinki.

Copies of the consolidated financial statements are available on the Internet at www.biohit.com or from the parent company's headquarters, address Laippatie 1, Helsinki, Finland.

At its meeting on 28 February 2011, Biohit Oyj's Board of Directors approved the financial statements for publication. According to the Finnish Limited Liability Companies Act, shareholders have the opportunity to approve or reject the financial statements at the Annual General Meeting held after their publication. The Annual General Meeting can also decide to revise the financial statements.

2.2 ACCOUNTING PRINCIPLES

Accounting policy

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). They have been drawn up in compliance with the IAS and IFRS standards in force as at 31 December 2009 and SIC and IFRIC interpretations. The term "IFRS standards" in the Finnish Accounting Act and the provisions laid down pursuant to the Act refers to the standards approved by the EU in accordance with the procedures laid down in IAS Regulation (EC) 1606/2002 of the European Parliament, and the interpretations of these standards. The notes to the consolidated financial statements also conform to Finnish accounting and corporate legislation.

The consolidated financial statements have been drawn up on the basis of original acquisition costs, with the exception of available-for-sale investments and financial assets and liabilities measured at fair value through profit or loss. The figures in the financial statements are presented in thousands of euros.

When financial statements are prepared in accordance with IFRS, the Group's management must make estimates and exercise judgement in the application of accounting policies. The note "Accounting principles requiring judgements by management and key sources of estimation uncertainty" provides information on the judgements that have been made by management in the application of the accounting principles employed by the Group and which have the greatest impact on the figures presented in the financial statements.

Principles of consolidation

The consolidated financial statements include the parent company Biohit Oyj and all of its subsidiaries. Subsidiaries are those companies in which the Group has a controlling interest, that is, in which the Group holds over half of the voting rights or otherwise has a controlling interest. "Controlling interest" means the right to dictate a company's financial and business principles in order to benefit from its operations.

The acquisition cost method has been used in eliminating cross-ownership of shares within the

Group. The acquisition cost is taken to include surrendered assets at fair value, liabilities that have arisen or for which responsibility has been adopted, equity instruments issued, and all the direct expenses of the acquisition. Acquired subsidiaries are included in the consolidated financial statements as from the moment when the Group has assumed a controlling interest, and divested subsidiaries are included until the moment when the Group ceases to have a controlling interest. All intra-Group transactions, receivables, liabilities, unrealised profits and internal distribution of profits are eliminated when drawing up the consolidated financial statements. Unrealised losses are not eliminated if they are due to impairment. The distribution of profit for the period to the equity holders of the parent company and minority interests is presented in the income statement. Minority interest in equity is presented in the balance sheet as a separate item under shareholders' equity. The minority interest share of accumulated losses is recognised in the consolidated financial statements up to the amount of the investment at most. The Group does not have any associated companies, joint ventures or minority shareholders.

Translation of items denominated in foreign currency

Figures relating to the result and financial position of each of the Group's business units are measured in the currency of the main operating environment for that unit. The consolidated financial statements are presented in euros, the functional and presentation currency of the parent company.

Foreign currency transactions are recorded in the functional currency using the exchange rates on the date of the transaction in question. Monetary receivables and liabilities are converted using the rates on the closing date. Non-monetary items denominated in foreign currency are translated to the functional currency at the rate on the transaction date. Exchange rate differences on translation have been entered in the income statement. Exchange rate differences arising from the translation of intra-Group trade receivables and payables are recorded under financial items, and the corresponding external items are accounted for as sales or purchases adjustment items. The income statements of foreign subsidiaries have been translated into euros using the average exchange rates for the financial period. Their balance sheets have been translated using the rates on the closing date. The exchange rate difference resulting from the use of the average exchange rate in the translation of income statement items and the closing date rate in the balance sheets has been entered as a separate item under translation differences in consolidated shareholders' equity. Exchange rate differences in monetary items that are classed as net investments in foreign subsidiaries are entered under translation differences. In accordance with the exception permitted by IFRS 1, cumulative translation differences prior to the IFRS transition date are recorded under retained earnings at the time of the transition to IFRS, and will also not be entered into the income statement later on the divestment of a subsidiary.

Business segments

Biohit has organised its business into two primary business areas: Liquid Handling and Diagnostics. The format of the Group's segment reporting is based on these business segments. Biohit also reports on geographical areas: Europe, Asia, America and other countries.

A business segment produces products and services whose risks and profitability differ from the risks and profitability of other segments. A geographical segment produces products and services in an economic environment whose risks and profitability differ from the risks and profitability in other economic environments.

Income recognition

The sale of goods and services is recognised as income when the significant risks and rewards incident to ownership are transferred to the buyer, and the payment of goods and services, costs or the possible return of the goods does not involve significant uncertainty. The income recognised is the fair value of the consideration received from the goods or services sold less value-added tax and both bulk and other discounts as well as exchange rate gains or losses on the sale. Interest income is recognised using the effective interest method. Dividend income is booked when the rights to the dividends have materialised.

Property, plant and equipment

Property, plant and equipment have been valued at the original acquisition cost less accumulated depreciation and impairment. The acquisition cost includes the direct costs of acquisition. Later expenditure is included in the carrying amount of the asset or recognised as a separate asset only if it is probable that the Group will benefit from the future economic benefits of the asset and the acquisition cost of the asset can be reliably measured. Other repair and maintenance expenditure is recognised through profit or loss in the period incurred.

Assets are amortised on a straight-line basis over their estimated useful life. There is no depreciation on land areas. The estimated useful lives of assets are as follows:

	Years
Buildings	20 – 30
Machinery and equipment	3 – 10

The residual values and useful lives of assets are reviewed in each financial statement. If necessary, they are adjusted to reflect the changes in the expected economic benefits. Capital gains and losses on the discontinuation or disposal of property, plant and equipment are included in other operating income or expenses.

Costs of debt

Costs of debt are expensed in the financial period in which they were incurred. The exception is the costs of debt connected to the acquisition cost of a capitalised investment, in which case financing costs based on the Group's average financing costs are capitalised in the acquisition cost. Transaction costs arising directly from the raising of loans – and which are clearly connected with a certain loan – are included in the original periodised acquisition cost of the loan and are periodised as interest expenses using the effective interest rate method.

Public grants

Public grants received for the acquisition of intangible assets and property, plant or equipment are recognised as decreases in the carrying amounts of property, plant and equipment. Grants are recognised as revenue through smaller depreciation over the useful life of the asset. Grants not related to the acquisition of non-current assets are booked in other operating income.

Intangible assets

Goodwill

In the case of companies acquired after 1 January 2004, goodwill corresponds to the share of the acquisition cost in excess of the Group's share of the fair value of the acquiree's net assets at the time of acquisition. The goodwill on the consolidation of business functions prior to this date corresponds to the carrying amount (as per the previously employed accounting standards), which has been used as the deemed cost. Neither the classification nor accounting treatment of these acquisitions has been adjusted when drafting the opening consolidated IFRS balance sheet.

No regular depreciation is recorded on goodwill. Instead, it is subjected to an annual impairment test. To this end, goodwill is allocated to cash generating units. Goodwill is measured at the original acquisition cost less impairment.

Research and development expenditure

Research expenditure is expensed in the income statement. Development expenditure on the design of new or more advanced products is capitalised as intangible assets in the balance sheet as from the date when the product is technically feasible, can be utilised commercially, and is expected to yield future economic benefits. Expensed development expenditure is not capitalised later. Amortisation begins when the asset is ready to be used. The useful life of capitalised development expenditure is 5 years, over which time capitalised assets are expensed on a straight-line basis.

Other intangible assets

An intangible asset is recorded in the balance sheet only if the asset's acquisition cost can be reliably determined and it is probable that the company will benefit from the expected economic benefits of the asset. Other intangible assets with a finite useful life are entered in the balance sheet at the original acquisition cost and expensed in the income statement on a straight-line basis over their known or estimated useful lives. The Group has no intangible assets with unlimited useful lives.

The depreciation periods are as follows:
Patents	10 years
Development expenditure	5 years
Software	3 years
Other	5-7 years

Impairment of tangible and intangible assets

At each closing date, the Group evaluates whether there are indications of impairment on any asset item. If impairment is indicated, the recoverable amount of the asset is estimated. The recoverable amount for goodwill is also assessed annually regardless of whether impairment is indicated. Impairment is examined at the level of cash generating units, that is, at the lowest unit level that is primarily independent of other units and whose cash flows can be separated out from other cash flows. The discount interest used is determined before taxes and describes the market outlook for the time value of money and the risks associated with the asset items to be tested.

The recoverable amount is the fair value of the asset item less the costs of disposal or the value in use, whichever is higher. Value in use is the estimated net cash flow, discounted to its present value, from the asset item or cash-generating unit in question. An impairment loss is recognised if the carrying amount of the asset item is higher than its recoverable amount. The impairment loss is entered immediately in the income statement. If the impairment loss is allocated to a cash generating unit, it is first allocated as a reduction to the goodwill of the cash generating unit and subsequently as a reduction to the other asset items of the unit on a pro rata basis. An impairment loss is reversed if the situation changes and the recoverable amount of an asset item has changed since the date when the impairment loss was recorded. However, impairment losses are not reversed beyond the carrying amount of the asset exclusive of impairment losses. Impairment losses on goodwill are never reversed under any circumstances.

Inventories

Inventories are measured either at the acquisition cost or at the net realisable value, whichever is lower. The acquisition cost is determined using the FIFO principle. The acquisition cost of finished and incomplete products comprises raw materials, direct labour costs, other direct costs, and the appropriate portion of the variable general costs of manufacture and fixed overhead at a normal level of operations. The net realisable value is the estimated selling price in ordinary business operations less the estimated expenditure on product completion and sale.

Lease agreements

The Group as lessee

Lease agreements concerning property, plant and equipment in which the Group holds a material share of the risks and rewards of ownership are classified as finance lease agreements. Assets acquired under finance lease agreements are recognised in the balance sheet at the fair value of the asset when the lease period begins or at the present value of the minimum rents, whichever is lower. Assets acquired under finance lease agreements are amortised over their useful life unless it is probable that the asset will not be redeemed after the end of the lease period. In such cases, amortisation is performed during the contract period. Lease payments are split between the finance cost and a reduction in the liability over the lease period such that the interest rate on the liability outstanding for each financial period remains the same. The lease commitments are included in interest-bearing liabilities.

Lease agreements in which the risks and rewards incident to ownership are retained by the lessor are treated as other lease agreements. Rents payable under other lease agreements are expensed in the income statement on a straight-line basis over the lease period.

The Group does not act as a lessor.

Pension obligations

Group companies have organised their pension security in accordance with the pension legislation and practices of the country in question. The majority of the Group's pension schemes are defined contribution schemes for which payments are expensed in the period in which they occur. Defined benefit pension schemes are entered into the income statement such that expenses are periodised over the years in employment of the employee on the basis of annual actuarial calculations. Actuarial gains and losses are recognised in the income statement over the average remaining time in service of the persons in the scheme insofar as they exceed either 10% of the pension commitment or 10% of the fair value of assets, whichever is higher.

Provisions

Provisions are recorded when the Group has a legal or constructive obligation on the basis of a prior event, the materialisation of the payment obligation is probable, and the size of the obligation can be reliably estimated. The amount recognised as a provision represents the best estimate of the expenditure required to fulfil the existing obligation on the closing date. If the time value of money is material, the provision recorded is the present value of expected expenditure.

Taxes on the taxable income for the period and deferred taxes

Tax expenses in the income statement comprise taxes on the taxable income for the period and deferred tax liabilities. Taxes on the taxable income for the period are calculated on the taxable income on the basis of the tax base in force in the country in question. If applicable, taxes are adjusted for the taxes of previous periods.

Deferred taxes are calculated on all temporary differences between the carrying amount and taxable value. The largest temporary differences arise from the depreciation of property, plant and equipment, unused tax losses, and the internal margin included in inventories.

No deferred taxes are calculated on goodwill impairment that is not deductible in taxation and no deferred taxes are recognised on the undistributed profits of subsidiaries to the extent that the difference is unlikely to be discharged in the foreseeable future.

Deferred taxes have been calculated using the tax bases set by the closing date. Deferred tax assets have been recognised to the extent that it is probable that taxable income against which the temporary difference can be applied will materialise in the future.

Financial assets and liabilities

The Group's financial assets are categorised as: financial assets at fair value through profit or loss, loans and other receivables, and available-for-sale financial assets. Financial assets are classified in accordance with the purpose underlying their acquisition, and are categorised on initial recognition. All acquisitions and sales of financial assets are booked on the date of the transaction. Financial assets are derecognised in the balance sheet when the Group has lost its contractual rights to their cash flows, or when the Group has substantially transferred the risks and rewards out of the Group.

Financial assets at fair value through profit or loss include financial asset items that have been acquired to be held for trading or which have been measured at fair value through profit or loss on initial recognition (use of the fair value alternative). Held-for-trading assets are investments in fixedterm deposits and are included in current assets. The items in this group are measured at fair value. The fair value of all investments in this group is measured on the basis of released price quotations on well-functioning markets, that is, buy quotations on the closing date. Both realised and unrealised gains and losses due to changes in fair value are recorded in financial items in the income statement on the period in which they were incurred.

Loans and other receivables are assets that exclude derivative assets and whose related payments are fixed or definable. They are not quoted on well-functioning markets and are not held for trading. Assets are measured at the periodised acquisition cost using the effective interest rate method. They are included in the balance sheet as either current or non-current financial assets – non-current if they do not mature within the next 12 months. This category mainly consists of trade receivables.

Available-for-sale assets comprise investments in unquoted shares. They are measured at acquisition cost, as they are non-liquid assets whose fair value cannot be reliably determined. Available-forsale assets are included in non-current assets, as the Group is unlikely to surrender them within 12 months of the closing date.

Cash and cash equivalents comprise cash at bank and in hand and other liquid investments with a maturity of less than 3 months.

Financial liabilities are originally booked at their fair value on the basis of the consideration received. Transaction costs have been included in the original carrying amount of financial liabilities. All financial liabilities are later valued at the periodised acquisition cost using the effective interest rate method. Financial liabilities are included in current and non-current liabilities and may be interest-bearing or non-interest-bearing. Interest-bearing liabilities comprise financial liabilities requiring the company to make contractual interest or other payments during the term of the loan. Non-interest-bearing liabilities comprise liabilities for which the company does not have to make contractual interest or other payments.

The fair value of the convertible bond liability has been determined using the market interest rate for a comparable liability on the date of issue. The bond liability will be presented as a periodised acquisition cost until it is amortised through repayment or conversion into shares. The remainder – the equity component of the bond – is presented, less taxes, in the share premium fund.

The principles used for determining the fair values of financial assets and liabilities are presented in note 2.15 to the financial statements.

Impairment of financial assets

At every closing date, the Group evaluates whether there is objective evidence indicating impairment in the value of either a single item or a group of financial assets. If there is evidence of impairment, impairment is recognised through profit or loss. If the impairment loss decreases in a subsequent financial year, the recognised loss is reversed through profit or loss, except in the case of availablefor-sale investments classed as equity instruments. Impairment of the latter is not reversed in the income statement.

The Group recognises an impairment loss on trade receivables when there is reliable evidence to indicate that the receivable cannot be collected according to the original terms. The impairment loss to be recognised in the income statement is defined as the difference between the carrying amount of the receivable and the estimated present value of future cash flows adjusted using the effective discount interest rate. If the impairment loss decreases in a subsequent financial year and the reduction can be considered as relating to an event after the recognition of impairment, the recognised loss is then reversed through profit or loss.

Definition of operating profit or loss

The IAS 1 standard – Presentation of Financial Statements – does not include a definition of operating profit. The Group has defined it as follows: operating profit or loss is the net sum remaining after other operating income is added to net sales, less purchasing costs (adjusted for the change in inventories of finished goods and work in progress and the costs incurred from production for own use) and less expenses, depreciation and potential impairment losses caused by employee benefits and other operating expenses. All other income statement items except the above-mentioned are presented below operating profit/loss. Translation differences and changes in the fair value of derivatives are included in operating profit/loss if they are incurred from items related to operational activities; otherwise they are entered under financial items. Exchange rate differences on intra-Group receivables and liabilities are booked under financial items.

Accounting principles requiring judgements by management and key sources of estimation uncertainty

When preparing financial statements, estimates and assumptions about the future must be made, which is why the actual results may differ from these estimates and assumptions. Management must also exercise judgement in the application of accounting policies. Although estimates are based on the most up-to-date information available, actual results may differ from these estimates. The major areas in which estimation and judgement have been used are described below.

Impairment testing

The Group tests goodwill and incomplete intangible assets for impairment on at least an annual basis, and evaluates whether there are indications of impairment as presented in the accounting policies above. The recoverable amount from cash generating units has been defined on the basis of value in use calculations. Estimates must be used when performing these calculations.

Deferred tax assets

In the case of unused tax losses and the deferred tax assets recognised on temporary differences, the Group evaluates annually whether it is probable that the company in question will generate sufficient taxable income before the unused tax losses lapse.

Application of new or amended IFRS standards and IFRIC interpretations

The following standards, amendments or interpretations that came into force on 1 January 2010 did not affect the consolidated accounting principles because the Group did not record any transactions covered by the standards in question:

• • IFRS3, Business Combinations
• • IAS 27, Consolidated and Separate Financial Statements
• • IAS 39, Financial Instruments: Recognition and Measurement Eligible Hedged Items
• • IFRS 2, Share-based Payment Group Cash-settled Share-based Payment Transactions
• • IFRIC 12, Service Concession Arrangements
• • IFRIC 15, Agreements for the Construction of Real Estate
• • IFRIC 16, Hedges of a Net Investment in a Foreign Operation
• • IFRIC 17, Distributions of Non-cash Assets to Owners
• • IFRIC 18, Transfers of Assets from Customers

2.3 SEGMENT-BASED REPORTING

Biohit has organised its business into two primary divisions, based on business area: Liquid Handling and Diagnostics.The Group's segment-based reporting is done by business area. In addition, Biohit reports information by geographical area, with these areas defined as Europe, Asia, the Americas, and other countries.

The Group's business is divided into separate business segments on the basis of the nature of the products and services provided. A segment represents a business unit that offers different kinds of products and services to different markets. Service provision does not generate a significant proportion of earnings. The Liquid Handling segment produces electronic and mechanical pipettes, disposable tips, and maintenance services. The Diagnostics segment produces diagnostic test systems, tests and instruments, and related software. There are no sales or other business transactions between business segments. Segments' assets consist primarily of property, plant, and equipment items; intangible assets; inventories; receivables; and cash and cash equivalents. Segment liabilities consist of business debts and do not include items such as tax liabilities or the liabilities of the Group as a whole. Investments comprise increases in property, plant, and equipment items and increases of intangible assets to be employed longer than one financial period.

Although the Group's two business segments are managed globally, they operate in four separate geographical areas: Europe, the Americas, Asia, and the rest of the world. Sales are allocated to geographical areas on the basis of the country in which the customer is located. Assets and investments of these regions are assigned on the basis of the location of the asset.

Segment-based reporting follows the structure of the company's internal reporting. There are no internal sales between segments. In internal sales between geographical areas within the Group, pricing follows market-based pricing.

Business segments 2010	Liquid Handling	Diagnostics	Unallocated	Total
Statement of income
information
Net sales	37,798	2,247	-	40,044
Operating profit/loss	3,370	-2,863	-	507
Depreciation and
amortisation	-1,601	-70	-	-1,671
Interest income	-	-	3	3
Interest expenses	-	-	-533	-533
Assets
Reportable assets for
the segment(s)	19,329	7,853	2,201	29,383
Investments	1,986	583	-	2,569
Liabilities
Reportable liabilities for
the segment(s)	1,847	57	14,476	16,380
Business segments 2009	Liquid Handling	Diagnostics	Unallocated	Total
Statement of income
information
Net sales	33,550	1,816	-	35,366
Operating profit/loss	3,231	-2,041	-	1,190
Depreciation and amortisation	-1,657	-61	-	-1,718
Interest income	-	-	12	12
Interest expenses	-	-	-517	-517
Assets
Reportable assets for the segment(s)	19,968	5,334	2,097	27,399
Investments	1,930	509	-	2,439
Liabilities
Reportable liabilities for
the segment(s)	1,359	50	13,241	14,650

Geographic area information 2010				Other
	Europe	Americas	Asia	countries	Total
Net sales	20,754	7,648	6,248	5,395	40,044
Assets	22,818	2,075	3,900	591	29,383
Investments	2,438	34	90	7	2,569
Geographic area information 2009				Other
	Europe	Americas	Asia	countries	Total
Net sales	19,357	6,197	4,748	5,066	35,366
Assets	21,661	1,849	3,187	702	27,399
Investments	2,374	2	51	12	2,439

2.4 OTHER OPERATING INCOME

	2010	2009
Capital gains on the sale of property, plant, and equipment	-	1
Grants	180	38
Other	37	123
Total	217	162

2.5 MATERIALS AND SERVICES

	2010	2009
Raw materials, consumables, and goods	7,070	5,869
External manufacturing services	704	602
Total materials and services	7,773	6,471

2.6 EMPLOYEE BENEFIT EXPENSES

		2010	2009
Wages and salaries		14,227	12,324
Pensions	Defined benefit plans	89	19
Pensions	Defined contribution plans	1,593	1,438
Other personnel expenses		1,733	1,594
Wages and salaries capitalised in
non-current assets		-522	-476
Total		17,120	14,899

Details of the management's employee benefits are presented in Note 2.26, 'Related party transactions'.

Number of personnel	2010	2009
Average number of salaried personnel	221	224
Average number of non-salaried personnel	191	146
Overall average number of personnel	412	370
Number of personnel at the end of the financial period	431	383

2.7 DEPRECIATION

	2010	2009
Intangible assets	254	302
Buildings	208	192
Machinery and equipment	1,209	1,224
Total	1,671	1,718

2.8 OTHER OPERATING EXPENSES

	2010	2009
Travel and other employee-related expenses	2,608	2,187
Rent and maintenance expenses	2,841	2,704
Marketing and sales expenses	3,240	2,429
Other external services	2,709	2,160
Other operating expenses	1,363	1,492
Total	12,760	10,972
Invoiced auditors' fees	138	124
Other fees	29	28
Total auditors' fees	167	152

2.9 RESEARCH AND DEVELOPMENT EXPENDITURE

The Group's research and development expenditure totalled EUR 2,542 thousand (EUR 2,409 thousand), representing 6.3% (6.8%) of net sales, of which EUR 565 thousand (EUR 420 thousand) has been capitalised as development expenditure.

2.10 FINANCIAL INCOME AND EXPENSES

	2010	2009
Exchange rate gains from financial assets and liabilities	658	320
Gains from financial assets recognised at fair value	3	12
Other financial income	1	40
Total financial income	663	372

Interest expenses on financial liabilities	-533	-517
Exchange rate losses on financial assets and liabilities	-148	-307
Wage and salary expenses	-101	-69
Total financial expenses	-782	-893
Total financial income and expenses	-120	-521
2.11 INCOME TAXES
Direct taxes	2010	2009
Taxes on taxable income for the period	-204	-208
Deferred taxes	-123	-74
Total direct taxes	-327	-282
Reconciliation of the tax rate	2010	2009
Profit before taxes	388	669
Taxes at the rate for the parent company, 26%	-101	-174
Effect of different tax rates of foreign subsidiaries	-23	57
Non-deductible expenses and tax-exempt income	-60	-100
Change in unrecognised tax assets from tax losses /
use of previously unrecognised tax losses	-123	-74
Other	-20	8
Taxes in the income statement	-327	-282

2.12 EARNINGS PER SHARE

Undiluted earnings per share are calculated by dividing the profit for the period attributable to equity-holders of the parent company by the weighted average number of shares outstanding during the period.

	2010	2009
Earnings for the period attributable to equity-holders of
the parent company, EUR 1000	61	387
Interest on the convertible bonds	263	263
Result for the period for the calculation of earnings per
share adjusted for the dilution effect	324	650
Average number of shares, undiluted	12,937,627	12,937,627
Conversion of convertible bonds into shares	900,000	900,000
Average number of shares, diluted	13,837,627	13,837,627
Earnings per share (EPS), undiluted, EUR	0,00	0,03

In the calculation of earnings per share adjusted for the dilution effect, the weighted average number of shares accounts for the dilution effect of the conversion of convertible bonds into shares. The convertible bonds did not have a dilutive effect in the 2010 and 2009 financial years.

2.13 INTANGIBLE ASSETS

				Other
	Development Intangible			intangible
2010	expenditure	rights	Goodwill	assets	Total
Acquisition cost, 1 Jan. 2010	1,815	1,832	2,638	1,472	7,757
Increases	565	260	-	531	1,356
Decreases	-3	-	-	-	-3
Transfers between items	-	-	-	-276	-276
Foreign exchange differences	-	-	-	5	5
Acquisition cost, 31 Dec. 2010	2,376	2,092	2,638	1,732	8,838
Accumulated amortisation and
impairment, 1 Jan. 2010	-356	-1,312	-	-1,101	-2,770
Amortisation	-112	-114	-	-28	-254
Accumulated amortisation and
impairment, 31 Dec. 2010	-468	-1,426	-	-1,129	-3,024
Carrying amount, 1 Jan. 2010	1,458	520	2,638	371	4,987
Carrying amount, 31 Dec. 2010	1,908	666	2,638	603	5,815

				Other
	Development Intangible			intangible
2009	expenditure	rights	Goodwill	assets	Total
Acquisition cost, 1 Jan. 2009	1,205	1,730	2,638	1,170	6,743
Increases	420	102	-	811	1,334
Transfers between items	191	-	-	-507	-316
Foreign exchange differences	-2	-	-	-2	-4
Acquisition cost, 31 Dec. 2009	1,815	1,832	2,638	1,472	7,757

Accumulated amortisation and
impairment, 1 Jan. 2009	-222	-1,203	-	-1,045	-2,470
Amortisation	-135	-109	-	-56	-300
Impairment	-	-	-	-3	-3
Foreign exchange differences	-	-	-	2	2
Accumulated amortisation and
impairment, 31 Dec. 2009	-356	-1,312	-	-1,101	-2,770
Carrying amount, 1 Jan. 2009	983	527	2,638	125	4,273
Carrying amount, 31 Dec. 2009	1,458	520	2,638	371	4,987

Contractual commitments concerning the acquisition of intangible assets totalled EUR 54 thousand (EUR 0 thousand).

Intangible rights consist of patents. Assets acquired under finance lease agreements have been capitalised in other intangible assets. The acquisition cost at the end of the year was EUR 474 thousand (EUR 474 thousand), accumulated amortisation EUR 474 thousand (EUR 473 thousand), and the carrying amount EUR 0 (EUR 1 thousand).

Goodwill impairment test

All goodwill has been allocated to certain GastroPanel products in the Diagnostics segment. In impairment testing, recoverable amounts have been determined on the basis of value in use. Cash flow estimates cover a five-year period. The forecast for 2011 is based on the budget approved by the Board of Directors. Estimated cash flows for each of the years 2012–2015 are based on marketspecific business plans approved by the Board of Directors and an understanding of future trends in key market areas. A growth rate of 7% has been used in calculations for the year 2016. No substantial increase in net sales after that has been assumed. As this is a fledgling business area, growth estimates cannot be based on historical data. In the management's opinion, the business growth expectations used in impairment testing are conservative, and the company's targets have been set considerably higher.

The sales margin used for impairment testing is a cautions estimate that reflects trends in the sales margin and net sales of the previous years. Biohit's management estimates that the growth in unit sales and the increased operational efficiency will keep the sales margin at the 2010 level.

The fixed costs used in impairment testing are based on the management's estimates, which take into account the rise in costs caused by market-specific growth expectations. Average annual growth has been forecast at about 5%. Cost-cutting and increased operational efficiency will enable the company to keep expenses in check.

The discount rate used in impairment calculations reflects the impact of business risks on the required return on equity. The cost of debt has been defined according to the existing credit base. The higher risk of commercialising new medical products has been taken into account in definition of the discount interest rate, which has been set at 15% before taxes.

On the basis of impairment testing using the above-mentioned estimates, there is no need to recognise any impairment losses on goodwill in the financial statements for the year ending 31 December 2010.

Impairment testing sensitivity analysis

The table below presents a breakdown of the maximum changes in each key assumption (in percentage points) that can occur in order for the value of future cash flows to equal the book value.

	actual for	2011–2016
Year	2010	projection	sensitivity, %
Net sales growth (CAGR), %	23.7	32.2	-4.9
Discount interest rate, %		15.0	20.0
Sales margin, %	73.0	72.0	-17.0

The long-term growth rate used in the calculation is 2%. The sensitivity of the long-term growth is -118%.

Whether or not the projected net sales figures are achieved depends largely on the following factors:

The market penetration of Biohit's diagnostics products has taken longer than expected.

Some negotiations with distributors are still ongoing in several European and Asian countries. Delays in these negotiations and difficulties in finding reliable distributors could lead to net sales growth remaining below the forecast values used in impairment testing.

The management's estimates indicate that there is substantial growth potential for the GastroPanel product family in China and India. However, forecasts of future trends cannot be based on historical data, as net sales in these markets have been minimal to date. If approval from local opinionleaders and physicians is not obtained for the product concept according to schedule, there will be an increased risk that the growth forecasts used in goodwill impairment testing will not be realised.

2.14 TANGIBLE ASSETS

	Machinery and
2010	Land	Buildings	equipment	Total
Acquisition cost, 1 Jan. 2010	72	4,008	15,903	19,984
Increases	-	46	1,167	1,213
Decreases	-	-	-401	-401
Transfers between items	-	-	276	276
Foreign exchange differences	-	16	-6	10
Acquisition cost, 31 Dec. 2010	72	4,070	16,939	21,082

Accumulated depreciation and
impairment, 1 Jan. 2010	-	-1,962	-11,562	-13,524
Depreciation	-	-208	-1,209	-1,417
Accumulated depreciation of
decreases and transfers	-	-	432	432
Foreign exchange differences	-	-	-41	-41
Accumulated depreciation and
impairment, 31 Dec. 2010	-	-2,170	-12,380	-14,551
Carrying amount, 1 Jan. 2010	72	2,046	4,342	6,460
Carrying amount, 31 Dec. 2010	72	1,900	4,559	6,531
			Machinery and

2009	Land	Buildings	equipment	Total
Acquisition cost, 1 Jan. 2009	72	3,809	14,671	18,552
Increases	-	188	968	1,156
Decreases	-	-	-34	-34
Transfers between items	-	-	316	316
Foreign exchange differences	-	11	-17	-6
Acquisition cost, 31 Dec. 2009	72	4,008	15,903	19,984
Accumulated depreciation and
impairment, 1 Jan. 2009	-	-1,762	-10,338	-12,100
Depreciation	-	-192	-1,224	-1,416
Foreign exchange differences	-	-8	-	-8
Accumulated depreciation
and impairment, 31 Dec. 2009	-	-1,962	-11,562	-13,524
Carrying amount, 1 Jan. 2009	72	2,047	4,333	6,452
Carrying amount, 31 Dec. 2009	72	2,046	4,342	6,460

Commitments to agreements related to property, plant, and equipment acquisitions amounted to EUR 0 thousand (EUR 662 thousand).

Assets acquired under finance lease agreements have been capitalised in machinery and equipment. The acquisition cost at the end of the year was EUR 1,407 thousand (EUR 742 thousand), accumulated depreciation EUR 462 thousand (EUR 342 thousand), and the carrying amount EUR 945 thousand (EUR 418 thousand).

2.15 FINANCIAL ASSETS AND LIABILITIES BY CATEGORY

Balance sheet values of financial assets by category, 31 Dec. 2009

Balance sheet values of financial assets by category, 31 Dec. 2010
	Financial
			assets
			recognised
		Available- at	fair value
		for-sale	through	Total
	Loans and	financial	profit or	carrying
	receivables	assets	loss	amount Fair	value
Non-current financial assets
Financial assets	4	8 (*	-	12	12
Total	4	8	-	12	12
Current financial assets
Trade and other receivables	7,779	-	-	7,779	7,779
Investments held for trading	-	-	500	500	500
Cash and cash equivalents	1,659	-	-	1,659	1,659
Total	9,438	-	500	9,938	9,938
Total financial assets	9,442	8	500	9,950	9,950

			Financial
	assets
			recognised
		Available- at	fair value
		for-sale	through	Total
	Loans and	financial	profit or	carrying
	receivables	assets	loss	amount Fair	value
Non-current financial assets
Financial assets	1	8 (*	-	9	9
Total	1	8	-	9	9
Current financial assets
Trade and other receivables	6,888	-	-	6,888	6,888
Investments held for trading	-	-	400	400	400
Cash and cash equivalents	1,580	-	-	1,580	1,580
Total	8,468	-	400	8,868	8,868
Total financial assets	8,469	8	400	8,877	8,877

*) Available-for-sale financial assets totalling EUR 8 thousand (EUR 8 thousand) include unquoted investments, which have been presented at cost because their fair value is not reliably available.

The carrying value of other receivables is equivalent to their fair value, because the discount effect is minimal when the maturity of liabilities is taken into account.

Financial liabilities	Carrying amount	Fair			value Carrying amount
by category	2010	2010	2009	2009
Non-current financial liabilities
measured at amortised cost
Convertible bonds	3,841	3,477	-	-
Capital loans	696	696	775	775
Other interest-bearing liabilities	4,008	4,008	3,079	3,079
Other liabilities	856	856	790	790
Total	9,400	9,036	4,645	4,645

Current financial liabilities measured at amortised cost
Convertible bonds	-	-	3,991	3,784
Other interest-bearing liabilities	920	920	1,127	1,127
Trade and other payables	6,010	6,010	4,887	4,887
Total	6,930	6,930	10,005	9,798
Total financial liabilities	16,330	15,966	14,650	14,443

The original carrying amount of trade payables and other non-interest-bearing liabilities is equivalent to their fair value, because the discount effect is minimal when one takes into account the maturity of liabilities.

The fair value of convertible bonds has been determined with a discount interest rate of 9.00% (9.00%). The fair value of capital loans cannot be reliably determined, because they are not quoted on well-functioning markets. Items among other interest-bearing liabilities are primarily floating rate liabilities linked to the market interest rate, or else have been drawn down close to the closing date. Their balance sheet values do not substantially differ from their fair values.

2.16 DEFERRED TAXES

Deferred tax assets	2010	2009
Intangible assets	-	150
Internal margin on inventories	287	339
Pension obligations	34	28
Unused tax losses	1,089	976
Accumulated depreciation difference	439	443
Other	-	1
Total	1,849	1,937
Deferred tax liabilities	2010	2009
Accumulated depreciation differences	38	-
Total	38	-

Changes in deferred taxes have been entered in the statement of comprehensive income. Deferred tax assets for onfirmed losses have been recognised to the extent that the management believe it probable that taxable income against which the asset can be utilised will materialise in the future.

On 31 December 2010, Group companies had EUR 3,160 thousand (EUR 3,575 thousand) in confirmed tax losses for which no deferred tax assets have been recorded, as it has been estimated that it is not probable that these losses can be utilised prior to maturity. These losses expire in 2014–2030, and the equivalent deferred taxes are EUR 848 thousand (EUR 945 thousand).

2.17 INVENTORIES

	2010	2009
Raw materials and consumables	2,660	2,439
Products in progress	360	464
Completed products and goods	2,218	2,235
Total inventories	5,238	5,138

In the course of the financial year, EUR 7,302 thousand (5,589 thousand) was expensed to reduce the carrying amount of inventories. The item includes the carrying amount of EUR 120 thousand (EUR 303 thousand) of obsolete and slowly moving inventories recognised as expenses.

2.18 TRADE AND OTHER RECEIVABLES

Non-current receivables	2010	2009
Non-current non-interest-bearing receivables	4	1
Trade receivables	6,592	6,014
Pre-payments and accrued income	649	549
Other receivables	538	324
Total	7,779	6,888

A breakdown of trade receivables by age is presented in Note 2.25.

2.19 CASH AND CASH EQUIVALENTS

Cash and cash equivalents	2010	2009
Cash at bank and in hand	1,659	1,580
Financial assets recognised at fair value through profit or loss	500	400
Total	2,159	1,980
Cash and cash equivalents in the cash flow statement	1,659	1,580

2.20 NOTES CONCERNING SHAREHOLDERS' EQUITY

Biohit Oyj'sshare capital is EUR 2,199,397 and the number ofshares 12,937,627, of which 2,975,500 (2,975,500) are Series A shares and 9,962,127 (9,962,127) Series B shares. The Series B shares are quoted on the stock exchange.

Both series have a nominal share value of EUR 0.17. Series A and Series B shares differ to the extent that each Series A share confers on its subscriber the right to 20 (twenty) votes at General Meetings and each Series B share confers the right to one vote. However, in the payment of dividends, a dividend two per cent higher than the nominal value is paid for Series B shares than is paid for Series A shares.

According to theArticles ofAssociation, the company's minimum share capital is EUR 1,063,101.29 and the maximum share capital EUR 4,252,405.16. Within these limits, the share capital can be increased or decreased without amendment to the Articles of Association. There was no change in share capital in 2010 or 2009. The share capital is fully paid-in.

Description of shareholders' equity funds:

Translation differences: The fund includes translations differences resulting from the conversion of foreign subsidiaries' financial statements into euros.

Invested unrestricted equity fund: This fund includes other equity investments and payments for share subscriptions insofar as it is decided not to enter said amounts in the share capital.

2.21 PENSION LIABILITIES

The majority of the Group's pension schemes are defined contribution plans. There is a defined benefit plan in France and in Japan.

Pension liabilities for defined benefit plans in the balance sheet	2010	2009
Present value of non-funded liabilities	155	85
Present value of funded liabilities	197	121
Unrecognised actuarial gains/losses	-3	-3
Fair value of assets	-195	-119
Pension liabilities at end of year	155	85
Changes in the present value of obligations during the period	2010	2009
Present value of obligations at beginning of period	204	180
Costs based on work carried out during the period	89	19
Interest expenses	-	4
Benefits paid	57	1

Pension liabilities at end of year	350	204
Changes in the fair value of assets during the period	2010	2009
Fair value of assets at beginning of period	119	94
Employer contributions	73	24
Benefits paid	3	1
Fair value of assets at end of period	195	119

Pension expenses from defined benefit schemes

recognised in the income statement	2010	2009
Costs based on work carried out during the period	89	19
Total	89	19

Mathematical assumptions for defined benefit pension	2010	2009
Discount interest rate, %		3.0	3.0
Projected increase in wages and salaries, %		2.0	2.0
Projected inflation, %		4.5	4.5
Amounts for the financial period and the pervious two periods:	2010	2009	2008
Current value of liability	350	204	180
Fair value of assets in the schemes	-195	-119	-94
Surplus (+) or deficit (-)	155	85	86

In 2011, payments into pension schemes are expected to total EUR 33 thousand (EUR 20 thousand).

2.22 PROVISIONS

Warranty provisions	2010	2009
Increases in provisions	50	-
Provision, 31 Dec.	50	-
Total provisions	50	-

2.23 INTEREST-BEARING LIABILITIES

Interest-bearing liabilities, balance sheet values	2010	2009
Non-current interest-bearing liabilities
Loans from financial institutions	3 493	2,784
Convertible bonds	3,841	-
Capital loans	696	775
Finance lease liabilities	515	295
Total	8,544	3,854
Current interest-bearing liabilities
Loans from financial institutions, current portion	631	1,023
Convertible bonds	-	3,991
Finance lease liabilities, current portion	288	105
Total	920	5,118
Total interest-bearing liabilities	9,464	8,973

Fair values for financial liabilities are presented in Note 2.15.

Current and non-current interest-bearing liabilities are presented in euros. At the end of the period, the average weighted interest on the company's loans was 4.8% per annum (4.7% in 2009). The fair values of interest-bearing liabilities do not substantially differ from their balance sheet values.

Convertible bonds

On 28 October 2010, Biohit Oyj floated an issue of convertible bonds targeted at professional investors in Finland. The subscription value of the convertible bonds on the date of issue was EUR 4,050,000. These convertible bonds replace the convertible bonds which matured on 28 October 2010. Annual fixed interest of 6.5% is paid on the capital of a convertible bond, which has a fiveyear maturity. Each EUR 4,500 note unit can be converted into 1,000 Series B shares with a nominal value of EUR 0.17. The conversion rate is EUR 4.50. A bond can be converted into a maximum of 900,000 Biohit Oyj Series B shares. The company's share capital may be increased by a maximum of EUR 153,000 and the number of Series B shares by a maximum of 900,000 new shares, as a result of conversions. At a maximum, 6.5% of the company's shares can be converted on the basis of the convertible bonds, and 1.0% of the votes conferred by the shares after any increase in share capital. As from 2 January 2011, the company is entitled to repay the bonds prior to the maturity date using a 100% rate added with interest accrued until the payment date, provided that, on 20 out of 30 consecutive exchange days occurring immediately before the date of such repayment decision, the mean rate of the company's share weighted with share turnover on the Helsinki Stock Exchange was at least 70% higher than the computational conversion rate as defined in the convertible bonds' terms or as amended in accordance with said terms.

The convertible bonds mature five years after issue, unless the bond-holders exercise their right to convert the bonds to shares in the parent company. Conversion can be carried out as from 2 January 2011. The annual subscription period of Series B shares spans from 2 January to 30 November, except where the company's Board of Directors due to a cogent reason allows conversion during the period between 1 December and 1 January. In 2015, the subscription period will end on 30 September. No bonds were converted into shares during the financial year. Provided that special conditions are fulfilled, owners of book-entries of these convertible bonds are entitled to demand the repayment of bonds before the maturity date. These special conditions are as follows:

• • Interest has not been paid or principal has not been returned in due time.
• As a result of the issuer's negligence, another debt of the issuer of at least EUR,3,million has fallen due prior to its maturity date and such early repayment has not been paid in due time.
• The issuer ceases its entire current business operations.
• More than 50,per,cent of the issuer's share capital or shares conferring more than 50,per,cent of the votes have been transferred to a single person or corporation.
• The issuer has been placed into liquidation or it has declared bankrupt or submitted a register notification concerning negative equity to the Trade Register.

In the balance sheet, the convertible bonds are divided into shareholders' equity and liabilities. The liability component has been initially recognised at fair value, which was defined by using the market interest on an equivalent liability at the moment when the bond was issued. The equity component has been calculated as the difference between the cash received from the bond issue and the fair value of the liability. The equity component of the convertible bond, EUR 177 thousand, is recognised in the invested unrestricted equity fund.

Covenants related to non-current loans

Loans from financial institutions include EUR 1,919 thousand (EUR 1,167 thousand) in long-term loans with the special condition that the loan will mature immediately when the creditor so demands. The bases for this demand are detailed in Note 2.25.

Capital loans

Biohit's principal shareholders have granted the company a capital loan of EUR 696 thousand (EUR 775 thousand) for product and other business-related development. The accumulated interest on the capital loan as of 31 December 2010 totals EUR 657 thousand (EUR 618 thousand). The loan meets the terms of capital loan laid down in Chapter 12 of the Finnish Limited Liability Companies Act. The main terms are as follows:

• • In the event of the dissolution and bankruptcy of the company, the payment of the capital, interest, and other compensation is subordinated to payment to all other creditors.
• In other cases, the capital may be repaid only if a full margin remains on restricted equity and other non-distributable items in the balance sheet adopted for the company for the financial period last ended.
• Interest and other compensation can be paid only if the amount to be paid can be used for the distribution of profit in accordance with the balance sheet adopted for the company for the most recent complete financial period.
• • Loan interest rates vary between five per cent and six per cent per annum. Capital loans and their outstanding interest are presented under non-current liabilities.

Finance lease liabilities

2010	2009
	121
	312
	433
	-33
	400
2010	2009
	105
	295
	400
	318 532 850 -47 803 288 515 803

2.24 TRADE AND OTHER LIABILITIES

Non-interest-bearing liabilities, balance sheet values	2010	2009
Non-current non-interest-bearing liabilities
Deferred tax liabilities	37	-
Pension liabilities	155	118
Interest on capital loans	657	618
Other non-current liabilities	7	54
Total	856	790
Current non-interest-bearing liabilities
Trade payables	1,854	1,409
Other liabilities	1 121	909
Provisions	50	-
Advances received	171	155
Tax liabilities	18	-40
Accrued liabilities and pre-paid income	2,846	2,454
Total	6,060	4,887
Total non-interest-bearing liabilities	6,916	5,677

Accrued liabilities and pre-paid income include amortised employee benefits and leasing expenses.

2.25 MANAGEMENT OF FINANCIAL RISKS

Biohit's risk management has focused on analysing and minimising the following major risks:

Exchange rate risk

International operations involve exchange rate risks. When calculated using comparable exchange rates, Biohit's net sales grew by 9.6%, but when calculated using the reporting date exchange rates, the growth was 13.2%. The overall effect of exchange rate fluctuations on the Group's profitability was not material. While the strengthening of the euro against other currencies weakens the Group's profitability, the weakening of the euro will have the opposite effect. The company seeks to protect itself from exchange rate risks by making procurements in currencies other than the euro. The exchange rate risk is also reduced by the realisation of fixed costs in currencies with a strong net position. During the reporting period, the company used no exchange rate hedges.

On the closing date, 40% (34%) of the Group's external trade receivables and 14% (12%) of its trade payables were in foreign currencies.

Sensitivity analysis of changes in foreign currency exchange rates in accordance with IFRS7

2010 EUR 1000	USD	JPY	CNY	GBP
Non-current liabilities	7	54	-	8
Open position	7	54	-	8
Current assets
Other financial assets	290	269	189	303
Trade and other receivables	2,486	2,528	345	868
Current liabilities
Non-interest-bearing liabilities	1,820	1,874	129	670
Open position	956	923	405	501
Net position	949	869	405	493
2009 EUR 1000	USD	JPY	CNY	GBP
Non-current liabilities	7	33	-	44
Open position	7	33	-	44
Current assets
Other financial assets	356	292	217	204
Trade and other receivables	2,362	2,540	137	801
Current liabilities
Interest-bearing liabilities	-	-	-	6
Non-interest-bearing liabilities	1,427	2,024	75	568
Open position	1,291	808	279	431
Net position	1,284	775	279	387

The net position includes cash and cash equivalents in foreign currencies, as well as receivables and payables to both Group and non-Group companies, converted into euros at the exchange rate for the closing date.

The below table shows the strengthening or weakening of the euro against the US dollar, the Japanese yen, the Chinese yuan, and the British pound with the other factors remaining constant. The change in percentage points shows the average volatility over the past 12 months. The sensitivity analysis is based on the foreign-currency-denominated assets and liabilities on the closing date. The company did not use any foreign exchange derivatives during the reporting period.

2010 EUR 1000	USD	JPY	CNY	GBP
Change in percentage points	+/- 7%	+/- 18%	+/- 10%	+/- 3%
Effect on profit after taxes	+/- 69	+/-160	+/- 42	+/- 15
Shareholders' equity	+/- 22	+/- 97	+/- 68	+/- 11
2009 EUR 1000	USD	JPY	CNY	GBP
Change in percentage points	+/- 5%	+/- 5%	+/- 5%	+/- 10%
Effect on profit after taxes	+/- 64	+/-39	+/- 14	+/- 39
Shareholders' equity	+/- 24	+/- 20	+/- 9	+/- 31

Interest rate risk

Changes in interest rates have only a slight effect on Biohit's earnings, for which reason the Group has not implemented separate hedging measures during the financial period. The overall potential interest rate risk of deposits and short-term money market investments is not significant. The Group's income and cash flows from operating activities are largely independent of changes in market interest rates. Interest rate risks associated with the Group's granting of credit are managed with fixedrate lending. On the closing date, 72% (71%) of the Group's credit was tied to a fixed interest rate.

Sensitivity analysis of changes in interest levels in accordance with IFRS7

The Group has net floating rate liabilities totalling EUR 2,248 thousand (EUR 2,537 thousand). A change of one percentage point in the

interest level at the end of the year would mean an effect of +/- EUR 22 thousand (EUR 25 thousand) on the result before taxes.

The contractual repricing periods for floating-rate liabilities are as follows:

	under 6	6–12	12–36
In 2010	months	months	months	Total
Loans from financial institutions	353	1,895	-	2,248
	under 6	6–12	12–36
In 2009	months	months	months	Tota
Loans from financial institutions	471	1,938	129	2,537

Liquidity risk

Our liquidity risk management aims to safeguard the Group's financing in all situations. The Group's liquid assets on the closing date totalled EUR 2.2 million (EUR 2.0 million). Despite the increase in the liquid assets the Group's profitability has declined during the financial year. Growing cost pressures in the Liquid Handling business and the outlays required in the diagnostics business give rise to financial risks whose management requires the optimisation of the operational cost structure and the correct allocation of resources. The loan refinancing risk (the risk that too large a proportion of the Group's loans will fall due at a time when loan refinancing is financially impossible) is minimised by balancing out the loan maturities. However, convertible bond of EUR 4.05 million will mature in full in 2015 if the bond-holders do not exercise their right to convert them into shares in the parent company. The company re-arranged its EUR 4.05 million convertible bond, which matured in 2010, and reissued a new bond with almost identical terms. This improved the company's short-term liquidity. Special terms related to the convertible bond are presented in the notes to the financial statements, under Note 2.23.

The Group's non-current financial liabilities include EUR 1.9 million in financing, with the special condition that the loan will mature immediately if the equity ratio in the consolidated financial statements adopted by Biohit Group falls below 40%, or the debtor or subsidiary has, without the prior written consent of the creditor, placed the collateral position of the creditor on a weaker footing than other creditors. A total of EUR 353 thousand of these non-current financial liabilities is tied to Biohit Oyj's equity ratio, which is required to be higher than 35%. In 2010, the Biohit Group's equity ratio was 44.5% (46.8% in 2009).

Financial liability maturity analysis 2010

	<1 year 1–5	years	>5 years	Total
Trade payables and other non-interest-bearing liabilities 6,010		44	155	6,209
Repayments on loans from financial institutions	678	2,933	560	4,171
Financing costs for loans from financial institutions	370	306	11	687
Repayments on the convertible bonds	-	4,050	-	4,050
Financing costs for the convertible bonds	263	1,052	-	1,315
Repayments on capital loans	-	-	696	696
Financing costs for capital loans	-	-	848	848
Repayments on finance lease liabilities	288	515	-	803
Financing costs for finance lease liabilities	29	18	-	47
Total	7,638	8,918	2,270	18,826

Financial liability maturity analysis 2009

	<1 year 1–5	years	>5 years	Total
Trade payables and other non-interest-bearing	liabilities 4,887	54	118	5,059
Repayments on loans from financial institutions	1,023	2,687	97	3,807
Financing costs for loans from financial institutions	166	258	18	442
Repayments on the convertible bond	4,050	-	-	4,050
Financing costs for the convertible bond	263	-	-	263
Repayments on capital loans	-	-	775	775
Financing costs for capital loans	-	-	618	618
Repayments on finance lease liabilities	105	295	-	400
Financing costs for finance lease liabilities	16	17	-	33
Total	10,510	3,311	1,626	15,448

Commodity risk

The company has not hedged against commodity risks with derivatives, as they are not appropriate in view of the nature of the company's business. Biohit engages in long-term delivery contracts to minimise any risks associated with commodity availability.

Credit and counterparty risk

Business units are responsible for any credit loss risks associated with their trade receivables, and have conducted separate evaluations of the credit risk associated with each customer. Biohit's customer base consists mainly of financially sound companies, and consequently Biohit does not consider credit loss risks significant. The Group has not taken out any credit insurance. Biohit mainly enters into long-term, active relationships with its customers, so that any changes in customers' credit ratings will quickly come to the company's attention.

At 31 December 2010, trade receivables totalled EUR 6.6 million (EUR 6.0 million). Trade receivables include EUR 0.4 million (EUR 0.3 million) in receivables from a single, financially stable customer. The maximum credit risk amount is equal to the carrying amount of trade receivables."

Breakdown of trade receivables by age

	Impairment			Impairment
	2010	loss	Net 2010	2009	loss	Net 2009
Not yet falling due	4,932	-	4,932	4,248		4,248
Under 60 days	1,423	-	1,423	1,214		1,214
61–120 days	176	-15	161	360	-3	358
121–360 days	104	-28	76	190	-14	177
Over 360 days	33	-33	0	26	-8	18
Total	6,668	-76	6,592	6,038	-24	6,014

In 2010, EUR 56 thousand (EUR 25 thousand) was recognised in credit losses from trade receivables.

Equity structure management

Biohit's equity structure management aims to safeguard the Group's ability to operate in all situations. The target equity structure is defined by the largest shareholders, and attainment of this level is periodically monitored by the Board of Directors. The equity ratio is used to monitor equity structure, and it should remain above 40%.

The equity structure indicator – the equity ratio – is calculated by dividing the Group's shareholders' equity by the balance sheet total minus advances received and then multiplying the result by 100.

Equity ratio	2010	2009
Total shareholders' equity	13,003	12,749
Balance sheet total	29,383	27,399
Advances received	-171	-155
Equity ratio	44.5 %	46.8 %

2.26 RELATED PARTY TRANSACTIONS

Parties are considered to be related parties if one party is able to exercise control over the other or has substantial influence in decision-making related to the other's finances and business operations. The Group's related parties include the parent company and subsidiaries. Others include members of the Board of Directors, the Group Management Team, and the president & CEO.

Salaries and other current employee benefits	2010	2009
Parent company
Management Teams	1,002	854
President & CEO	209	188
Members of the Board of Scientific Advisors	113	-

President & CEO's salaries include Osmo Suovaniemi's salary from 1 Jan. 2010 to 9 June 2010, EUR 90 thousand, and Jussi Heiniö's salary from 10 June 2010 to 31 Dec. 2010, EUR 119 thousand. Under the Board of Directors' decision, Osmo Suovaniemi has been employed by the company as a member of the Board of Scientific Advisors (EUR 113 thousand) as of 10 June 2010. The subsidiaries' fees to the Members of the Boards include EUR 27 thousand (EUR 20 thousand) paid to Jussi Heiniö and EUR 27 thousand (EUR 40 thousand) paid to Osmo Suovaniemi.

Subsidiaries

Managing directors	801	839
Fees of Board members	2010	2009
Parent company
Osmo Suovaniemi	15	14
Reijo Luostarinen	19	19
Mårten Wikström	-	5
Tero Kauppinen	-	5
Mikko Salaspuro	15	14
Kalle Kettunen	15	11
Jukka Ant-Wuorinen	15	10
Eero Lehti	15	10

Ainomaija Haarla	10	-
Parent company, total	104	87
Subsidiaries
Members of the Boards	77	100
Other operating expenses	2010	2009
Consulting fees
Companies controlled by Board members	69	39
Total consulting fees	69	39
Capital loans from related parties	2010	2009
Loan amounts	696	775
Interest for the period	39	46
Total interest payment liabilities	657	618
Average loan interest per annum	5.5 %	5.4 %

The main terms for the capital loans are presented in Note 2.22.

Group's parent company and subsidiaries

Parent company Biohit Oyj, Finland	Group's holding
Biohit Ltd, UK	100 %
Biohit Healthcare Ltd, UK	100 %
Biohit SAS, France	100 %
Biohit Deutschland GmbH, Germany	100 %
Biohit Japan Co., Ltd, Japan	100 %
Biohit, Inc., USA	100 %
Biohit OOO, Russia	100 %
Biohit Biotech (Suzhou) Co., Ltd, China	100 %
Biohit Biotech Systems (India) Pvt. Ltd, India	100 %
Oy Finio Ab, Finland	100 %
Vantaan Hienomekano Oy, Finland	100 %

Oy Finio Ab and Vantaan Hienomekano Oy did not conduct any business operations in 2010 or 2009.

2.27 COLLATERALS AND CONTINGENT LIABILITIES

	2010	2009
Collaterals given for the parent company
Corporate mortgates	2,511	2,511
Mortgage on real estate	2,744	2,744
Guarantees	41	8
Collaterals given on behalf of subsidiaries
Guarantees	150	-
Other liabilities
Leasing commitments:	2010	2009
Due for payment before one year	830	707
Due for payment after 1 year but not later than 5 years	1,057	1,180
Total	1,887	1,887
Other rental commitments:	2010	2009
Due for payment before one year	940	961
Due for payment after 1 year but not later than 5 years	2,034	1,897
Due for payment after 5 years	2,002	218
Total	4,976	3,076
Total other liabilities	6,863	4,963
Total collaterals and contingent liabilities	12,309	10,218

The Group rents many of its production and office premises. While the length of leases range from 2 to 10 years, normally they include the possibility to extend the contract after the original expiry date. The leases generally include an index clause.

3. KEY RATIOS

3.1 KEY FINANCIAL RATIOS

	IFRS	IFRS	IFRS	IFRS	IFRS
	2006	2007	2008	2009	2010
Net sales	31,408	33,011	35,095	35,366	40,044
Change in net sales, %	9.6%	5.1%	6.3%	0.8%	13.2%
Operating profit/loss	-143	-197	1,314	1,190	507
% of net sales	-0.5%	-0.6%	3.7%	3.4%	1.3%
Profit/loss before extraordinary
items and taxes	-607	-1,116	996	669	388
% of net sales	-1.9%	-3.4%	2.8%	1.9%	1.0%
Profit/loss before taxes	-607	-1,116	996	669	388
% of net sales	-1.9%	-3.4%	2.8%	1.9%	1.0%
Return on equity, %	-6.1%	-11.9%	7.4%	3.1%	0.5%
Return on investment (ROI), %	0.0%	-0.6%	8.2%	5.8%	4.2%
Equity ratio, %	49.4%	43.6 %	46.5%	46.8%	44.5%
Investments in fixed assets	1,928	2,081	1,213	2,439	2,569
% of net sales	6.1%	6.3%	3.5%	6.9%	6.4%
R&D expenditure	1,689	2,005	2,044	2,409	2,542
% of net sales	5.4%	6.1%	5.8%	6.8%	6.3%
Total assets	27,320	27,337	27,107	27,399	29,383
Personnel, average	310	352	369	370	412

3.2 KEY RATIOS PER SHARE

	IFRS	IFRS	IFRS	IFRS	IFRS
	2006	2007	2008	2009	2010
Earnings per share, undiluted, EUR	-0,06*	-0,12*	0,07*	0,03*	0,00*
Equity per share attributable to
the equity holders of the parent
company, EUR	1,04	0,92	0,97	0,99	1,01
Price/earnings ratio, (P/E)	-31	-14	18	50	525
Dividend per share	-	-	-	-	-
Dividend/earnings, %	-	-	-	-	-
Effective dividend yield, %	-	-	-	-	-
Series B share price trend, EUR
- average	2,26	2,42	1,41	1,55	3,42
- low	1,99	1,51	0,91	1,27	1,50
- high	2,61	3,29	1,92	1,90	4,91
- price at 31 Dec	2,03	1,57	1,27	1,50	2,10
Market capitalisation, EUR 1,000
(assuming the market price of the
Series A share is the same as that
of the Series B share)	26,263	20,312	16,431	19,406	27,169
Turnover of Series B shares,
1,000 shares	1,530	3,436	1,742	1,996	9,415
- % of total number of shares	16.9%	37.9%	17.5%	20.0%	94.5%
Average number of shares,
adjusted for share issues				12,937,627 12,937,627 12,937,627 12,937,627 12,937,627
- accounting for the dilutive
effect of options and bonds				13,837,627 13,837,627 13,837,627 13,837,627 13,837,627
Total number of shares at the
closing date, adjusted for
share issues				12,937,627 12,937,627 12,937,627 12,937,627 12,937,627
- accounting for the dilutive
effect of options and bonds				13,837,627 13,837,627 13,837,627 13,837,627 13,837,627

*) options and bonds have no dilutive effect

4.1 SHARES AND SHAREHOLDERS

4.2 SHARES AND SHAREHOLDERS

Holdings by shareholder group, 31 Dec 2010

	No of shareholders		No of shares
Series A shares	no.	%	no.	%
1. Companies	1	0.1	24,990	0.8
2. Households	9	99.9	2,950,500	99.2
Shares on the waiting list	-	-	10	0.0
Total Series A shares	10	100.0	2,975,500	100.0

	No of	shareholders		No of shares
Series B shares	no.	%	no.	%
1. Companies	188	4.1	3,029,852	30.4
2. Financial and insurance institutions	6	0.1	65,676	0.7
3. Public sector organisations	1	0.0	343,138	3.4
4. Non-profit organisations	4	0.1	3,921	0.0
5. Households	4,387	95.3	6,466,726	64.9
6. Foreign ownership	16 0.3		47,222	0.5
Shares on the joint book-entry account	-	-	5,592	0.1
Total Series B shares	4,602	100.0	9,962,127	100.0
Total Series A and B shares	4,612		12,937,627

	No of shareholders			No of shares
Series A shares	no.	%	no.	%
1–1,000	0	0.0	0	0.0
1,001–10,000	3	30.0	25,000	0.8
10,001–100,000	3	30.0	156,990	5.3
Over 100,001	4	40.0	2,793,500	93.9
Shares on the waiting list	-	-	10	0.0
Total Series A shares	10	100.0	2,975,500	100.0

	No of	shareholders		No of shares
Series B shares	no.	%	no.	%
1–1,000	3,912	85.0	1,382,048	13.9
1,001–10,000	623	13.5	1,778,031	17.8
10,001–100,000	56	1.2	1,229,035	12.3
Over 100,001	11	0.2	5,567,431	55.9

Shares on the joint book-entry account	-	-	5,582	0,1
Total Series B shares	4,602	100,0	9,962,127	100,0
Total Series A and B shares	4,612		12,937,627
Largest registered shareholders, 31 Dec 2010
The 10 largest shareholders	Series A	Series B
by number of shares	shares	shares	Total shares	%
Suovaniemi, Osmo	2,265,340	965,207	3,230,547	25.0
Biocosmos Oy	-	1,142,735	1,142,735	8.8
Interlab Oy	-	1,021,762	1,021,762	7.9
Suovaniemi, Ville	208,280	371,300	579,580	4.5
Suovaniemi, Joel	208,280	333,000	541,280	4.2
Suovaniemi, Oili	111,600	288,935	400,535	3.1
Etera Mutual Pension Insurance
Company	-	343,138	343,138	2.7
Oy Etra Invest Ab	-	333,000	333,000	2.6
Härkönen, Matti	57,200	269,515	326,715	2.5
Suovaniemi ,Vesa	74,800	193,339	268,139	2.1
The 10 largest shareholders	Series A	Series B
by number of votes	shares	shares	Total votes	%
Suovaniemi, Osmo	45,306,800	965,207	46,272,007	66.6
Suovaniemi, Ville	4,165,600	371,300	4,536,900	6.5
Suovaniemi, Joel	4,165,600	333,000	4,498,600	6.5
Suovaniemi, Oili	2,232,000	288,935	2,520,935	3.6
Suovaniemi, Vesa	1,496,000	193,339	1,689,339	2.4
Härkönen, Matti	1,144,000	269,515	1,413,515	2.0
Biocosmos Oy	-	1,142,735	1,142,735	1.6
Interlab Oy	-	1,021,762	1,021,762	1.5
Oy Tech Know Ltd	499,800	70,000	569,800	0.8
Etera Mutual Pension Insurance
Company	-	343,138	343,138	0.5

Management's shareholding, 31 Dec 2010

On 31 December 2010, members of the Board of Directors and the President and CEO owned a total of 2,386,940 Series A shares and 3,610,736 Series B shares. These represent 46.4% of the total number of shares outstanding and 73.9% of the voting rights conferred.

Return on	result for the period
equity, %	X 100 shareholders' equity (average over the year)
Return on investment, %	profit before extraordinary items + interest and other financial expenses X 100 balance sheet total – non-interest-bearing liabilities (average over the year)
Equity ratio, %	shareholders' equity in the balance sheet X 100 balance sheet total – advance payments received
Earnings per share, EUR	profit for the period average number of shares, adjusted for share issues
Equity per share, EUR	shareholders' equity in the balance sheet number of shares on the closing date
Dividends per share, EUR	dividends for the period number of shares on the closing date
Dividends per earnings, %	dividends per share X 100 earnings per share
Effective dividend yield, %	dividends per share X 100 closing share price

Price	closing
per	share
earnings	price
ratio, (P/E)	earnings per share

5. FORMULAS FOR THE KEY RATIOS PARENT COMPANY INCOME STATEMENT

		01.01. -	01.01. -
1 000 €	Note number	31.12.2010	31.12.2009
Net sales	6.2	25,025	21,828
Change in inventories of finished goods
and work in progress		11	-132
Other operating income	6.3	237	170
Materials and services	6.4	-7,168	-5,617
Personnel expenses	6.5	-8,937	-7,719
Depreciation, amortisation and impairment	6.6	-1,651	-1,751
Other operating expenses	6.7	-7,784	-7,554
Operating profit/loss		-266	-774
Financial income and expenses	6.8	-269	-243
Profit/loss before appropriations and taxes		-534	-1,018
Profit/loss for the period		-534	-1,018

PARENT COMPANY BALANCE SHEET PARENT COMPANY CASH FLOW STATEMENT

1000 €	2010	2009
Cash flows from operating activities:
Profit/loss before extraordinary items	-534	-1,018
Adjustments for:
Depreciation according to plan	1,651	1,751
Unrealised exchange rate gains and losses	-113	199
Financial income and expenses	164	93
Other adjustments	62	867
Change in working capital:
Increase (-) or decrease (+) in current
non-interest-bearing trade receivables	-799	75
Increase (-) or decrease (+) in inventories	-179	239
Increase (+) or decrease (-) in current
non-interest-bearing liabilities	1,251	112
Realised exchange rate gains and losses	351	-70
Interest and other financial items paid	-452	-472
Dividends received	246	218
Interest received from operating activities	2	45
Cash flows from operating activities	1,651	2,040
Cash flows from investing activities:
Investments in tangible and intangible assets	-1,768	-1,826
Investments in other investments	-100	-
Capital gains from other investments	-	117
Proceeds from sales of tangible and intangible assets	-	1
Cash flows from investing activities	-1,868	-1,709
Cash flows from financing activities:
Increase in long-term borrowings	5,650	-
Repayments of long-term borrowings	-5,413	-381
Cash flows from financing activities	237	-381
Increase (+) or decrease (-) in cash and cash equivalents	20	-49
Cash and cash equivalents at beginning of period	467	516
Cash and cash equivalents at end of period	487	467

6. NOTES TO THE PARENT COMPANY'S FINANCIAL STATEMENTS

6.1 ACCOUNTING POLICY

When preparing financial statements in accordance with generally accepted accounting principles, the company's management must make estimates and assumptions. Actual results may differ from these estimates.

These financial statements have been prepared in accordance with the Finnish Accounting Act.

The financial statements are presented in thousands of euros and are based on initial transaction values, except for the marketable securities included in current assets, which have been measured at fair value.

Measurement of property, plant, and equipment

Property, plant, and equipment have been entered in the balance sheet at the original acquisition cost less grants received, depreciation according to plan, and impairment. Depreciation according to plan has been calculated on a straight-line basis over the useful economic lives of the items of property, plant, or equipment.

Depreciation periods according to plan are:

Intangible rights	3–10 years
Goodwill	10 years
Development expenditure	5 years
Other capitalised expenditure	5–10 years
Buildings	20 years
Machinery and equipment	3–10 years

Measurement of inventories

Inventories are presented according to the FIFO principle at acquisition cost, or at the lower of the replacement cost and the probable sale price. In addition to the direct costs, the acquisition cost of inventories includes an appropriate proportion of production overheads.

Valuation of marketable securities

Marketable securities included in current assets are measured at fair value. The fair value of all investments is measured on the basis of released price quotations on well-functioning markets – that is, buy quotations on the closing date. Both gains and losses due to changes in fair value are recorded in the income statement in the period in which they materialised.

Research and development expenditure

Research expenditure is expensed in the year it is incurred. Development expenditure for new products has been capitalised as intangible assets in the balance sheet since 1 January 2004 and amortised over the economic lives of the products to a five-year maximum.

Revenue recognition

Net sales are calculated as gross sales less indirect sales taxes and discounts. Revenues from products and services are recognised upon delivery.

Maintenance and repairs

Maintenance and repair costs are recorded as expenses in the financial year they are incurred. The costs for renovating rented premises have been capitalised under 'other capitalised expenditure', with depreciation calculated on a straight-line basis over the remainder of the term of lease.

Pensions

Pension schemes and any additional pension benefits required by Finnish law are arranged through pension insurance companies. Pension costs are recorded over the term of service of employees on an accrual basis.

Deferred taxes

Deferred taxes have not been recognised in the balance sheet. In accordance with the general guidelines of the Finnish Accounting Standards Board, issued on 12 September 2006, the notes to the financial statements present the amount of deferred taxes that could be recognised in the balance sheet and assets that are unlikely to materialise and as such should not be recognised in the balance sheet.

Foreign currency translation

Figures for receivables and liabilities in foreign currencies are converted into euros at the exchange rate quoted by the European Central Bank on the closing date. Exchange rate gains and losses are recognised through profit or loss.

6.2 NET SALES BY BUSINESS AREA

	2010	2009
Liquid handling	23,542	20,615
Diagnostics	1,483	1,213
Total	25,025	21,828

NET SALES BY GEOGRAPHICAL AREA

	2010	2009
Finland	1,770	1,484
The rest of Europe	10,789	10,439
North and South America	5,061	3,819
Asia	3,985	2,934
Other countries	3,420	3,152
Total	25,025	21,828

6.3 OTHER OPERATING INCOME

	2010	2009
Gains on sale of tangible assets under non-current assets	-	1
From Group companies	36	45
Other	201	124
Total	237	170

6.4 MATERIALS AND SERVICES

	2010	2009
Purchases during the year	7,088	5,369
Change in inventories	-167	108
Total raw materials and consumables	6,921	5,476
External services	247	140
Total materials and services	7,168	5,617

6.5 PERSONNEL EXPENSES AND NUMBER OF PERSONNEL

	2010	2009
Salaries and wages	7,800	6,697
Pension expenses	1,274	1,139
Other personnel expenses	386	360
Wages and salaries capitalised in non-current assets	-522	-476
Total personnel expenses	8,937	7,719

During the financial year, EUR 408 thousand (EUR 420 thousand) was capitalised in development expenditure and EUR 114 thousand (EUR 56 thousand) in relation to mould production.

Average number of employees by the parent

company during the year	2010	2009
Salaried employees	97	88
Non-salaried employees	95	86
Average number of personnel	192	174
Personnel at end of period	201	175

6.6 DEPRECIATION

	2010	2009
Intangible assets	601	627
Buildings	142	139
Machinery and equipment	907	985
Total	1,651	1,751

6.7 OTHER OPERATING EXPENSES

	2010	2009
Travel and other personnel-related expenses	1,040	896
Rent and maintenance expenses	2,026	1,784
Marketing and sales expenses	2,018	1,447
Other external services	1,655	1,342
Impairment of trade receivables	48	943
Other operating expenses	997	1,143
Total	7,784	7,554

Impairment of trade receivables includes EUR 0 thousand (EUR 920 thousand) in receivables from Group companies.

6.8 FINANCIAL INCOME AND EXPENSES

	2010	2009
Income from shares in Group companies	246	218
Interest income from long-term investments
From others	2	1
Total income from other investments under non-current assets	2	1
Other interest and financial income
From others	-	44
Other interest and financial income	-	44

Total other interest and financial income	249	263
Interest expenses and other financial expenses
Outgoing to Group companies	-14	-14
Outgoing to others	-503	-492
Total financial expenses	-517	-507
Total financial income and expenses	-269	-243
Foreign exchange losses included under
'Financial income and expenses'	-25	-2

The items presented as components of operating profit include EUR 464 thousand in (net) exchange rate gains (EUR 268 thousand in net exchange rate losses).

6.9 INTANGIBLE ASSETS

				Other
	Development Intangible			capitalised
2010	expenditure	rights	Goodwill expenditure		Total
Acquisition cost at beginning of year	1,806	1,832	6,558	1,562	11,759
Increases	565	260	-	545	1,370
Decreases	-	-	-	-	-
Transfers between items	-	-	-	-276	-276
Acquisition cost at end of year	2,372	2,092	6,558	1,831	12,853
Accumulated amortisation and
impairment at beginning of year	-356	-1,312	-6,206	-1,241	-9,115
Amortisation and impairment
during the year	-112	-114	-352	-23	-601
Accumulated amortisation at
end of year	-468	-1,426	-6,558	-1,264	-9,716
Carrying amount at end of year	1,903	666	0	567	3,136

Acquisition costs consist of patents transferred and a liquidation loss as a result of the dissolution of Locus genex Oy

				Other
	Development Intangible			capitalised
2009	expenditure	rights		Goodwill expenditure	Total
Acquisition cost at beginning of year	1,195	1,730	6,558	1,309	10,791
Increases	420	102	-	760	1,283
Decreases	-	-	-	-	-
Transfers between items	191	-	-	-507	-316
Acquisition cost at end of year	1,806	1,832	6,558	1,562	11,759
Accumulated amortisation and
impairment at beginning of year	-222	-1,203	-5,854	-1,210	-8,489
Amortisation and impairment
during the year	-135	-109	-352	-31	-627
Accumulated amortisation at
end of year	-356	-1,312	-6,206	-1,241	-9,115
Carrying amount at end of year	1,450	520	352	321	2,644

6.10 TANGIBLE ASSETS

	Machinery
2010	Buildings	equipment	Total
Acquisition cost at beginning of year	2,776	13,397	16,174
Increases	27	321	347
Decreases	-	-174	-174
Transfers between items	-	276	276
Acquisition cost at end of year	2,803	13,821	16,624
Accumulated depreciation and impairment
at beginning of year	-1,144	-9,886	-11,030
Accumulated depreciation of decreases	-	98	98
Depreciation during the year	-142	-907	-1,050
Accumulated depreciation at end of year	-1,286	-10,695	-11,982
Carrying amount at end of year	1,517	3,125	4,642

The undepreciated acquisition cost of production machinery and equipment is EUR 2,858 thousand (EUR 3,248 thousand).

		Machinery and
2009	Buildings	equipment	Total
Acquisition cost at beginning of year	2,594	12,722	15,316
Increases	182	363	545
Decreases	-	-4	-4
Transfers between items	-	316	316
Acquisition cost at end of year	2,776	13,397	16,174
Accumulated depreciation and impairment
at beginning of year	-1,005	-8,905	-9,910
Accumulated depreciation on decreases	-	4	4
Depreciation during the year	-139	-985	-1,124
Accumulated depreciation at end of year	-1,144	-9,886	-11,030
Carrying amount at end of year	1,632	3,511	5,143
6.11 SHARES AND HOLDINGS
2010 Shares	Group companies	Other shares	Total
Carrying amount at beginning of year	3,849	7	3,856
Increases	108	-	108
Carrying amount at end of year	3,957	7	3,963

The increase in shares and holdings is composed of the share capital of Biohit Biotech (Suzhou) Co., Ltd, China.

2009 Shares	Group companies	Other shares	Total
Carrying amount at beginning of year	3,805	7	3,812
Increases	44	-	44
Carrying amount at end of year	3,849	7	3,856

6.12 INVENTORIES

	2010	2009
Raw materials and consumables	1,952	1,848
Products in progress	441	520
Finished products/goods	1,166	1,013
Total inventories	3,560	3,381

6.13 RECEIVABLES
Non-current receivables	2010	2009
Receivables from others
Pre-payments and accrued income	31	-
Total non-current receivables	31	-
Current receivables	2010	2009
Receivables from Group companies
Trade receivables	5,802	5,117
Other receivables	24	20
Total	5,826	5,137
Receivables from others
Trade receivables	2,152	2,211
Other receivables	256	195
Pre-payments and accrued income	206	127
Total	2,613	2,533
Total current receivables	8,439	7,671

As of 31 December 2010, EUR 31 thousand (EUR 20 thousand) in convertible bond issue costs were capitalised in pre-payments and accrued income. Capitalised expenditure is expensed over the remaining five years (one year) to maturity.

6.14 MARKETABLE SECURITIES

	2010	2009
Investments in funds	500	400

Marketable securities consist of investments in interest funds.

6.15 CASH AND CASH EQUIVALENTS

	2010	2009
Cash at bank and in hand	487	467

6.16 SHAREHOLDERS' EQUITY

	2010	2009
Share capital, 1 Jan. and 31 Dec.	2,199	2,199
Invested unrestricted equity fund, 1 Jan. and 31 Dec.	12,230	12,230
Accumulated profit/loss from previous years, 1 Jan. and 31 Dec.	-3,742	-2,724
Reported profit/loss for the year	-534	-1,018
Total shareholders' equity	10,152	10,687

Shares and voting rights

Biohit's shares are divided into Series A and B shares. The series differ to the extent that each Series A share confers 20 (twenty) votes at General Meetings and Series B shares confer one vote. However, in the payment of dividends, a dividend two per cent higher than the nominal value is paid for Series B shares than is paid for Series A shares.

Structure of the parent company's			2010			2009
shareholders' equity	no.	EUR	% of shares %	of votes	no.	EUR
Series A shares
(20 votes per	share) 2,975,500	505,835	23.0		85.7 2,975,500	505,835
Series B shares
(1 vote per share)	9,962,127 1,693,562		77.0		14.3 9,962,127 1,693,562
Total	12,937,627 2,199,397		100.0		100.0 12,937,627 2,199,397

According to theArticles ofAssociation, the company's minimum share capital is EUR 1,063,101.29 and the maximum share capital EUR 4,252,405.16. Within these limits, the share capital can be increased or decreased without amendment to the Articles of Association.

The company does not own any of its own shares. The Board of Directors has no authorisations in force to carry out a share issue or issue of convertible bonds or bonds with warrants, or to buy back the company's own shares. The company has no share option schemes.

6.17 PROVISIONS

Warranty provisions	2010	2009
Increases in provisions	50	-
Provision, 31 Dec.	50	-
Total provisions	50	-

6.18 DEFERRED TAX LIABILITIES AND ASSETS

The company has a total of EUR 1,978 thousand (EUR 2,399 thousand) in deferred tax assets from tax losses and temporary differences. The company's management estimates that EUR 1,330 thousand (EUR 1,568 thousand) of this amount can be utilised.

6.19 NON-CURRENT LIABILITIES

	2010	2009
Loans from Group companies	231	231
Loans from others
Loans from financial institutions	3,255	2,456
Convertible bonds	4,050	-
Other non-current liabilities	-	47
Interest on capital loans	657	618
Total non-current liabilities	8,194	3,353
Liabilities falling due after five years	2010	2009
Loans from financial institutions	511	473
Capital loans	696	775
Total	1,207	1,248

Non-current liabilities incude EUR 4,050 thousand in convertible bonds. The main terms for these bonds are presented in the notes to the consolidated financial statements, under Note 2.23.

6.20 CAPITAL LOANS

	2010	2009
From related parties	696	775
Total	696	775

The company has capital loans totalling EUR 696 thousand. The main terms for these loans are detailed in the notes to the consolidated financial statements.

6.21 CURRENT LIABILITIES

	2010	2009
Convertible bonds	-	4050
Loans from financial institutions, current portion	577	965
Other non-current liabilities, current portion	47	95
Advances received	42	32
Trade payables	1,477	1,083
Accrued liabilities and pre-paid income	2,308	1,851
Other liabilities	195	172
Liabilities to Group companies
Trade payables	888	426
Accrued liabilities and pre-paid income	132	73
Total current liabilities	5,666	8,747

Accrued liabilities and pre-paid income include wage and salary accruals totalling EUR 1,405 thousand (EUR 1,139 thousand), leasing cost amortisation of EUR 180 thousand (EUR 240 thousand), and interest cost amortisation of EUR 117 thousand (EUR 90 thousand).

6.22 LIABILITIES AND COMMITMENTS WITH MORTGAGES AS COLLATERAL

Liabilities for which mortgages have been pledged as collateral	2010	2009
Loans from financial institutions	3,448	3,033
Corporate mortgages	2,276	2,276
Mortgages on real estate	1,500	1,500
Other liabilities	47	142
Mortgages on real estate	763	763
Leasing agreements	1,292	1,715
Corporate mortgages	235	235
Leasing commitments	2010	2009
Due for payment the following year	832	572
Due for payment at a later date	1,301	1,271
Total	2,133	1,843
Rental commitments	2010	2009
Due for payment the following year	431	429
Due for payment at a later date	861	1,286
Total	1,292	1,715

Leasing commitments and rents mainly consist of fixed-term leasing and rental under agreements that are effective for more than one year.

CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES

	2010	2009
Guarantees given on behalf of Group companies	150	-
OTHER CONTINGENT LIABILITIES
	2010	2009
Guarantees	8	8

7. BOARD OF DIRECTORS' DIVIDEND PROPOSAL

The Board of Directors proposes to the Annual General Meeting that no dividend be paid and that the parent company's loss of EUR 534,475.32 be transferred to retained losses.

Helsinki, 28 February 2011

Chairman of the Board Vice-Chairman of the Board Member of the Board Member of the Board

Reijo Luostarinen Jukka Ant-Wuorinen Osmo Suovaniemi Kalle Kettunen

Ainomaija Haarla Eero Lehti Mikko Salaspuro Member of the Board Member of the Board Member of the Board

Member of the Board

We have today issued an auditor's report on the audit performed.

Helsinki, 28 February 2011

Ernst & Young Oy Authorised Public Accounting Firm

Erkka Talvinko Authorised Public Accountant

8. AUDITOR'S REPORT

To the Annual General Meeting of Biohit Oyj

We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Biohit Oyj for the financial period 1.1. - 31.12.2010. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company'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 and the report of the Board of Directors.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company's financial statements and the report of the Board of Directors

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.

Helsinki, 28 February 2011

Ernst & Young Oy Authorized Public Accountant Firm

Erkka Talvinko Authorized Public Accountant

Headquarters

Biohit Oyj

Laippatie 1 00880 Helsinki, Finland Puh: +358-9-773 861 Faksi: +358-9-773 86 292 info@biohit.com

Factory

Biohit Oyj

Tietokatu 4 87400 Kajaani, Finland

www.biohit.com

Subsidiaries

Germany

Biohit Deutchland GmbH Raiffeisenstrasse 1a 61191 Rosbach, Germany Puh: +49-6003-82 820 Faksi: +49-6003-828 222 info@biohit.de

Japan

Biohit Japan Co., Ltd. NB Building 6F 2-15-10 Iwamoto-cho, Chiyoda-ku Tokyo, 101-0032, Japan Puh: +81-3-5822 0021 Faksi: +81-3-5822 0022 sales@biohit.co.jp

United Kingdom

Biohit Ltd. Unit 1, Barton Hill Way Torquay, Devon TQ2 8JG, United Kingdom Puh: +44-1803-315 900 Faksi: +44-1803-315 530 sales@biohit.demon.co.uk

France

Biohit SAS 2 Rue du Grand Chêne 78830 Bonnelles, France Puh: +33-1-3088 4130 Faksi: +33-1-3088 4102 commercial.france@biohit.com

United States Biohit Inc.

3535 Route 66, Bldg. 4 Neptune, N.J. 07753, U.S.A. Puh: +1-732-922 4900 Faksi: +1-732-922 0557 pipet@biohit.com

Russia

Biohit OOO, Saint-Petersburg

VO, line 5, 68, Unit 4, letter D 199178 Saint-Petersburg, Russia Puh: +7-812-327 5327 Faksi: +7-812-327 5323 main@biohit.ru

Biohit OOO, Moscow

Petrovsko-Razumovsky av., 29, Unit 2 127287 Moscow, Russia Puh: +7-495-748 1613 Faksi: +7-495-613 5577 main.moscow@biohit.ru

China

Biohit Biotech (Suzhou) Co., Ltd. Room 501, Office Block Hotel Equatorial 65 Yan An Xi Lu Shanghai, 200040 P. R. China Puh: +86-21-6248 5589 Faksi: +86-21-6248 7786 info.china@biohit.com

India

Biohit Biotech Systems (India)

Private Limited No.10, Anna Avenue, Bhakthavatsalam Nagar, Adyar, Chennai 600020, India india.info@biohit.com

Representative Office

Singapore

Biohit Representative Office 1 North Bridge Road #12-01 High Street Center, Singapore 179094 Puh: +65 9797 0280 Faksi: +65 6336 6534