ANNUAL REPORT 2019

Highlights of the Year 2019 ………………………………………… 5
Review by the President & CEO ………………………………… 6
Strategy …………………………………………………………………… 8
Innovative Products …………………………………………………… 9
History ………………………………………………………………………10
Corporate Governance Statement 2019 ………………………12
Board of Directors ………………………………………………………17
Management Team ……………………………………………………18
Information for Shareholders ……………………………………19
Stock Exchange and Press Releases 2019 …………………20
Financial Statements …………………………………………………21

BIOHIT OYJ IN BRIEF

Biohit Oyj is a globally operating Finnish biotechnology company. Biohit's mission is "Innovating for Health". Biohit is headquartered in Helsinki and has subsidiaries in Italy and the UK. Biohit's B series shares (BIOBV) are quoted on NASDAQ OMX Helsinki under Small cap/Healthcare.

HIGHLIGHTS OF THE YEAR 2019

SATYA ABADI PHARMA TO BECOME ACETIUM® LOZENGE'S DISTRIBUTOR IN INDONESIA

Satya Abadi Pharma, a well-known marketer and distributor of pharmaceuticals and medical devices, will begin to distribute Acetium® smoking cessation products throughout Indonesia. Smoking is a serious health problem in Indonesia with up to 60 million active smokers. More than 200,000 people die each year from smoking-related illnesses. Acetium® lozenge is needed to solve this problem.

GASTROPANEL® 14 929 PEOPLE STUDY IN CHINA

Significant confirmation of the existing evidence on the predictive value of the GastroPanel® biomarkers in diagnosing gastric cancer has been obtained in recent Chinese multicenter trials. The nationwide trials focused on a sample population with high risk of developing gastric cancer and were conducted by a research group led by Professor Cuancai Cai of Changhai Hospital, Naval Medical University, Shanghai, China. GastroPanel study in China included 14,929 people.

ACETIUM® AVAILABLE IN THAILAND IN 2019

Biohit Oyj and Precision Health Co. Ltd have signed a distribution agreement for Acetium® lozenge in Thailand. There are over 13 million smokers in the country and over 5 million people planning or trying to quit smoking.

EUR10.1MILLION 83.9% NET SALES EQUITY RATIO

EUR +0.6 MILLION OPERATIVE EBITDA

NET SALES 2015-2019, MEUR

NET SALES FROM INTERNATIONAL OPERATIONS

96%

KEY FIGURES	2019	2018
Net sales (EUR million)	10.1	9.9
EBITDA (EUR million)	0.6	–0.2
Operative EBITDA (EUR million)	0.6	–0.1
Operating profit/loss (EUR million)	-1.4	–2.0
Profit/loss before taxes (EUR million)	-1.2	–2.0
Profit/loss for the period (EUR million)	-1.4	–2.1
Average number of personnel	46	50
Number of personnel at the end of the period	46	49
Equity ratio (%)	83.9	89.2
Undiluted earnings per share (EUR)	-0.09	–0.14
Diluted earnings per share (EUR)	-0.09	–0.14
Shareholders' equity per share (EUR)	0.97	1.06
Average number of shares during the period	15,005,253	14,901,904
Number of shares at the end of the period	15,045,593	14,952,041

Review by the President & CEO

OUR PROFITABILITY IMPROVED

The year 2019 was exceptional for Biohit due to the completion of GastroPanel® product's re-registration only at the end of the year in China. Despite the delay of a delay in the registration our Net Sales grew slightly and the profitability improved.

Operative EBITDA improved to EUR +0.6 million (EUR -0.1 million) due to increased raw material deliveries to China and reduced fixed costs. The 2019 Operative EBITDA was 6 % of Net Sales. Our cash at the end of the period amounted to EUR 1.3 million (EUR 1.4 million). Our cash position was negatively impacted by the delay in customer payments worth of EUR 0.8 million. Payments were received in January 2020.

WE INCREASED OUR DISTIBUTION NETWORK

We continued our domestic sales and marketing efforts for the Acetium® Iozenge and as a result our distribution network expanded significantly for example inside SOK.

We made several international distribution agreements for Acetium® Iozenge during the review period. PT Satya Abadi Pharma is our distributor in Indonesia. In Italy, Difar Distribuzione

S.r.l. received the exclusive distribution rights to the product. We also signed an agreement with Precision Health Co., Ltd over the distribution of Acetium® Iozenge in Thailand. Towards the end of the year, we signed an agreement with Slim Pharmaceuticals ( Pvt ) Ltd concerning the distribution of both Acetium® capsules and lozenges in Sri Lanka.

The year 2019 was exceptional for Biohit due to the completion of GastroPanel® product's re-registration only at the end of the year in China. Despite the delay of a delay in the registration our

Net Sales grew slightly and the profitability improved.

During 2019, we also signed new agreements for the distribution of Biohit diagnostic test kits in Colombia with BioSystems & D-Diagnostica SAS and in Mexico with Uniparts SA DE CV.

GASTROPANEL® QUICK TEST AND THE RESULTS OF THE CLINICAL STUDIES

Significant confirmatory evidence to the existing data on GastroPanel® biomarkers as predictors of gastric cancer was provided by a recently published nationwide multi-center study from China which included 14,929 people. This important study provides additional confirmatory evidence to the two previous studies, where GastroPanel® biomarkers were shown to be significant independent predictors of incidental gastric cancer.

ethical approvals for the study and collecting study subjects has taken more time than anticipated. GastroPanel® Quick Test development continues and the target is to CE-mark the product during the first half of the 2020.

During the review period, we finished two clinical studies about the effectiveness of Acetium® capsules as an inhibitor for migraine-type headaches. Although the result of the study was not positive, the subgroup analysis revealed patients who clearly benefitted from the Acetium® Iozenge capsules. We are considering the possibility of a new clinical study regarding said subgroup.

CHINA, RUSSIA AND MIDDLE-EAST

In the beginning of 2020 we have been able to deliver GastroPanel® products to China as previously. According to the latest estimate our GastroPanel® distributor's new production facility will be operational at the end of the year 2020. GastroPanel® deliveries to China will grow in 2020 if the logistics problems created by coronavirus (SARS-CoV-2) don't continue.

The Ministry of Health of the Russian Federation gave recommendation for early detection of gastrointestinal diseases by using GastroPanel® biomarkers. This was a significant step in developing our business in Russia further. The recommendation increases Biohit's likelihood of winning tenders in Russia's national Healthcare project. Biohit also has national recommendations in Italy and China for the GastroPanel® product.

SIGNIFICANT CONFIRMATORY EVIDENCE TO THE EXISTING DATA ON GASTROPANEL® BIOMARKERS AS PREDICTORS OF GASTRIC CANCER WAS PROVIDED.

Our Middle-East business developed positively during the review period despite the increasing uncertainty regarding the region's political situation.

OUTLOOK FOR 2020

Biohit expects its 2020 Net Sales growing comparing 2019 (previous year EUR 10.1 million). In the outlook we have not taken into account possible prolonging coronavirus epidemic and its negative impact on our business in China.

I thank our employees, our customers, our owners and our partners for their confidence in Biohit and for their cooperation in 2019.

Semi Korpela President & CEO

-

STRATEGY 2019–2022

OUR STRATEGIC DECISIONS

SIMPLIFICATION AND STREAMLINING OF OPERATIONS AND SERVICES

Supply chain as a competitive advantage: responsive, agile and cost efficient. Create a highly efficient process, together with continuous improvement and digitalisation, with high level of automation in operations.

CUSTOMER PERSPECTIVE

In every Biohit decision we have to consider this: "What's in it for the customer How does it enable innovation on behalf of the customer"

QUALITY FIRST

Continuous improvement: More preventive actions rather than corrective actions.

VISION: TO BE THE WORLD'S LEADING BIOTECHNOLOGY COMPANY IN OUR CHOSEN MARKETS OF THE DIGESTIVE TRACT. OUR CHOSEN SYNERGISTIC MARKETS FOR UNMET NEED ARE:

A Advanced and innovative in vitro diagnostics and screening tests for the gastrointestinal tract.

B Products that bind acetaldehyde in the gastrointestinal tract

WE AIM TO INCREASE NET SALES PRIMARILY IN THE FOLLOWING AREAS:

1 China 2 EU, Russia and Middle East

MISSION: INNOVATING FOR HEALTH

8 BIOHIT ANNUAL REPORT 2019

INNOVATIVE PRODUCTS

BIOHIT'S R&D COOPERATION ACROSS DIFFERENT SCIENTIFIC FIELDS, INNO-VATIONS AND APPLICATIONS HAVE ESTABLISHED VALUABLE RESULTS FOR HEALTHCARE WORLDWIDE. GASTROPANEL® TESTS AND ACETIUM® LOZENG-ES ARE EXAMPLES OF OUR INNOVATIVE PRODUCTS FOR THE PROMOTION OF HEALTH AND PREVENTION OF DISEASES.

GASTROPANEL® –A HEALTH TEST FOR YOUR STOMACH

GastroPanel® is a unique four-test package developed by Biohit as a first line diagnostic tool for dyspeptic patients through a simple blood test. GastroPanel helps reliably distinguish between healthy and non-healthy stomachs and helps prioritise patients who need further testing.

GastroPanel is suitable for the diagnosis of atrophic gastritis and Helicobacter infections, and for the risk assessment of gastric cancer.

The GastroPanel test determines the

MISSION: INNOVATING FOR HEALTH

levels of Pepsinogen I, II and Gastrin-17 and the level of antibodies for Helicobacter pylori in the blood. The tests are based on enzyme-linked immunosorbent assay (ELISA). GastroPanel can reliably identify whether the gastric mucosa is healthy or not, in other words, whether the patient's upper stomach symptoms are caused by an organic or functional problem.

A GastroPanel rapid test version will also be released to the market. It is a finger-prick blood test and it provides results in only 20 minutes.

ACETIUM® LOZENGE – QUIT SMOKING WITHOUT NICOTINE

In 2018, Biohit launched the Acetium® lozenge to help those wanting to quit smoking. The lozenge should be used regularly for an average of 3 to 6 months for optimal results. Acetium® reduces the pleasure received from smoking, making it easier to quit.

Carcinogenic acetaldehyde is one of the harmful substances in tobacco smoke. Acetium lozenge binds up to 90 % of the acetaldehyde in saliva.

The effect of Acetium® lozenge on smoking cessation has been investigated in two clinical studies. Regular use of the lozenge during smoking increased the likelihood of quitting smoking by a factor of 1.5 compared to the placebo. Acetium® lozenges do not have the side effects associated with other methods of quitting smoking, such as nicotine addiction or possible side effects from medicines.

HISTORY Biohit's success is primarily based on its aggressive innovation and patenting strategy developed by Professor Osmo Suovaniemi, MD, PhD. He can be considered a pioneer of this strategy, which has demonstrated a successful model and path for small and large companies in Finland.

Biohit's roots extend back to the 1970s, to two companies established by professor Osmo Suovaniemi, M.D., Ph.D (Labsystems Oyj in 1971 and Eflab Oy in 1978). They developed the first single and multichannel precision pipettes with adjustable volumes, and the first instruments based on vertical photometry. Next step was to develop diagnostic tests for the diagnosis of cancers and HIV among other things. From the beginning the companies were based on high technology, top knowhow of biotechnology and global thinking.

The aggressive innovation and patenting strategy forms a strong basis for enterprises – whether small or large – to succeed in international competition and create well-being for our society. Giving up on the aggressive innovation and patenting strategy often precedes the onset of recession in Finland and abroad. (www.biohithealthcare.com/en/ path-tosuccess).

Analysis and liquid handling devices based on innovations created by Labsystems, Eflab and Biohit have been taken into use worldwide, enabling the massive development of immunoassays using non-radioactive markers based on Suovaniemi's vertical measurement invention. These immunoassays have been used for research and diagnostics of infections and cancer. Immunoassays and vertical measurements have developed into global industrial norms, revolutionising laboratory practices worldwide in the 1970s and 1980s.

They have also enabled the development of the GastroPanel test and Biohit's other immunoassays (www.biohithealthcare.com/additional-information).

1988–1999

Osmo Suovaniemi establishes Biohit Oy in 1988.
Work begins on the development, production and international marketing of a new generation of liquid handling devices based on Biohit's innovations.
Biohit works with Professors Stina Syrjänen and Kari Syrjänen to develop commercial HPV tests
to screen for and classify variants of the human papillomavirus, which is linked to cervical cancer. The tests are based on HPV hybridisation probes developed by a researcher who subsequently won the Nobel prize. However, at the beginning of the 1990s, the time was not right for HPV testing to be taken into wider use.
Work begins on the GastroPanel programme, which is based on research data obtained over a period of two decades. The GastroPanel programme exploits and produces innovations
GastroPanel's development work is based on follow-up studies conducted by work groups operating under Professors Max Siurala and Pentti Sipponen to study patients suffering from gastritis. A further basis for the development of GastroPanel

is collaboration with Professors Matti Härkönen and Seppo Sarna, and the immunoassay analysis devices based on vertical measurements invented by Biohit's founder.

Development of the GastroPanel immunoassays was also influenced by observations of the role played by Helicobacter (Helicobacter pylori) in contributing to the onset of gastritis and peptic ulcer disease, which led to its discoverers receiving the Nobel prize in 2005.
As the only study in the world to use blood samples, GastroPanel diagnoses Helicobacter gastritis and atrophic gastritis, which is caused by Helicobacter gastritis and increases the risk of stomach cancer and other diseases, while providing information about the risks of peptic ulcer disease. (www.biohithealthcare.com/ additional-information)
The company is listed on the Helsinki Stock Exchange on 18 June 1999. At that point, Biohit had 16 patents in Finland, while 20 other newly listed companies had 11 patents between them.

2000–2009

Biohit Oyj commences service laboratory operations.
GastroPanel is launched to diagnose and prevent diseases of the stomach and related risks.
The Healthy Stomach Initiative (HSI) organisation is established in 2006 (www.gastropanel.com/ news, www.hsinitiative.org).
There is a large and growing need for Gastro-Panel and Acetium products as means for more safely diagnosing and preventing diseases in a cost- effective manner (www.biohithealthcare. com/ additional-information).
Biohit UK is established in 2008 to market Biohit HealthCare's products.

2010

Biohit launches the Acetium capsule, which binds acetaldehyde, a carcinogen that forms in anacidic stomachs. Anacidity can be caused by atrophic gastritis, which can be identified by GastroPanel, or be due to the use of proton-pump inhibitors (PPIs).
Basic research carried out since the 1980s by internationally renowned and acclaimed alcohol and acetaldehyde researcher Professor Mikko Salaspuro and his working group, and collaboration with Professor Martti Marvola combine with the work of the company to form the foundation of Biohit Oyj's Acetium innovation, which binds acetaldehyde.

2011–2012

Biohit Oyj sells its liquid handling business to Sartorius Lab Holding GmbH for EUR 68 million.
The company decides to focus on and invest in diagnostics in larger, rapidly growing markets and in products that bind carcinogenic acetaldehyde into harmless compounds, thereby promoting the prevention of diseases, improving people's quality of life and saving on health care costs.

2013

• An Italian company focusing on gastrointestinal diagnostics becomes a subsidiary of Biohit Group. • Biohit establishes Biohit HealthCare (Hefei) Co.

• The quick test for lactose intolerance is joined by the UFT-300 quick test for Helicobacter and a quick test for coeliac disease. The Acetium loz-

Ltd, a joint venture in China.

enge is launched.

• Biohit launches a calprotectin test, which is used for diagnosing and monitoring inflammatory diseases of the bowel (IBS and IBD), as well as the Biohit Active B12 test, based on vertical measurement, for identifying vitamin deficiency.

2014

• Biohit launches the ColonView FIT test, which identifies faecal occult blood and can be used to screen for and diagnose colorectal cancer. Several countries are using the test around the world. (www.biohithealthcare.com/additional-information)

2015

Biohit completes its first studies related to giving up smoking (www.biohithealthcare.com/en/ scientific/study-protocols/).
The first population-based GastroPanel screen begins in China.
A vitamin D test based on vertical measurement joins the product range.
Standardised GastroPanel immunoassays based on the vertical measurement invention are also launched.
Biohit Oyj acquires a stake in Genetic Analysis AS, a Norwegian company.
Biohit's joint venture in China begins manufacturing the GastroPanel product.
Biohit launches the revolutionary GastroPanel® quick test. The GastroPanel® quick test will be available in Europe after for the CE mark have been completed.

2016 2017-2019

A wide-ranging comparative study found Biohit's Acetium® lozenge to be effective in helping smokers to give up smoking (www.acetium.com). Sales of the product began and comprehensive distribution channels were established in Finland via pharmacies, as well at R-kioski shops and
at grocery stores. The first few distribution agreements were also made for the product in other EU countries.
Biohit Oyj's Acetium® was granted an important patent in Japan (Patent no: 6178657)
Biohit's distributor, Biohit Healthcare (Hefei)
Co. Ltd, announced that it was increasing it's investments in production capacity to 75 million tests annually. In the review period, Biohit Healthcare (Hefei) Co. Ltd also purchased 33.2.% of all of the shares in Biohit Oyj from the company's main owner. Osmo Suovaniemi and his family, acquiring 29.5% of the voting rights based on shares. Osmo Suovaniemi is still having over 50% of number of votes in the company.
11 BIOHIT ANNUAL REPORT 2019

CORPORATE GOVERNANCE STATEMENT 2019

INTRODUCTION

Biohit Oyj has prepared this Corporate Governance Statement on the basis of Section 54 of the Finnish Corporate Governance Code for listed companies issued by the Securities Market Association. Biohit Oyj has appended its remuneration statement for the 2019 financial period to this statement.

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 at its meeting on 17 February 2020.

The Report of the Board of Directors, the Auditor's Report and the full Corporate Governance Statement are available atww.biohithealthcare.com/ investors .

RULES OBSERVED BY BIOHIT

Biohit Oyj is a Finnish public limited company whose series B shares are listed on Nasdaq Helsinki in the Small cap/Healthcare group. 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 governance complies with applicable legislation, standards and recommendations concerning public listed companies, the regulations of Nasdaq Helsinki Ltd, and Biohit Oyj's Articles of Association. Biohit Oyj has administered its affairs in compliance with the corporate governance code for Finnish listed companies 2015, and this Statement has been prepared in accordance with the

code. The Corporate Governance Code is available at www.cgfinland.fi.

One of the members of the six-person Board of Directors is independent of the company, so the company does not fulfil recommendation number 10 stating that the majority of the members of the Board of Directors must be independent of the company. The company strives to comply with high international standards of corporate governance and the key principles of corporate governance among Finnish listed companies.

BIOHIT'S ADMINISTRATIVE BODIES IN 2019

The highest decision-making power at Biohit is exercised by the company's 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 trends. The President & CEO is responsible for operative management and he is assisted by the Management Team.

Annual General Meeting

In 2019, Biohit Oyj held its Annual General Meeting on 24 April 2019 in Helsinki. 2,018,310 series A shares and 644,721 series B shares were represented at the meeting, corresponding to 17.80% of all of the shares in the company and 57.36% of the votes. The meeting was attended by four of the six members of the Board of Directors, the President & CEO and the principal auditor.

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. Proposals concerning membership of the Board of Directors are prepared by the Board of Directors. Biohit has defined the principles applying to diversity within the Board of Directors in accordance with recommendation 9 of the corporate governance code. Biohit's objective is for both sexes to be represented on the company's Board of Directors. In line with this objective, the Board of Directors had members of both sexes starting from 2019 Annual General Meeting.

The Board of Directors elects a chairman from amongst its members.

Board members' terms of office run from the date of their election by the AGM until the end of the next AGM.

The Board's areas of responsibility are stated in the written rules of procedure approved by the Board. They are as follows:

Increasing shareholder value
Ensuring the appropriate organisation of accounting and financial management
Approving Biohit Oyj's financial statements, consolidated financial statements and the Report of the Board of Directors for the most recent financial period
Approving the half year financial report annually for the period ending at the end of June
Deciding on Biohit's business plan, budget and investment plan
Deciding on Biohit's financing and risk management policies
Approving the remuneration and incentive schemes for senior managers
Appointing the President & CEO
Deciding on Biohit's strategy, organisational structure, investments and other wide-reaching and significant issues

The Board's decision-making is based on reports prepared by the company's operative management on the operational development of the Group and its business units.

The Chairman is responsible for convening Board meetings and arranging the work of the Board. The Board convenes 5–12 times per year, usually meeting once every month or once every two months, and the meeting schedule for the entire term is confirmed in advance. When necessary, Board meetings are held more frequently or by teleconference.

Board of Directors in 2019

Until the Annual General Meeting held on 24 April 2019, the following five people were on the Board of Directors: Osmo Suovaniemi (chairman), Eero Lehti, Liu Feng, Franco Aiolfi and Matti Härkönen. At the Annual General Meeting on 24 April 2019, Osmo Suovaniemi (chairman), Eero Lehti, Liu Feng, Franco Aiolfi and Matti Härkönen were re-elected to the Board of Directors and Lea Paloheimo was elected as a new member to serve until the end of the Annual General Meeting in 2020. The Board of Directors elected Osmo Suovaniemi as its chairman.

12 BIOHIT ANNUAL REPORT 2019

Biohit Oyj's Board of Directors convened 8 times in 2019 (5 times in 2019). The average attendance was 91 per cent (91 per cent).

Biohit Oyj's Board of Directors on 31 December 2019

Professor Osmo Suovaniemi (b. 1943), MD, PhD

Member of the Board since 1988 and Chairman since 2011
Non-independent of major shareholders and of the company
Founder of Biohit and its former President & CEO
Attended 8 Board meetings in 2019
Direct shareholding: series A shares: 2,018,310; series B shares: 0.

Franco Aiolfi (b. 1947), Degree in Pharmacy awarded by the University of Urbino

Member of the Board since 2013
Independent of the major shareholders but non-independent of the company
Attended 8 Board meetings in 2019
Direct shareholding: no Biohit shares
Indirect shareholding: Managing Director of Euroclone S.p.A and a majority shareholder in Euroclone S.p.A. in 31.12.2019 and in Biobrick through Arsfin Consult Srl. Euroclone is the leading distributor of biotechnology application instruments on the Italian market. Euroclone S.p.A. owned 92,807 series B shares in 31.12.2019.

Matti Härkönen (b. 1933), MD, PhD, Emeritus Professor

Member of the Board since 2017
Non-independent of major shareholders and of the company
Doctor of Medicine and Surgery (MD, PhD) and Emeritus Professor of Clinical Chemistry at the University of Helsinki
Responsible for Biohit Oyj's clinical laboratory research and related development work. Also serves as scientific advisor to Biohit Oyj.
Attended 8 Board meetings in 2019
Direct shareholding: series A shares: 57,200; series B shares: 267,965
Indirect shareholding via Oy Tech Know Ltd, a company under his control: series A shares: 24,990; series B shares: 43,600

Eero Lehti (b. 1944), MSc (Soc. Sci.), holder of the Finnish honorary title of "kauppaneuvos", honorary doctor of economics

Member of the Board since 2009
Independent of the major shareholders and of the company
Member of Parliament between 2007-2019
Founder of Taloustutkimus Oy and the Chairman of its Board
Attended 6 Board meetings in 2019
Direct shareholding: series B shares: 2,000

Liu Feng (b. 1972), General Manager of Hefei Medicine Co., Ltd, Owner of Biohit Healthcare Hefei.

Member of the Board since 2018
Non-independent of the major shareholders and
of the company
Special researcher at the Counselor's Office of Anhui Provincial People's Government
The vice chairman of the Chinese National Early Gastrointestinal-Cancer Prevention & Treatment Center
Alliance member of the council of the China Health Promotion Foundation
Attended 6 Board meetings in 2019
Indirect shareholding via Biohit Healthcare (Hefei) Co., Ltd.: series A shares: 850 000, B shares: 4 095 415

Lea Paloheimo (b. 1951), PhD

(clinical biochemistry), hospital chemist.

Member of the Board since 2019
Independent of the major shareholders but non-independent of the company
Employed by Biohit Oyj during 2001-2019, recently working as a Production and Product Development Director and Business Development Director.
Attended 7 Board meetings in 2019
Direct shareholding: series B shares: 7,000

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 & CEO

The President & CEO is responsible for the day-today management of the company in accordance with the instructions and regulations issued by the Board of Directors. The President & CEO of the parent company is elected by the Board and also acts as Group President. He also ensures the appropriate organisation and legality of the company's accounting and asset management. The terms of employment of the President & CEO are based on a written contract that is approved by the Board of Directors. The President & CEO cannot be elected Chairman of the Board. Semi Korpela, MSc (Econ.) was the President & CEO of Biohit during the financial period.

Semi Korpela (b. 1970)

MSc (Econ.)
With Biohit Oyj since 2011
Previously held the position of CFO at Biohit Oyj from 2003 to 2006. After that, Korpela was CFO of CPS Color Group.
Direct shareholding: series B shares: 14,746

Group Management Team

The composition and areas of responsibility of the Group's Management Team were as follows: Semi Korpela (President & CEO), Jukka Kainulainen (finance, ICT, HR), Minna Mäki (R&D and production), Ilari Patrakka (sales and marketing) and Daniela Söderström (quality and registration).

Jukka Kainulainen (b. 1982)

Msc (Econ.)
Finance, HR, ICT
With Biohit Oyj since 2018
Previously: Business Controller at Capgemini and Tieto, Head of Group FP&A at Affecto and Controller team lead at CGI.
No direct shareholding

Ilari Patrakka, b.1980

MSc (Econ.)
Sales and Marketing Director
With Biohit Oyj since 2012
Previously: retail sales channel manager at Marioff Corporation Oy, marketing and export manager at Gasmet Technologies Oy, sales manager at Gasmet Technologies (Asia) Ltd.
Direct shareholding: series B shares: 4,116

Minna Mäki (b. 1969)

Ph.D., Adjunct professor (Molecular microbiology)
R&D and Production Director
With Biohit Oyj since 2018
Previously: At Orion Diagnostica Oyj. Before that, Product Development Director at Mobidiag Ltd and researcher at the University of Helsinki.
No direct shareholding

Daniela Söderström (b. 1987)

MSc (Tech.)
Quality and Regulatory Affairs Director
Daniela Söderström has been working for Biohit Oyj in the field of quality management since 2014.
Direct shareholding: series B shares: 30,000

Management of subsidiaries

The Managing Directors of the subsidiaries are responsible for the management of subsidiary operations and report to the President & CEO of the parent company. The subsidiaries are responsible for the sales and marketing of Biohit's products in their market areas. The managers of subsidiaries operate under the management and supervision of Biohit's President & CEO. In 2019, the Managing Directors of Biohit's subsidiaries were: Graham Johnson (United Kingdom) and Franco Aiolfi (Italy).

The personal details and shareholdings of Biohit's Board of Directors and operative management are available at www.biohit.fi/investors

REMUNERATION STATEMENT Decision-making procedure concerning remuneration and main principles of remuneration

Remuneration of 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 on 24 April 2019 to pay a fee of EUR 1,500 per meeting to the chairman and the other members of the Board of Directors.

The remuneration paid to the other members of Biohit Oyj's Board of Directors is decided by the company's Board of Directors in accordance with the company's rules on related-party transactions, which are described on section "related-party transactions".

President & CEO and other company management

The Board approves the President & CEO's remuneration and terms of employment. The severance payment is not included in the President & CEO's terms of employment.

The Board approves the remuneration and terms of employment of members of the Management Team. Biohit's Board of Directors approves the principles of the incentive schemes for Management Team members and the President & CEO. Bonuses are determined on the basis of the net sales and earnings trends in 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 40% of annual salary. No bonus was paid to the President & CEO and Management Team members in 2019.

The President & CEO approves the salaries and profit-based incentives of subsidiaries' Managing Directors in accordance with the instructions provided by Biohit's Board of Directors. Profit-based incentives are dependent on sales and profitability trends for each unit.

In 2013, Biohit introduced an incentive system offering stock options to company managers and employees. A total of 93,552 new series B shares in the company were subscribed under stock options in 2019. The share subscription price under the stock options in question was EUR 2.2766 per share. The share subscription period with stock options I 2013 B began on 1 June 2015 and ended 31 May 2019.

No new stock option programmes are in effect for 2020. CEO and the management team members are covered by an incentive scheme, which is based on the reaching of annually set targets. The targets are mainly linked to the net sales and results of the whole company. The target levels of management's bonuses are 20% of the total compensation. The Board of Directors will set and approve the financial targets for the CEO and the Management Team members

Pension plans

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

Remuneration and other benefits 2019

Remuneration of members of the Board of Directors

	Position on the	Board of	Other	Total
Member of the	Board of	Directors' fees	remuneration	remuneration
Board of Directors	Directors	(1,000 EUR)	(1,000 EUR))	(1,000 EUR)
Osmo Suovaniemi	Chairman	9	200	209
Matti Härkönen	Member	9	-	9
Eero Lehti	Member	8	-	8
Lea Paloheimo	Member	8	-	8
Franco Aiolfi	Member	9	36	45
Liu Feng	Member	8	-	8
Total		50	236	285

Companies under the control of members of the Board of Directors

	2019	2018
Franco Aiolfi, Euroclone S.p.A	77	66
Matti Härkönen, Oy Tech Know Ltd.	46	55
Franco Aiolfi, Biobrick	25	25
Total	148	146

During the financial period that ended on 31 December 2019, the remuneration paid to members of the parent company's Board of Directors totalled EUR 50,000 (EUR 36,000 in 2018). Osmo Suovaniemi was paid EUR 209,000 (EUR 213,000 in 2018) for his services as a member of the scientific advisory board. Board member Franco Aiolfi is the Managing Director of Biohit Oyj's subsidiary, Healthcare S.R.l., and he received remuneration of EUR 45,000.

Biohit has a consultancy agreement with Oy Tech Know Ltd, a company controlled by Board member Matti Härkönen. On the basis of this agreement, Oy Tech Know Ltd was paid consultancy fees of EUR 46,000 based on the work done by Matti Härkönen.

Biohit has agreements with Euroclone S.p.A and Biobrick, a companies controlled by Board member Franco Aiolfi in 2019. Companies deliver finance, IT, quality and premises services to Biohit Italy. On the basis of these agreements, Euroclone S.p.A and Biobrick was paid EUR 102,000 during the 2019 financial period.

Remuneration for the President & CEO

Remuneration of members of the Board of Directors

Position on the Board of Directors

Board of Directors' fees (1,000 EUR)

Osmo Suovaniemi Chairman 9 200 209 Matti Härkönen Member 9 - 9 Eero Lehti Member 8 - 8 Lea Paloheimo Member 8 - 8 Franco Aiolfi Member 9 36 45 Liu Feng Member 8 - 8 Total 50 236 285

Other remuneration (1,000 EUR))

Total remuneration (1,000 EUR)

Member of the Board of Directors

Salary and benefits (1,000 EUR)	2019	2018
Salary	204	202
Short-term incentives	-	-
Long-term incentives	-	86
Total	204	288

Remuneration for members of the Management Team (excluding the President & CEO)

Salary and benefits (1,000 EUR)	2019	2018
Salary	393	524
Short-term incentives	-	-
Long-term incentives	20	11
Total	413	535

MAIN CHARACTERISTICS OF 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 current regulations and legislation 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 efforts are made at various levels of the organisation to achieve the objectives set in the strategy approved by the Board of Directors. 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 through innovation. Biohit will continue to focus on its diagnostics business and products that bind

acetaldehyde – the areas where the company conducts global operations in manufacturing, sales and marketing.

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 & 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 approved 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 & CEO works with the parent company's operative management and subsidiaries' managers 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 the subsidiaries' Management Teams 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. The subsidiaries report to Group Management on business and earnings trends and the most significant deviations on a monthly and quarterly basis. The Group's Management Team reports to the Board of Directors on the overall development of business; these two bodies, together with the President & CEO, decide on overall corporate strategies and procedures guiding the operations of the Group.

The subsidiaries' Boards follow business developments and ensure that the parent company's approved instructions and guidelines are followed. As a rule, the Boards of Directors of the subsidiaries meet monthly. Board work in the subsidiaries is based on financial reports and the written monthly and annual reports drawn up by subsidiary management.

Biohit's business control is carried out in accordance with the management system described

above. The company provides the 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 finance department retains central control of funding and administrative matters within the framework of the instructions provided by the Board of Directors and the President & CEO, and is also responsible for the management of interest and exchange rate risks. The Managing Directors of the subsidiaries ensure that the 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 provide all of its stakeholders with information about the company's operations in a proactive, consistent and timely manner. The company seeks to take the special requirements 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 approved an information release policy with a view to ensuring the accuracy and reliability of any information released. The policy also specifies who is responsible for communications in different situations.

Biohit's financial department regularly provides information on processes related to financial administration reporting. This ensures the realtime availability of data, which is a prerequisite 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 internal controls on financial reporting is overseen by the Board of Directors, the President & CEO, Management Team members, and the Managing Directors of subsidiaries. Control focuses on following weekly and monthly financial reports and forecasts, and analysing any deviations from business plans. Monitoring is performed at all Board and Management Team meetings where reports are reviewed. It is supported by regular contact between Group Management and the company's auditor, and analysis of any deviations, which occurs at least once per quarter.

The audit frameworks for the Group's subsidiaries and key audit areas are jointly defined by the Group's financial management and the chief auditor. Biohit has not appointed a separately organised function for internal auditing purposes but Biohit's financial department has responsibility to implement it in practise.

The Group has internal control reporting systems required for financial management and monitoring business development. The reporting systems produce monthly financial data, so that financial management can ensure compliance with the parent company's approved instructions on matters such as authorisation.

The Group's auditor and the auditors of each subsidiary evaluate the effectiveness of the internal control system in connection with the external audit.

AUDIT 2019

The auditor elected by the AGM is responsible for Biohit's statutory audit. According to the Articles of Association, the company must have one auditing body approved by the Central Chamber of Commerce. The 2019 Annual General Meeting

re-elected auditing firm PricewaterhouseCoopers Oy as the company's auditor for a one-year term, with Pasi Karppinen, Authorised Public Accountant, as chief auditor.

AUDITOR AND AUDITOR'S FEES

The 2019 Annual General Meeting decided to pay auditor's fees in accordance with the auditor's invoice. The Group's invoiced auditors' fees for the 2019 financial period totalled EUR 101,000 (EUR 118,000 in 2018). In addition to this, PricewaterhouseCoopers Oy was paid a total of EUR 9,000 for other services (EUR 29,000 in 2018).

RELATED-PARTY TRANSACTIONS

The company keeps a list of its related parties, and it regularly engages in transactions with some of these parties. These transactions are related to the company's ordinary business activities, they are appropriate in terms of the company's operations and they are executed on ordinary market terms. The company's financial management monitors and supervises related-party transactions as part of the company's normal reporting and supervision practices. Relevant transactions between the company and its related parties are reported annually in the notes to the company's consolidated financial statements. The company's Board of Directors makes all relevant decisions concerning related-party transactions. Decision-making is based on particularly thorough preparation and appropriate reports, statements and estimates. Preparation of related-party transactions, decision-making and approval have been arranged to take account of disqualification rules and appropriate decision-making entities.

INSIDERS

Biohit applies the Guidelines for Insiders approved by Nasdaq Helsinki Ltd, as well as any relevant amendments.

Biohit's President & CEO is responsible for insider control. He ensures that people who handle insider information are aware of insider regulations and adhere to trading restrictions. Insiders are not allowed to trade Biohit Oyj securities for 30 days before the publication of the company's financial statement bulletin and interim reports. Insiders participating in projects are not allowed to trade 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.biohithealthcare.com/en/ investors.

BOARD OF DIRECTORS

OSMO SUOVANIEMI

b. 1943 MD, PhD, Professor

Chairman of Biohit Oyj's Board of Directors

Non-independent of the major shareholder and of the company

Other relevant experience:

The founder and previous President & CEO of Biohit Oyj
The founder, main shareholder, chairman, and CEO of Labsystems Oy and Eflab Oy
Received an award in 1992 for having most patents in FinlandA board member, vice-chairman, and chairman of the General Industry Group in Finland in 1978-1986
A board member of the Confederation of Finnish Industry in 1986
A member of the Academy of Technical Sciences from 2003

EERO LEHTI

b. 1944 MSc (Soc.Sc.), holder of the honorary Finnish title of "kauppaneuvos", member of parliament

Member of Biohit Oyj's Board of Directors since 2009

Independent of the major shareholder and company

Other relevant experience:

Member of Parliament
Founder and Chairman of Taloustutkimus Oy
Chairman and main owner of Suomen Lehtiyhtymä Oy
Chairman of Fennia, Henki-Fennia, Eila Kaisla Oy-Chairman of Kerava Municipal Board.

FRANCO AIOLFI

b. 1947 Degree in Pharmacy awarded by the University of Urbino

Member of Biohit Oyj's Board of Directors since 2013

Independent of the major shareholders but non-independent of the company

Other relevant experience:

• President of Euroclone S.p.A. (formerly Polyfin S.p.A.) of which he is the majority shareholder. Euroclone SpA is a leading distributor in the Italian market of consumables and instruments for biotechnological applications.

MATTI HÄRKÖNEN

b. 1933 MD, PhD, Emeritus Professor

Member of Biohit Oyj's Board of Directors since 2017

Independent of the major shareholders but non-independent of the company

Other relevant experience:

Emeritus Professor of Clinical Chemistry at the University of Helsinki
Medical Officer at Yhtyneet Laboratoriot Oy
About 280 scientific publications Responsible for the clinical trials and related development work at Biohit Oyj and also acts as a scientific advisor to Biohit Oyj.

LIU FENG

b. 1972

Specialist researcher at Anhui Medical University hospital

Managing Director of Hefei medicine Co., Ltd and owner of Biohit Healthcare (Hefei) Co., Ltd

Member of Biohit Oyj's Board of Directors since 2018

Independent of the major shareholders but non-independent of the company

Other relevant experience:

Special researcher at the Counselor's Office of Anhui Provincial People's Government
The vice chairman of the Chinese National Early Gastrointestinal-Cancer Prevention & Treatment Center Alliance
Member of the council of the China Health Promotion Foundation.

LEA PALOHEIMO

b. 1951

PhD (clinical biochemistry), hospital chemist.

Independent of the major shareholders but non-independent of the company

Other relevant experience:

• With Biohit Oyj during the years 2001-2019. Production and Product Development Director, Business Development Director.

MANAGEMENT TEAM

SEMI KORPELA

b. 1970 MSc (Econ.) President & CEO

With Biohit Oyj since 2011 and from 2003 to 2006 as CFO.

Previously: CFO at Biohit Oyj from 2003 to 2006. After that, Korpela was CFO of CPS Color Group.

ILARI PATRAKKA

b.1980 MSc (Econ.) Sales and Marketing Director

With Biohit Oyj since 2012

Previously: Retail sales channel manager at Marioff Corporation Oy, marketing and export manager at Gasmet Technologies Oy, sales manager at Gasmet Technologies (Asia) Ltd.

DANIELA SÖDERSTRÖM

b. 1987 MSc (Tech.) Quality and Regulatory Affairs Director

With Biohit Oyj since 2014

Daniela Söderström has been working for Biohit Oyj in the field of quality management since 2014.

JUKKA KAINULAINEN

b. 1982 M.Sc. (Econ) Chief Financial Officer

With Biohit Oyj since 2018

Previously:

Business Controller at Capgemini and Tieto. Head of FP&A at Affecto and Controller team leader at CGI.

MINNA MÄKI

b. 1969 Ph.D., Adjunct professor (Molecular microbiology) Research and Production Director

With Biohit Oyj since 2018

Previously:

At Orion Diagnostica Oyj. Before that, Product Development Director at Mobidiag Ltd and Researcher at the University of Helsinki

INFORMATION FOR SHAREHOLDERS

GENERAL MEETING OF SHAREHOLDERS

The Board of Directors will call the General Meeting at a later date.

BOARD OF DIRECTORS' PROPOSAL REGARDING THE DISTRIBUTION OF PROFITS:

On 31 December 2019, the parent company's distributable assets (unrestricted equity) amounted to EUR 10,420,384.40, including the loss for the financial period of EUR 1,116,686.74. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed by the company for the most recent financial period.

Total number of shares: 15,045,593 (14,952,041 in 2018) Series A shares (20 votes per share): 2 975 500 (2,975,500 in 2018) Series B shares (1 vote per share): 12 070 093 (11,976,541 in 2018)

Biohit Oyj's series B shares are listed in the Nasdaq Helsinki Ltd Small Cap group. The shares are traded under the symbol BIOBV. More detailed information about Biohit Oyj's shares is provided in the notes to the consolidated financial statements and on the company's website at www.biohithealtcare.com/investors.

FINANCIAL COMMUNICATIONS

The financial reviews and other stock exchange releases published by Biohit are available on the company's website at www.biohithealtcare. com/ investors. You can also subscribe to receive financial communications by email using the subscription form on the website.

PUBLICATION DATES FOR FINANCIAL REPORTS IN 2020

Wednesday 12 August 2020. Interim report, January–June (H1)

SILENT PERIOD

Biohit observes a silent period of 30 days before results are published. During this period, Biohit's management and other personnel will not provide information about the company's financial position or market-related comments, nor will they meet with representatives from equity markets or the financial media. However, if an event that requires immediate publication takes place during the silent period, Biohit will publish information without delay in accordance with disclosure regulations. In such cases, the company is able to comment on the event.

SUMMARY OF STOCK EXCHANGE AND MEDIA RELEASES IN 2019

STOCK EXCHANGE RELEASES

31.01.2019	Business Development Director Lea Paloheimo will retire from Biohit Oyj
11.02.2019	Biohit Oyj: Managers' Transactions
20.02.2019	BIOHIT GROUP FINANCIAL STATEMENT RELEASE 2018
27.02.2019	Biohit Oyj B-shares Subscribed with Stock Options I 2013
29.03.2019	NOTICE OF BIOHIT OYJ'S ANNUAL GENERAL MEETING
29.03.2019	Publication of Biohit Oyj Annual Report 2018
24.04.2019	Decisions of the Annual General Meeting of Biohit Oyj
25.04.2019	Constitutive meeting of Biohit Oyj's Board of Directors
03.06.2019	Biohit Plc - Managers' transactions - Söderström
12.06.2019	Biohit Oyj B-shares Subscribed with Stock Options I 2013
09.08.2019	Two clinical trials with Acetium® capsule for prevention of migraine-type headache have been concluded
	migreenityyppisten päänsärkykohtausten estäjänä ovat valmistuneet
14.08.2019	BIOHIT GROUP HALF YEAR FINANCIAL REPORT 2019
29.11.2019	Biohit Oyj Financial Calendar, Biohit Oyj's Financial Reporting and Annual General Meeting in 2020

MEDIA RELEASES

18.01.2019	Biohit new-generation fecal immunochemical test (ColonView-FIT) is
	superior to traditional guaiac test in colorectal cancer screening
28.01.2019	Nicotine dependence is an increasing problem
04.02.2019	International group of experts revisits the value of traditional Helicobacter
	tests (13C urea breath test and stool antigen test) in their critical review
04.04.2019	Satya Abadi Pharma to distribute Acetium® lozenge in Indonesia
09.04.2019	Biohit GastroPanel® biomarkers validated as powerful predictors of gastric
	cancer risk in a multicenter study
11.04.2019	Acetium® lozenge for smoking intervention will be available in Thailand
	during the year 2019
17.4.2019	Acetium® lozenge for smoking intervention will shortly be distributed in
	Italy within Difar Consumer Care® product division
14.10.2019	TREATMENT RECOMMENDATION IN RUSSIA: GastroPanel® biomarkers
	should be used for detection of gastrointestinal diseases

FINANCIAL STATEMENTS

REPORT BY THE BOARD OF DIRECTORS 2019……………22
CONSOLIDATED FINANCIAL STATEMENTS* ………………26
Consolidated comprehensive income statement and balance sheet* …………………………………………………26-28
Statement of changes in consolidated shareholders' equity* …………………………………………………29
Consolidated cash flow statement* ……………………………30
Notes to the consolidated financial statements* …………32
Key indicators ……………………………………………………………55
Shares and shareholders ……………………………………………57
Formulae for calculating key indicators ………………………59
PARENT COMPANY'S FINANCIAL STATEMENTS* ………60
Board of Director's proposal regarding the distribution of profits* …………………………………………………72
AUDITOR'S REPORT……………………………………………………73

*part of the financial statements

REPORT BY THE BOARD OF DIRECTORS 2019

BIOHIT GROUP KEY FIGURES

SUMMARY

Net sales EUR 10.1 million (EUR 9.9 million)
Net sales grew by 1.2% compared to 2018
Operative EBITDA EUR +0.6 million (EUR -0.1 million)*
Cash at the end of the period EUR 1.3 million (EUR 1.4 million)
Net sales from international operations 96.0% (95.6%) of total net sales
Equity ratio 83.9% (89.2%)**

In 2019, Biohit's net sales increased by 1.2% compared to the previous year. Biohit's balance sheet provides a strong foundation for building the business and exploiting the great potential of the products. Our company's equity ratio at the end of 2019 was 83.9% (89.2%). At the end of the financial period, the company's financial assets amounted to EUR 5.6 million (EUR 5.5 million).

	1–12/2018
10.1	9.9
-1.4	-2.0
-1.2	-2.0
-1.4	-2.1
46	50
46	49
83.9	89.2
-0.09	-0.14
0.97	1.06
15,005,253	14,901,904
15,045,593	14,952,041
	1–12/2019

* In 2017 we capitalized the patent regarding divestment of Biohit Healthcare (Hefei) Co. Ltd. which is depreciated EUR 1.5 million annually until end of 2021

* Biohit Group implemented the IFRS 16 Leases -standard effective from 1 January 2019. This impacted on Operative EBITDA +0.2 million euros in 2019 due to reason that comparative amounts have not been restated.
** The Group's equity ratio without the impact of the implementation of the IFRS 16 -standard would have been 85.2%.

REPORTING

Biohit's product portfolio consists of diagnostic tests, analysis systems, acetaldehyde binding products, monoclonal antibodies, as well as service laboratory operations. The entire product and service portfolio is reported under a single segment

NET SALES AND RESULTS

Net sales grew by 1.2% from the previous year. The proportion of international operations grew from the previous year and, in 2019 amounted to 96.0 % (95.6 %). The operational income was EUR -1.4 million (EUR -2.0 million).

Consolidated net sales and operating income

EUR million	2019	2018
Net sales	10.1	9.9
Operating income	-1.4	–2.0

BRIDGE CALCULATION OF ALTERNATIVE PERFORMANCE MEASURES

Operative EBITDA

€ 1,000	2019	2018
Operating profit/loss	-1,412	–1,965
Depreciation and amortization	2,006	1,807
Items affecting comparability	-	20
Operative EBITDA	593	–138

Items affecting comparability

€ 1,000	2019	2018
IFRS 2 Share based payments	-	–20
Total	-	–20

BALANCE SHEET

On the 31 December 2019, the balance sheet totaled EUR 17.4 million (EUR 17.9 million). Biohit's balance sheet provides the necessary foundation for building new business and for utilizing the significant potential of the company's products. At the end of the reporting period, our equity ratio stood at 83.9% (89.2%)

FINANCIAL AND OPERATIONAL CONTINUITY

Biohit Oyj has a stable financial position, which allows for the necessary actions towards creating an international distributor network as well as the development and commercialization of the new products. At the end of the financial period, the company's financial assets totaled to EUR 5.6 million (EUR 5.5 million), which does not include Genetic Analysis AS shares.

Despite significant financial investments the company has managed to keep its working capital on a good level and the management believes that working capital will cover the operations for the next 12 months and the company is not dependent on external financing to be able to guarantee the continuity of its operations. Cash flow from operating activities was during the 1-12/2019 reporting period EUR +0.1 million. Company's management assessment is that company's ability to continue its operations is good and there are no indications towards events or circumstances that alone or together might give a significant reason to doubt the organization's ability to continue its operations.

INVESTMENT

Gross investments during the 1-12/2019 reporting period totaled EUR 0.0 million (EUR 0.0 million).

PERSONNEL

During the review period, the Biohit Group employed on average 46 (50) people, of whom 37 (42) were employed by the parent company and 9 (8) by the subsidiaries.

SHORT-TERM RISKS AND UNCERTAINTY FACTORS

Biohit's key risks are related to the success of the selection and development of new market areas and distribution channels, product registrations and personnel recruitment. Significant short-term risks are associated with the success of product registration and successful selection of correct distribution channels. The recent increase in uncertainty factors associated with international politics may have an unfavourable impact on the company's business, examples include the Middle-East and Brexit. Spreading of coronavirus (SARS-CoV-2) might impact negatively on our business in China.

The duration of the product registration process is different in each market area. For this reason, it is not possible to accurately assess the time taken for the authorities to handle registrations and for product sales to begin. The distributor is responsible for the registration process.

When investing liquid assets, the objective is to gain a return on investment with a minimum risk of equity loss. The investment portfolio consists of deposits, money market investments and corporate loans. A fundamental aspect in portfolio management is sufficient diversification across different asset classes, investment instruments and counterparties. The investment portfolio is subject to interest rate risk, which is managed by adjusting the duration of the portfolio. The rise of one percentage point in interest rates would have a negative impact of EUR 0.1 million on the fair value of the investment portfolio.

The Group's investment in Genetic Analysis AS unlisted shares is subject to changes in the terms of transactions involving the company's shares that take place between third parties. A negative change of 30% in the valuation of Genetic Analysis AS shares, would have a negative pre-tax impact of EUR 1.2 million on the Group comprehensive income. Investment in Genetic Analysis AS is also subject to changes in euro/NOK foreign exchange rate. In addition Genetic Analysis AS is dependent on securing external financing in its operations. Genetic Analysis AS valuation changes have no effect on company's cash flow.

Biohit's customer base is widely diversified, with the exception of GastroPanel® sales in China, which currently represents a major single business for Biohit. For this reason, the company is dependent on the continuation of this business relationship in China. Otherwise, the company is not significantly dependent on individual customers or project deliveries. Most of the company's business is conducted in euro, and the indirect effects of currency exchange rate fluctuations are considered insignificant.

OUTLOOK FOR 2020

Biohit expects its 2020 Net Sales growing comparing 2019 (previous year EUR 10.1 million).

In the outlook we have not taken into account possible prolonging coronavirus epidemic and its negative impact on our business in China.

MAIN EVENTS IN THE FINANCIAL PERIOD We increased our distibution network

We continued our domestic sales and marketing efforts for the Acetium® Iozenge and as a result our distribution network expanded significantly for example inside SOK.

We made several international distribution agreements for Acetium® Iozenge during the review period. PT Satya Abadi Pharma is our distributor in Indonesia. In Italy, Difar Distribuzione S.r.l. received the exclusive distribution rights to the product. We also signed an agreement with Precision Health Co., Ltd over the distribution of Acetium® Iozenge in Thailand. Towards the end of the year, we signed an agreement with Slim Pharmaceuticals ( Pvt ) Ltd concerning the distribution of both Acetium® capsules and lozenges in Sri Lanka.

During 2019, we also signed new agreements for the distribution of Biohit diagnostic test kits in Colombia with BioSystems & D-Diagnostica SAS and in Mexico with Uniparts SA DE CV.

GastroPanel® Quick Test and the results of the clinical studies

Significant confirmatory evidence to the existing data on Gastro-Panel® biomarkers as predictors of gastric cancer was provided by a recently published nationwide multi-center study from China which included 14,929 people. This important study provides additional confirmatory evidence to the two previous studies, where GastroPanel® biomarkers were shown to be significant independent predictors of incidental gastric cancer.

The usability of the GastroPanel® Quick Test was initially evaluated at the world's largest medical event, MEDICA 2019, where the test was well received by international health tech and medical experts for its fast turn-around time and its ease of use. Also, the results of an external multi-center clinical study have been completed in one hospital. Starting the clinical studies, getting ethical approvals for the study and collecting study subjects has taken more time than anticipated. GastroPanel® Quick Test development continues and the target is to CE-mark the product during the first half of the 2020.

clearly benefitted from the Acetium® Iozenge capsules. We are considering the possibility of a new clinical study regarding said subgroup.

China, Russia and Middle-East

In the beginning of the 2020 we have been able to deliver Gastro-Panel® products to China as previously. According to the latest estimate our GastroPanel® distributor's new production facility will be available at the end of the year 2020. GastroPanel® deliveries to China will grow in 2020 if the logistics problems created by coronavirus (SARS-CoV-2) won't continue.

The Ministry of Health of the Russian Federation gave recommendation for early detection of gastrointestinal diseases by using GastroPanel® biomarkers. This was a significant step in developing our Russia business further. The recommendation increases Biohit probabilities to win tenders in Russia's national "Healthcare" project. Biohit also has national recommendations in Italy and China for GastroPanel® product.

Our Middle-East business developed positively during the review period despite the increasing uncertainty regarding the region's political situation.

RESEARCH AND DEVELOPMENT

R&D operations focus on innovations, as well as product development and further improved usability. Biohit also employs external experts and subcontractors in its R&D operations. Development expenditures have not been capitalized. Research and development expenditure during the 1-12/2019 reporting period amounted to EUR 1.2 million (EUR 1.3 million), of which the second halfyear accounted for EUR 0.6 million (EUR 0.7 million).

The development of the GastroPanel® Quick Test, intended as the first-line diagnostic test for dyspeptic patients, has been advanced and the results of an external multi-center clinical study have been completed in one hospital where plasma samples collected from patients were analysed and their results were compared to those of the ELISA-based GastroPanel® test. After promising results, the external clinical performance study has been continued by extending the specimen types studied to finger-prick blood specimens and examining the usability of the test platform under point-of-care settings. The usability of the GastroPanel® Quick Test was also initially evaluated at the world's largest medical event MEDICA where the test was well received by international health tech and medical experts for its fast turnaround time and its ease of use. Our target is to CE-mark the product during the first half of the 2020

The development of ColonView ELISA Test, automated screening test intended for detection of fecal occult blood (FOB) in stool samples, continues in 2020.

CLINICAL RESEARCH

The randomized, double-blind clinical trials in patients suffering from migraine and cluster headache was completed in respect of data analysis. Data analysis showed that the results were not positive. According to the results, Acetium® capsule was not statistically significantly more effective than placebo in preventing migraine-type headaches when data analysis included all enrolled patients. However, patients who clearly benefitted from Acetium® and whose monthly headache days were reduced by more than 50% was found, and even more patients were found with a reduction of up to 25 % of their monthly migraine days. Because migraine is a complexed neurological disorder with diverse symptoms, it is important next to identify and define this subgroup responding to Acetium®. In addition, the open label experience has provided some evidence that a better treatment response could be achieved if the dosage of Acetium is 2 capsules 3 times a day administered after a meal, instead of 1 capsule twice a day as was administered in these clinical trials.

Preliminary data analysis has been initiated with patient data obtained from a clinical study conducted at GastroCenter and Internal Medicine Department of Oulu University Hospital. The study focuses on patients suffering from type 1 diabetes mellitus (DM1) or autoimmune thyroid disease (AITD) and known to be at increased risk of developing autoimmune atrophic gastritis. Based on the results of approximately 240 DM1 / AITD patients already enrolled in the study, it is decided whether there is a need for further patient enrollments or whether conclusions can be drawn on the prevalence of atrophic gastritis in these risk groups.

Option programme and financial statements

In 2019 a total of 93,552 new series B shares were subscribed under Biohit Oyj's I 2013 stock options. The share subscription price was EUR 2.2766 per share. During the review period, a total of EUR 212,980.48 of the subscriptions was recognised in Biohit Oyj's invested unrestricted equity fund. The share subscription period with stock options I 2013 B began on 1 June 2015 and ended 31 May 2019.

Biohit Oyj publishes financial reviews twice per year. In 2020, the company will publish its interim report for January-June (H1) 2020 on Wednesday 12 August 2020 at 9.30am.

MAJOR EVENTS AFTER THE CLOSE OF THE REVIEW PERIOD

The company's management is not aware of any material events since the balance sheet date.

ADMINISTRATION Annual General Meeting 2019

The Annual General Meeting (AGM) held on 24 April 2019 decided in accordance with the proposal by the Board of Directors that no dividend would be paid for the financial period that ended 31 December 2018.

The AGM decided that the Board of Directors would have six (6) members and selected the following Board members until the end of the next AGM: members Professor (h.c.) Osmo Suovaniemi, Managing Director Franco Aiolfi, Professor Matti Härkönen, Commercial Counsellor Eero Lehti and Ph.D Lea Paloheimo and CEO Liu Feng.

The AGM selected PricewaterhouseCoopers Oy, a firm of Authorized Public Accountants, to act as Biohit Oyj's auditor

Biohit Oyj Management team

The members of Biohit's Management Team are: CEO Semi Korpela, CFO Jukka Kainulainen, Production & Research and Development Director Minna Mäki, Sales and Marketing Director Ilari Patrakka and Quality and Regulatory Affairs Director Daniela Söderström..

SHARES AND SHAREHOLDERS

The number of Biohit Oyj's shares is 15,045,593 (14,952,041), of which 2,975,500 (2,975,500) are Series A shares and 12,070,093 (11,976,541) are Series B shares. The Series B shares are quoted on NASDAQ Helsinki in the Small cap/Healthcare group under the code BIOBV.

BIOBV/NASDAQ OMX Helsinki

	1–12/2019	1–12/2018
High (EUR)	3.70	6.20
Low (EUR)	2.10	2.94
Average (EUR)	2.99	4.37
End (EUR)	3.36	2.96
Turnover (EUR)	10,047,336	37,690,324
Turnover volume	3,361,995	8,616,223

Shareholders

At the end of the reporting period on 31 December 2019, the company had shareholders 6,980 (6,847 on 31 December 2018). Private households held 63.5% (63.3%). companies 7.5% (7.5%) and public sector organisations 0.0% (0.0%). Foreign ownership or nominee registrations accounted for 29.1% (29.2%) of shares. Further information on the shares, major shareholders and management shareholdings is available on the company's website at www. biohithealthcare.com/investors.

BOARD'S PROPOSAL FOR DISTRIBUTIONS OF PROFIT

The parent company's distributable funds (unrestricted equity) on 31 December 2019 are EUR 10,420,384.40 of which the period net loss is EUR 1,116,686.74. The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the fiscal year.

Annual General Meeting in 2020

The Board of Directors will call the General Meeting at a later date

Corporate Governance Statement

Biohit Oyj publishes a separate corporate Governance statement on its website at the following adress: https://www.biohithealthcare.com/ en/biohits-corporate-governance-statements/.

Helsinki, 17 February 2020

Biohit Oyj Board of Directors

25 BIOHIT ANNUAL REPORT 2019

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

€ 1,000	Note	1 Jan - 31 Dec 2019	1 Jan - 31 Dec 2018
Net sales	3	10,052	9,931
Change in inventories of finished and unfinished products		143	147
Other operating income	5	41	18
Materials and services	6	-3,528	–3,637
Expences arising from employment benefts	7	-3,291	–3,333
Other operating expenses	8	-2,824	–3,283
EBITDA		593	–157
Depreciation and amortization	10, 14, 15	-2,006	–1,807
Operating profit/loss		-1,412	–1,965
Financial income	11	173	153
Financial expenses	11	12	–212
Profit/loss before taxes		-1,227	–2,024
Income taxes	12	-189	–120
Profit/loss for the financial period		-1,417	–2,143
Other items of comprehensive income
Items that may later be reclassified through profit and loss
Translation differences		60	0
Items that will not be reclassified through profit and loss
Changes in the fair value of equity instruments measured at fair value through other comprehensive income		-110	632
Total comprehensive income for the period		-1,467	–1,512
Distribution of profit/loss for the financial period
To the owners of the parent company		-1,417	–2,143
Total		-1,417	–2,143
Distribution of comprehensive income for the financial period
To the owners of the parent company		-1,467	–1,512
Total		-1,467	–1,512

Earnings per share calculated from earnings attributable to the owners of the parent company
Undiluted earnings per share (EUR)	13	-0.09	–0.14
Diluted earnings per share (EUR)		-0.09	–0.14

STATEMENT CONSOLIDATED BALANCE SHEET

CONSOLIDATED COMPREHENSIVE INCOME

€ 1,000	Note	31 Dec 2019	31 Dec 2018

ASSETS
Non-current assets
Intangible assets	14	3,401	5,045
Property, plant and equipment	15	389	557
Right-of-use assets	15, 16	283	-
Other non-current financial assets	17, 19	58	1
Deferred tax assets	20	28	54
Total non-current assets		4,159	5,657

Current assets
Inventories	21	990	826
Trade and other receivables	17, 22	2,902	2,025
Other current financial assets	17, 19	7,996	8,003
Cash and cash equivalents	17, 19, 23	1,325	1,375
Total current assets		13,213	12,229
Total assets		17,372	17,887

CONSOLIDATED BALANCE SHEET

€ 1,000 Note	31 Dec 2019	31 Dec 2018
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital 24	2,350	2,350
Invested unrestricted equity fund 24	5,138	4,925
Translation differences 24	-84	–143
Retained earnings	7,175	8,760
Shareholders' equity attributable to shareholders of the parent company	14,580	15,892
Total shareholders' equity	14,580	15,892
Long-term liabilities
Lease liabilities 16, 17, 26	59	-
Deferred tax liabilities 20	352	380
Financial liabilities 17, 19, 26	-	42
Other liabilities 19, 27	5	4
Total long-term liabilities	415	425
Short-term liabilities
Trade payables 17, 27	869	518
Short-term interest-bearing liabilities 17, 19, 26	228	17
Tax liabilities 17, 27	109	13
Other liabiliteis 17, 27	1,171	1,022
Total short-term liabilities	2,377	1,569
Total shareholders' equity and liabilities	17,372	17,887

STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY

	Shareholders' equity attributable to shareholders of the parent company
		Invested unrestricted	Translation	Fair value	Retained	Total shareholders'
€ 1,000	Share capital	equity fund	differences	reserve	earnigns	equity
Shareholders' equity 1 January 2019	2,350	4,925	-143	1,505	7,255	15,892
Subscription of options	-	213	-	-	-	213
Adjustments of translation differences	-	-	-	-	-59	-59
Total comprehensive income for the period	-	-	60	-110	-1,417	-1,467
Shareholders' equity 31 December 2019	2,350	5,138	-84	1,395	5,780	14,580

	Shareholders' equity attributable to shareholders of the parent company
		Invested unrestricted	Translation	Fair value	Retained	Total shareholders'
€ 1,000	Share capital	equity fund	differences	reserve	earnigns	equity
Shareholders' equity 1 January 2018	2,350	4,777	–143	914	9 ,345	17,243
Change in accounting policies	–	–	–	–41	33	–7
Adjusted shareholders' equity 1 January 2018	2,350	4,777	–143	873	9,378	17,235
Incentive scheme for senior management	–	–	–	–	20	20
Subscription of options	–	148	–	–	-	148
Total comprehensive income for the period	–	–	0	632	–2,143	–1,512
Shareholders' equity 31 December 2018	2,350	4,925	–143	1,505	7,255	15,892

CONSOLIDATED CASH FLOW STATEMENT

€ 1,000	Note	2019	2018

Cash flow from operating activities
Profit/loss for the financial period		–1,417	–2,143
Adjustments to profit for the financial period
Business activies with no payment transactions		–68	26
Depreciation and impairment	10	2,006	1,807
Financial income and expenses		–184	59
Income taxes	12	189	120
Total adjustments to income for the financial period		1,943	2,012
Change in working captial
Increase (-)/ decrease (+) in short-term interest-free trade receivables		–849	–54
Increase (-)/ decrease (+) in inventories		–190	–145
Increase (-)/ decrease (+) in short-term interest-free liabilities		612	264
Total change in working capital		–427	65
Interest paid		–51	–68
Interest received		150	132
Realised exchange rate gains and losses		9	–13
Income tax paid		–123	–78
Net cash flow from operating acitivies		83	–93

€ 1,000	Note	2019	2018
Cash flow from investments
Investments in tangible and intangible assets		–46	–13
Income from disposal of tangiable and intangible assets		–	–2
Investments in funds and deposits		–1,497	-2,112
Profit from the sale of investments in funds and deposits		1,462	2,131
Loans		–57	-
Net cash flow from investments		–138	4
Cash flow from financial acitivies
Paid share issue		213	148
Withdrawal of loans		1	–
Repayment of lease liabilities		–224	–17
Net cash flow from financial activities		–10	131
Change in financial assets		–65	43
Cash and cash equivalents at the beginning of the period		1,375	1,339
Effects of changes in exchange rates		15	–7
Cash and cash equivalents at the end of the period	23	1,325	1,375

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 BASIC INFORMATION ON THE COMPANY

Biohit Oyj is a Finnish public limited company that manufactures products that bind acetaldehyde, diagnostic products and systems for diagnostic analysis for the use of research institutions, healthcare and industry. The parent company's domicile is Helsinki, Finland.

A copy of the consolidated financial statements is available on the website, www.biohit.fi, and at the headquarters of the Group's parent company at Laippatie 1, Helsinki, Finland.

Biohit Oyj's Board of Directors approved the financial statements for publication on February 17th 2020. In accordance with the Finnish Limited Liability Companies Act, shareholders have the opportunity to approve or reject the financial statements at the Annual General Meeting, which is to be held after the financial statements have been published. At the Annual General Meeting, it is also possible for a decision to be made to alter the financial statements.

2 ACCOUNTING PRINCIPLES Accounting principles

These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) endorsed by the European Union. The IAS and IFRS standards that were valid on 31 December 2019 have been followed, as well as SIC and IFRIC interpretations. The IFRS refer to standards and interpretations thereof approved for application in the EU in compliance with the proceedings stipulated in Regulation (EC) 1606/2002, as referred to in the Finnish Accounting Act and subsequent regulations. The notes to the consolidated financial statements also comply with Finnish accounting and corporate legislation.

The consolidated financial statements have been prepared in compliance with the principle of operational continuity. Despite its loss-making financial periods, the company has succeeded in

keeping its working capital at a good level and the company believes that it is sufficient to cover the next 12 months of operations. The company is not dependent on external financing to guarantee operational continuity. In the assessment of the company's senior management, the company's capacity to continue operating is good, and there are no foreseeable events or conditions that could occur individually or in combination to give major cause to doubt the company's ability to continue operating.

The consolidated financial statements have been prepared on the basis of acquisition cost with the exception of equity investments recognised at fair value through other comprehensive income and financial assets and liabilities recognised at fair value through profit or loss. The financial statements are presented in thousands of euros. The figures presented in the financial statements are rounded from precise figures, so the combined total of individual figures may differ from the total sum presented. Indicators have been calculated using precise values.

The preparation of IFRS-compliant financial statements requires the Group management to make certain estimations and judgments when applying the Group's accounting policies. Information on judgements that the management has made when applying the Group's accounting principles and that have the most significant effect on the figures presented in the financial statements are presented under "Accounting policies calling for judgements by the management and key sources of estimation uncertainty".

Presentation method

The Group's income statement is presented as a single calculation in which the share of the income accounted for by the Group's ongoing operations is presented first and income due to discontinued operations is then presented on a single line. In the 2019 financial period Biohit has no discontinued operation to present.

Consolidation principles

The consolidated financial statements include the parent company, Biohit Oyj, and all its subsidiaries. Subsidiaries are companies over which the Group exercises control. The Group has a controlling interest in a company if, by being involved in the company, it is exposed to fluctuating returns or is entitled to such fluctuating returns and it is able to influence these returns by exercising its control over the company.

Mutual shareholdings of Group companies have been eliminated using the acquisition cost model. Acquisition costs include transferred assets at fair value, generated or assumed liabilities and equity-based instruments that are issued. Acquired subsidiaries are consolidated from the moment that the Group gains control over them and divested subsidiaries are consolidated until this control ends. All internal Group business transactions, receivables, liabilities, unrealised profits and internal profit distribution are eliminated when preparing the consolidated financial statements. Unrealised losses are not eliminated if the loss results from impairment. The distribution of profits for the financial period to the parent company's owners and minority interest-holders is presented in the income statement, and the minority interest-holders' share of equity is presented as a separate item in the balance sheet under equity. The minority interest-holders' share of accumulated losses is recognized in the consolidated financial statements up to the amount of the investment. The Group has no associated companies or minority shareholders.

Subsidiaries

Subsidiaries are consolidated into the financial statements from the moment that the Group gains control over them until this control ends. The consolidated financial statements have been prepared using the acquisition-cost method. The Group's share of assets, liabilities and contingent liabilities on the date of acquisition is recognised at fair value and the amount in excess of the fair-value acquisition cost is recognised as goodwill. If the acquisition cost of a subsidiary is less than the value of the net assets on the date of acquisition, the difference is recognised in the income statement. Internal Group business transactions, receivables, liabilities and unrealised profits from internal sales are eliminated in the consolidated financial statements. Unrealised losses are also eliminated unless an internal business transaction demonstrates that an asset has become impaired. The share of a subsidiary owned by minority interest-holders is presented in the consolidated balance sheet under equity, separately from shareholders' equity. The accounting principles applied by subsidiaries have been adapted to correspond to the Group's principles. On 31 December 2019, the company had no goodwill on its balance sheet.

Translating items denominated in foreign currencies

The profit and financial position of the Group's units are measured in the currency of the main operating region of the unit in question. The consolidated financial statements are presented in euro, which is the functional and presentation currency of the Group's parent company.

Foreign currency business transactions are recorded in the functional currency at the exchange rate on the date of transaction. Monetary receivables and liabilities are translated at the exchange rate on the closing date of the financial period. Non-monetary foreign currency items have been translated into the functional currency at the exchange rates on the transaction date. Any exchange differences arising from translation are recognised in the income statement. Any exchange differences arising from the translation of accounts receivable and accounts payable within the Group are recognised as financial items, while corresponding external items are treated as sales or purchase adjustment items. The income statements of foreign subsidiaries have been translated into euro at the average exchange rate for the financial period and the balance sheets have been translated at the exchange rate on the closing date of the financial period. The exchange difference resulting from translating income statement items using the average exchange rate and balance sheet items at the exchange rate on the closing date of the financial period has been recognised as a separate item under translation differences

in equity. Exchange differences from monetary items calculated as net investments made in foreign subsidiaries are recognised as translation differences.

Business segments

Biohit's product portfolio consists of diagnostic tests, analysis systems, products that bind carcinogenic acetaldehyde into harmless compounds, monoclonal antibodies and service laboratory operations. The company classifies its entire product and service portfolio into one segment.

Segment information is provided to the most senior operative decision-making body as part of internal reporting in a consistent manner. The Group's Management Team is the most senior operative decision-making body. It is responsible for allocating resources to business segments.

Revenue recognition:

The Group has adopted IFRS 15 Revenue from contracts with customers from 1 January 2018. The new standard establishes a five-step model for recognizing revenue from contracts with customers, and it replaced IAS 18 and IAS 11 and the related interpretations.

Revenue is recognised on a gross basis, as Biohit acts as a principal towards customers. The transaction price is estimated separately for each contract at the amount of consideration that Biohit is expected to be entitled to in exchange of the goods or services transferred. The determination of the transaction price is normally straightforward, as Biohit's contracts include no variable consideration such as retrospective discounts. Biohit applies the practical expedient and therefore does not recognise a significant financing component, i.e. does not adjust the promised consideration for time value of money when the time between the delivery of the promised good or service to the customer and the payment by the customer is less than one year.

Some distribution agreements include the right to return the goods. In this case, Biohit recognises revenue at the amount that it expects to be entitled to, and recognises a refund liability within advance payments (Note 27) as well as an asset reflecting the right to the returned goods in tangible assets in the balance sheet (Note 20). At the end of each reporting period, Biohit updates

its estimates relating to the sales involving a right to return and adjusts revenue, cost of goods sold and the related refund liability and asset accordingly.

Revenue for each good or service as well as royalty from license-based business is recognised as a distinct performance obligation, as those are separately identifiable and Biohit's customers can benefit from them individually. Revenue from goods sold is recognised at a point of time when control over them is transferred to the customer in accordance with the commercial terms of delivery "ex-works". For laboratory services, Biohit considers that control is transferred to the customer when the results of an analysis are delivered to the customer, and revenue is recognised at a point of time. Revenue from licence-based contracts is recognised based on a so-called subsequent sale, i.e. on the basis of revenue generated from the sales of the licenced goods by the customer or on the basis of the number of goods sold. Where Biohit is unable to receive from the customer the information regarding the amount of sales or the number of goods sold that forms the basis for royalty income, royalty income is estimated based on historical data. In the financial year 2019, royalty income is based on information submitted by the customers.

Biohit has a contractual obligation to withdraw defective goods from the market and replace them with new products without a separate compensation. Costs relating to the withdrawal are accounted for in accordance with IAS 37 Provisions, contingent liabilities and contingent assets. The amount of costs relating to goods withdrawn has not been material in Biohit's business.

Biohit recognises a contract asset when the right to a consideration is not unconditional. The asset is recognised within sales receivables when the right to a consideration is unconditional, i.e. when only passage of time is required before payment of the consideration is due. A contract liability is recognised for payments received from customers for which no goods or services have yet been delivered by Biohit.

Biohit has not incurred any significant costs to obtain the contracts, such as sales commissions. Biohit applies a practical expedient and recognises the incremental costs of obtaining a contract as an expense as incurred, if the amortisation period for the related asset would be one year or less.

Biohit applies the practical expedient and does not disclose information about partly or completely unsatisfied performance obligations that relate to contracts with a duration one year or less. Biohit's contracts with a duration of more than one year consist of distribution agreements that are framework contracts by nature and do not meet the criteria in IFRS 15 for the existence of a contract without specific purchase orders for quantities to be delivered. In this case, future sales relating to distribution agreements are not accounted for as unsatisfied performance obligations, and no transaction price is allocated to them.

Estimates made relating to revenue recognition

Biohit uses management's estimates when recognising revenue from contracts with customers including a right of return. Management estimates the extent to which the right of return will be exercised, and revenue is recognised only for the products which, according to management's estimate, are very likely not to be returned. Management's estimates are based on historical return rates or where historical data is not available, on estimates regarding future returns based on unsold goods included in the customer's inventory and their expiry dates. The amount of these contracts in Biohit's business is minimal.

Property, plant and equipment

Property, plant and equipment are recognised at original acquisition cost, less accumulated depreciation and impairments. Acquisition cost includes the direct costs arising from acquisition. Costs that arise subsequently are included in the book value of the asset or recognised as separate assets only if it is likely that the future financial benefit associated with the asset will benefit the Group and the acquisition cost of the asset can be reliably determined. Other repair and maintenance costs are recognised through profit or loss in the period during which they have materialised.

Straight-line depreciation is applied to assets according to the estimated useful life. No depreciation is made on land. The estimated useful lives are as follows:

Machinery and equipment: 3–10 years

The residual value and the useful life of assets are checked in every financial statement and, if necessary, adjusted to represent changes that have occurred in the expectations of financial benefit. Sales gains and losses accumulated from the disposal or transfer of tangible fixed assets are included in other operating income or expenses.

INTANGIBLE ASSETS Research and development expenses

Research expenditure is recognised as an expense in the balance sheet. Development expenditure related to designing new and more advanced products is capitalised in the balance sheet as an intangible asset when the product can be technically realised and commercially exploited, and the product is expected to generate a future financial benefit. Development expenditure that has previously been recognised as an expense cannot be capitalised at a later date. Depreciation is booked for an asset from the time it is ready for use. No development expenditure was capitalised on the balance sheet on 31 December 2019.

Other intangible assets

Intangible assets are only entered in the balance sheet if the acquisition cost of the asset can be reliably determined and if it is likely that the expected financial benefit from the asset will benefit the company. Other intangible assets with a limited useful life are entered in the balance sheet at original acquisition cost, and costs are booked in the income statement based on straight-line depreciation over the course of the known or estimated useful life of the asset. The Group has no intangible assets with indefinite useful lives.

The depreciation periods are as follows:
Patents:	4–10 years
IT software:	3 years
Other intangible assets:	5–10 years

Impairments of tangible and intangible assets

On the closing day of each financial period, the Group assesses whether there are indications of impairment in the value of a particular asset. If there are such indications, the recoverable amount from the said asset is estimated. Additionally, the recoverable amount is estimated annually for goodwill, regardless of whether there is any indication of impairment. The need for impairment is reviewed at the level of cash-generating units, that is, the lowest unit level that is largely independent of other units, and whose cash flow can be separated from other cash flows. The discount

rate used is the interest rate that is determined before taxes and that describes the market's view of the time value of money and the risks incorporated in the tested asset.

The recoverable amount is the asset's fair value, less costs arising from transfer or a higher utility value. Value in use is the estimated future net cash flow from the asset or cash-generating unit, which is discounted to its present value. Impairment loss is recognised if the book value of the asset is higher than the recoverable amount. Impairment loss is recognised immediately in the income statement. If the impairment loss is allocated to a cash-generating unit, it is first allocated to reduce the goodwill of the cash-generating unit and then to reduce the other assets of the unit pro rata. The impairment loss is cancelled if there is a change in the conditions and the recoverable amount from the asset has changed since the impairment loss was booked. However, the impairment loss may not be reversed in excess of what the asset's book value would be without the recognition of the impairment loss. Impairment losses recognised for goodwill are never reversed.

Inventories

Inventories are measured at acquisition cost or net realisable value, whichever is lower. The acquisition cost is determined using the FIFO method. The acquisition cost for finished and unfinished products consists of raw materials, direct labour costs, other direct costs, and the appropriate share of manufacturing-related variable overheads and fixed overheads at a normal level of operations. The net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs for completing the product and costs related to sales

Pension obligations

In Group companies, pension cover is arranged in accordance with the pension legislation and practices of the country in question. The pension arrangements are defined-contribution plans. The payments related to defined-contribution pension plans are recognised as costs in the financial period in which they arise.

Share-based payments

The Group has incentive plans where payments are made in the form of equity instruments. The benefits granted under the plans are recognised at fair value on the date on which they were granted and entered as costs evenly throughout the period during which they were earned. The effect of the plans on profit or loss is presented under costs of employee benefits.

The cost determined on the date on which the options were granted is based on the Group's estimate of the number of options for which rights are presumed to arise at the end of the incentive-earning period. The Group updates the presumption of the final number of options on the final day of every reporting period. Changes in estimates are treated through profit or loss. The fair value of option plans is defined on the basis of the Black-Scholes option pricing model. Terms that are not market-based, such as profitability and specific growth targets, are not taken into consideration when determining the fair value of options. Instead, they affect the estimate of the final number of options.

When option rights are exercised, the assets obtained from share subscriptions are entered into the invested unrestricted equity fund in accordance with the terms of the plan. The latest option program of Biohit ended 31st of May 2019.

Provisions

A provision is entered when the Group has, due to a past event, a legal or factual obligation, and the obligation is likely to materialise and the sum of the obligation can be reliably estimated. The amount to be recognised as a provision corresponds to the best estimate of the costs required to meet existing obligations on the closing date of the financial period. If the time value of money has a material impact, the amount of the provision is recognised as the present value of anticipated expenses.

Taxes based on taxable income for the period and deferred taxes

The tax expense in the income statement consists of the current tax expense and deferred tax. The amount of tax based on the taxable profit for the period is calculated from the taxable profit based on the applicable tax rate in each country. The tax is adjusted by possible taxes related to previous periods. Deferred taxes are calculated from all temporary differences between the book value and tax base. The biggest temporary differences arise from the deferred tax assets and internal margins on inventory.

No deferred tax is recognised for non-deductible goodwill impairment or for the undistributed profits of subsidiaries if the temporary difference is not likely to dissolve in the foreseeable future.

Deferred tax is calculated using the tax rates enacted by the balance sheet date. Deferred tax assets are recognised to the amount for which it is likely that taxable profit will be generated in the future against which the temporary difference can be utilised.

Financial Assets

Group's financial assets are classified in the following measurement categories: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The classification depends on used business model for managing the financial assets and the contractual terms of the cash flows. Assets are classified as current assets, except for maturities over 12 months after balance sheet date, which are classified as non-current assets. Purchases and sales of financial assets are recognized on the settlement date. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Amortized cost category consists of cash and cash equivalents, trade receivables and loan receivables where the business model is to hold the asset to collect the contractual cash flows. Financial assets recognized at amortized cost are valued using the effective interest method.

Assets at fair value through profit or loss consist of interest or equity funds or investments into listed bonds. All gains or losses of fair value changes investments in the category is included in financial income and expenses.

Assets at fair value fair value through other comprehensive income consist from equity investments to unlisted Genetic Analysis AS shares. All fair value changes in this category are recognised in equity and any potential future gain or loss from sale of assets will lead to transfer between equity to retained earnings without impact to the profit and loss statement. Dividends from equity investments are recognized at profit and loss statement. The consideration and estimates relating to the fair value assessment of the shares is described in note 18.

Financial Liabilities

Group's financial liabilities are classified as amortized cost and measured at fair value net of transaction cost at settlement date. Financial liabilities are subsequently measured at amortized cost using the effective interest method. Financial liabilities at amortized cost consist from loans from financial institutions and current accounts. Financial liabilities are included in non-current liabilities, except for items with maturities less than 12 months after the balance sheet date, which are included in current liabilities. A financial liability is derecognized when the related obligation is discharged, cancelled or expires. The group does not have any derivative liabilities.

The fair values of other interest-bearing liabilities at amortized cost are determined by using the discounted cash flow method employing market interest rates at the balance sheet date.

Impairment

The credit loss is recognized based on individual assessment of receivable. The simplified expected credit loss model is applied for trade receivables. The impairment process is based on historical credit loss experience combined with current conditions and forward looking macroeconomic analysis

Realised loss levels are adjusted based on history, so that they represent the current and future information and macroeconomic factors, that influence the customers ability to make the payments for receivables. Financial items based on trade receivables and contracts are recognized off the balance sheet as final credit loss., when it is not plausible to expect to receive payment e.g. in the process of bankruptcy.

The impairment or credit loss is recognized in the consolidated statement of income within other expenses.

Maturity analyses for trade receivables, movement in allowance account and general provisioning matrix is presented at note 28 under section credit risk. The Other financial assets at amortized cost consist from cash at banks. The impairment has not been recognised from these assets, as the impact is immaterial to the group's figures due the low credit risk.

Concept of operating profit and loss

IAS 1 Presentation of Financial Statements does not define the concept of operating profit. The Group has defined it as follows: operating profit or loss is a net total that can be calculated by adding other operating income to net sales, subtracting purchase expenses adjusted by the change in the stock of finished and unfinished products as well as expenses caused by production for own use, subtracting expenses from employee benefits, depreciation and potential impairment losses, as well as other operating expenses. All other items, including discontinued operations, are presented beneath operating profit or loss. Exchange differences and changes in the fair value of derivatives are included in operating profit or loss providing they arise from business-related items. Otherwise, they are recognised as financial items. Exchange differences related to the Group's internal receivables and liabilities are recognised as financial items.

Accounting policies calling for judgements by the management and key sources of estimation uncertainty

When preparing the financial statements, the management must make assessments and assumptions concerning the future, and the outcome may deviate considerably from the original assessments and assumptions. In addition, discretion must be used in applying the accounting policies. Although the estimates are based on the most recent information available, the realised values may differ from these estimates. The most important areas in which estimates, and discretion are used are described below.

Impairment testing

The Group conducts impairment tests as required on unfinished intangible assets. It also assesses any indication of impairment in accordance with the aforementioned accounting policies. The recoverable amounts of cash-generating units are measured on the basis of value-in-use calculations. Preparing these calculations requires the use of estimates.

Deferred tax assets

Deferred tax assets for unused tax losses and temporary differences in regard to recognised deferred tax assets are estimated by the Group at least once per year to determined the likelihood of the company in question generating sufficient taxable income before the unused tax losses expire.

Measurement of assets at fair value fair value through other comprehensive income where senior managers' judgement is required

Insofar as quoted valuations cannot be obtained from securities markets for liquid assets measured at fair value through other comprehensive income, the fair values are based on data that can be obtained for the assets or liabilities in question either directly

(as a price) or indirectly (as a derivative of the price). The Group uses generally accepted valuation models to determine the fair values of these instruments, and the input data for these models are based in significant part on observable market data. The discounted cash flow model has been used in the valuation of Genetic Analysis AS. The DCF model was based on the budgets prepared by the management of Genetic Analysis AS. The comparison periods assessment was based on exercised transactions, but because there were no transactions during the financial period, the company has used the discounted cash flow model at balance sheet date. The company classifies the shares in Genetic Analysis AS as equity investments recognised at fair value fair value through other comprehensive income. On the balance sheet date, the fair value of the shares was EUR 3.7 million.

Application of new or amended IFRS standards and IFRIC interpretations

Biohit will begin applying new or amended IFRS standards and interpretations as of the date on which they enter into force or when they are approved for adoption in the EU. The consolidated financial statements were prepared in compliance with the same principles used in 2018, except for IFRS 16, which was adopted on 1 January 2019. See the section "IFRS 16 Leases" below.

IFRS 16 Leases

Biohit implemented IFRS 16 for the first time for the reporting period beginning on 1 January 2019. It will result in almost all leases being recognised on the balance sheet by lessee as the distinction between operating and finance leases is removed.

Under the new standard, lessee recognises a right-of-use asset (the right to use the leased item) and a lease liability to pay rentals. The standard includes optional recognition exemptions for shortterm leases (12 months or less) and leases for which the underlying asset is of low value. Biohit has decided to apply the optional exemptions and recognises these expenses as straight-line basis over the period of the lease.

Due to adopting IFRS 16 -standard, the balance sheet on December 31 2019 increased by EUR 0.2 million. Biohit has evaluated that the most significant impact of adopting the standard is that Biohit recognises new liabilities and right-of-use assets, relating to office premises and company cars from lease contracts currently classified as operating leases. Furthermore, the nature

of expenses relating to such lease contracts changes when the rent expense is removed and depreciation of the right-of-use asset and interest expense (included in financial expenses) on the lease liability will be recognised. Biohit applies the simplified transition method and does not restate comparative amounts for the year prior to first adoption.

According to IFRS 16 -standard, the lessee's lease period is the period during which the lease cannot be terminated. Also, a potential extension or termination option should be considered, if the use of such option is estimated to be reasonable certain. The lease term for ongoing contracts is based on estimate by Biohit's management. Management regularly estimates the length of those leases.

The lessee should value the lease agreement by discounting the future lease payments to the present value at the inception of the contract. The internal interest rate implicit in the lease is not easily available which is why the future minimum lease payments are discounted using Biohit's incremental borrowing rate. According to the standard, the incremental borrowing rate is defined as the interest that the lessee would have to pay when borrowing for a similar term and with similar security to obtain an asset of an equivalent value to the right-of-use asset in similar economic environment. Biohit has determined the incremental borrowing rate for leases based on the debt based financing offers received from the 3rd party. Biohit has applied a single discount rate to a portfolio of leases with similar characteristics.

New standards and interpretations that have not yet been adopted

Biohit has not yet applied the following new and amended standards and interpretations, which have already been published but have not been approved by the European Union or will not take effect until after the financial period. The Group intends to apply these on the date on which they enter into force or from the beginning of the following financial period if this date is not the first day of the financial period.

The International Accounting Standards Board has published changes to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting policies, changes in accounting estimates and errors". The changes will take effect as of 1 January 2020.

3 NET SALES AND SEGMENT INFORMATION

The company's product portfolio consists of diagnostic tests, products that bind acetaldehyde and monoclonal antibodies.

The company classifies its entire product portfolio into one segment.

NET SALES BY MARKET AREA (1,000 €)	2019	2018
Finland	405	438
Europe, Other	3,977	3,648
North and South America	213	164
Asia	3,897	4,689
Other Countries	1,561	992
Net Sales from contracts with customers total	10,052	9,931

The majority of Biohit's net sales is generated from distributor agreements in diagnostics field. Biohit's customers, i.e. the distributors, buy and resell the products. Biohit has no post-sales rights or obligations relating to the control over the products, except for a right of return relating to some distribution agreements. The goods that are sold include several different tests for diagnostics of diseases in the gastrointestinal tract, such as celiac quick test, lactose intolerance test, Vitamin D test, GastroPanel® test for the first-line diagnosis of dyspepsia measured on simple blood test. Furthermore, the product portfolio includes Acetium® lozenge and Acetium® capsule, which are acetaldehyde-binding products sold under the trademark Acetium.

In licencing agreements, Biohit transfers licensed immaterial rights to a customer, and the customer both produces and sells the products. Licencing agreements cover both diagnostic products and Acetium products.

Biohit also has contracts that include both a distribution agreement and a licensing agreement. In this case, Biohit sells to the customer finished products and raw materials needed for production and, in addition, receives a royalty fee based on the sale of the product. Revenue from the sale of finished products, raw materials and royalty income from licences are recognised as separate performance obligations.

Biohit provides laboratory services, such as GastroPanel® tests, for customers. Biohit analyses the sample collected from the customer and delivers the results of the analysis to the customer or to a company. The proportion of service contracts of Biohit's net sales is insignificant.

Contract assets and liabilities:

Biohit recognises revenue at a point of time when goods and services are delivered. The payment terms in Biohit's contracts with customers vary from a payment to be made one month in advance to payment in 60 days.

A contract liability is recognised for payments received where the goods or services have not yet been delivered. This is the case, among others, with countries outside Europe and Asia, where as a result of a higher credit risk relating to customers, an advance payment is received, on the average, one month before the delivery of the goods. The timing difference between the receipt of the advance payment by Biohit and the delivery of the products or the results of a service does not exceed one year.

1,000 €	31 Dec 2019	31 Dec 2018
Contract Assets	34	27
Trade receivables	2,595	1,655
Contract assets and receivables total	2,629	1,681

1,000 €	31 Dec 2019	31 Dec 2018

Contract liabilities	2	12
Contract liabilities total	2	12

The items included in contract liabilities at the beginning of the period have been recognised as revenue during the financial year.

4 ACQUIRED BUSIENSSES

No businesses were acquired in the 2018 and 2019 financial periods.

5 OTHER OPERATION INCOME

1,000 €	2019	2018
Subsidies	38	17
Loss from sales of property, plant and equipment	–	–2
Others	3	3
Total	41	18

6 MATERIALS AND SERVICES

1,000 €	2019	2018
Materials, supplies and goods	2,576	2,867
External manufacturing services	952	770
Total	3,528	3,637

7 EXPENSES ARISING FROM EMPLOYMENT BENEFITS

1,000 €	2019	2018
Salaries	2,813	2,842
Pension expenses - defined-contribution plans	409	412
Options and share bonuses realised and paid in shares	–	20
Other pesonnel expenses	68	59
Total	3,291	3,333

Average number of Group employees in the financial period	2019	2018
Group total	46	50

Details of the employment benefits enjoyed by senior managers are presented in note 29 (related-party transactions).

8 OTHER OPERATING EXPENCES

1,000 €	2019	2018
Travel expenses and other personnel expenses	284	379
Rents and maintenance expenses	142	384
Sales and marketing expenses	857	932
Other external services	1,148	1,189
Other operating expenses	392	399
Total	2,824	3,283

Other operating expenses include research and development expenses of EUR 1,232 thousand (EUR 1,290 thousand).

9 AUDITORS' FEES

1,000 €	2019	2018
Companies belonging to the PricewaterhouseCoopers chain
Auditors' fees	101	118
Assignments according Auditing Act 1.1,2 §	5	10
Other services	4	19
Total fees paid to the auditor	110	147

Assignments relating Auditing Act 1.1,2 § included for example statements regarding option program and mergers.

Other services in 2019 included expert services regarding IFRS 16 implementation and other consulting services.

Other services in 2018 included expert services related to amending the articles of association and the effects of adopting IFRS 16, IFRS 15 and IFRS 9 implementation and other consulting services.

10 DEPRECIATION AND IMPAIRMENT

1,000 €	2019	2018
Intangible assets	1,644	1,643
Right-of-use assets	216	–
Plant and equipment	145	164
Total	2,006	1,807

11 FINANCIAL INCOME AND EXPENSES

1,000 €	2019	2018
Financial income
Net profit on investments recognised at fair value through
profit or loss	159	153
Other financial income	14	–
Total	173	153

Financial expenses
Interest expenses on financial liabilities	–	–3
Net loss on investments recognised at fair value through
profit or loss	–12	–184
Exchange rate losses from financial assets and liabilities	0	–
Other financial expences	24	–25
Total	12	–212

Total financial income and expences	185	–59

12 INCOME TAXES

Direct taxes
1,000 €	2019	2018
Tax based on taxable income for the financial period	–45	–104
Deferred taxes	–145	–16
Total Direct taxes	–189	–120

Reconciliation of tax expenses on the income statement

1,000 €	2019	2018
Profit before taxes	–1,227	–2,024
Taxes calculated at domestic rates 20%	246	405
Effect of differing tax bases applying to foreign subsidiaries	–77	–104
Tax-free income and non-deductible expenses	27	–30
Non-recognised deferred tax assets from taxable loss	–272	–375
Other items	–113	–16
Taxes on the income statement	–189	–120

13 EARNINGS PER SHARE

Undiluted earnings per share are calculated by dividing the profit attributable to shareholders of the parent company in the financial period by the weighted average number of shares in circulation during the financial period.

	2019	2018
Profit for the period attributable to the owners of the parent
company (EUR thousand)"	–1,417	–2,143
Average number of shares, undiluted	15,005,253	14,901,904
Effect of share options	–	113,552
Average number of shares, diluted	15,005,253	15,015,456
Earnings per share, undiluted (EUR)	–0.09	–0.14
Earnings per share, diluted (EUR)	–0.09	–0.14

14 INTANGIBLE ASSETS

2019

	Other
	Intangible	intangible
1,000 €	rights	assets	Total
Acquisition cost 1 January 2019	8,986	712	9,698
Acquisition cost 31 December 2019	8,986	712	9,698
Accumulated depreciation and impairment
1 January 2019	–3,941	–712	–4,653
Depreciation	–1,644	-	–1,644
Accumulated depreciation and impairment
31 December 2019	–5,585	–712	–6,298
Book value 1 January 2019	5,045	–	5,045
Book value 31 December 2019	3,401	–	3,401

2018

	Other
	Intangible	intangible
1,000 €	rights	assets	Total
Acquisition cost 1 January 2018	9,062	712	9,774
Decreases	–76	–	–76
Acquisition cost 31 December 2018	8,986	712	9,698
Accumulated depreciation and impairment
1 January 2018	–2,300	–711	–3,011
Depreciation	–1,641	–2	–1,643
Accumulated depreciation and impairment
31 December 2018	–3,941	–712	–4,653
Book value 1 January 2018	6,762	2	6,764
Book value 31 December 2018	5,045	–	5,045

Intangible rights consist of patents.

15 TANGIBLE ASSETS

2019

	Right-of-use	Plant and
1,000 €	assets	equipment	Total
Acquisition cost 1 January 2019	448	1,635*	2,083
Increases	51	47	98
Acquisition cost 31 December 2019	499	1,682	2,181

Accumulated depreciation and impairment
1 January 2019	–	–1,147	–1,147
Depreciation	–216	-145	–362
Accumulated depreciation and impairment
31 December 2019	–216	–1,293	–1,509

Book value 1 January 2019	448	488*	936
Book value 31 December 2019	283	389	672

* 1 January 2019 69 thousand euros has been transferred from the Plant and equipment to Right-of-use assets in connection with transition to IFRS16

2018

	Plant and
1,000 €	equipment	Total
Acquisition cost 1 January 2018	1,752	1,752
Increases	35	35
Decreases	–83	–83
Acquisition cost 31 December 2018	1,704	1,704
Accumulated depreciation and impairment
1 January 2018	–1,044	–1,044
Depreciation	–165	–165
Depreciation of decreases	61	61
Accumulated depreciation and impairment
31 December 2018	–1,147	–1,147
Book value 1 January 2018	708	708
Book value 31 December 2018	557	557

16 LEASES

Below stated information is based on the leasing contracts where the Biohit Group is the lessee.

Right-of-use assets
1,000 €	31 Dec 2019	1 Jan 2019
Buildings	181	361
Equipment	45	65
Vehicles	57	22
	283	448

Lease liabilities
1,000 €	31 Dec 2019	1 Jan 2019
Current	228	208
Non-current	59	240
	287	448

*In the previous year, the group only recognized lease assets and lease liabilities in relation to the leases which were classified as "finance leases" under IAS 17 Leases. The assets were presented in property, plant and equipment and the liabilities as a part of the Group's borrowings.

Depreciation charge of right-of-use assets
1,000 €	31 Dec 2019	1 Jan 2019
Buildings	181	–
Equipment	19	–
Vehicles	16	–
	216	–
Interest expense (included in finance costs)	12

The Group leases mainly company cars and premises. Rental contracts are typically made for fixed periods of 12 months to 5 years but may have extension options.

Until the 2018 financial year, leases of property, land and equipment were classified as either finance leases or operating leases. From 1st of January 2019, leases are recognized as a right-of-use asset and corresponding liability at the date at which the leased asset is available for use by the group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

-fixed payments

-variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

-the exercise price of a purchase option if the group is reasonably certain to exercise that option

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the Biohit's incremental borrowing rate.

According to the standard, the incremental borrowing rate is defined as the interest that the lessee would have to pay when borrowing for a similar term and with similar security to obtain an asset of an equivalent value to the right-of-use asset in similar economic environment.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassesed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

The standard includes optional recognition exemptions for short-term leases (12 months or less) and leases for which the underlying asset is of low value. Biohit has decided to apply the optional exemptions and recognises these expenses as straight-line basis over the period of the lease.

1,000 €	31 Dec 2019 ((before IFRS 16 impact)	IFRS 16 impact	31 Dec 2019 (after IFRS 16 impact)
EBITDA	400	194	593
Operative EBITDA	400	194	593
Operating profit/loss	–1,401	–12	–1,412
Profit/loss before taxes	–1,207	–21	–1,227
Total assets	17,147	225	17,372
Total shareholders' equity and
liabilities	17,147	225	17,372
Equity ratio	85.2%	–1.4%	83.9%

17 FINANCIAL ASSETS AND LIABILITIES BY CATEGORY

The Group categorised its financial assets and liabilities into the following categories on 31 December 2019:	Amortized cost 1,000 €	Fair value through profit and loss 1,000 €	Fair value through OCI 1,000 €	Hierarchical level
Non-current assets
Other non-current assets	58	–	–	Level 2
Current assets
Other current financial assets	–	1,250	-	Level 1
Other current financial assets	–	2,923	-	Level 2
Other current financial assets	–	99	–	Level 3
Other current financial assets	–	–	3,724	Level 3
Trade receivables	2,595	–	–
Other receivables	307	–	–
Cash and cash equivalents	1,325	–	–

* Genetic Analysis AS 3 724 thousand euros and single corporate loan worth of 99 thousand euros is categorized on the level 3. Genetic Analysis AS investment was valuated on fair value, 3,7 MEUR, by using discounted cash flow model due to reason that there was no transaction between 3rd parties in 2019 like in 2018.

The fair value in Norwegian ground was at the same level than in 2018 and valuation change in 2019 was mainly driven by euro's strengthening.

The Group categorised its financial assets and liabilities into the following categories on 31 December 2018:	Amortized cost 1,000 €	Fair value through profit and loss 1,000 €	Fair value through OCI 1,000 €	Hierarchical level
Non-current assets
Other non-current assets	1	–	–	Level 2
Current assets
Other current financial assets	–	4,141	–	Level 2
Other current financial assets	–	–	3,862	Level 3
Trade receivables	1,655	–	–
Other receivables	371	–	–
Cash and cash equivalents	1,375	–	–

The company has classified the hierarchies of financial assets according to the availability of data on market terms and other price data.

The fair values on level 1 of the hierarchy are based on the quoted (unadjusted) prices of identical assets or liabilities on active markets. The group has mainly used valuations provided by its asset management partner as a source of price data for determining the fair value of these instruments, and the company has verified that the price data represents genuine, frequent market transactions involving the instruments in question.

In significant part, the fair values of level 2 instruments are based on other input data than the quoted prices included in level 1, although this data can be obtained for the assets or liabilities in question either directly (as a price) or indirectly (as a derivative of the price). The Group uses generally accepted valuation models to determine the fair values of these instruments, and the input data for these models are based in significant part on observable market data.

The level in the fair value hierarchy at which a certain item measured at fair value is classified overall is determined on the basis of the significant input data on the lowest level with regard to the entire item measured at fair value. The significance of input data is evaluated in its entirety in relation to the item valued at fair value.

The original book value of other receivables corresponds to their fair value because the effect of discounting is negligible in view of the maturity of the receivables.

Financial liabilities by groups
	Book value	Fair value	Book value	Fair value
1,000 €	2019	2019	2018	2018
Long-term financial liabilities valued at amortised cost
Other liabilities	5	5	4	4
Lease liabilities	59	59	–	–
Financial leasing liabilities	–	–	42	42
Total	64	64	46	46
Short-term financial liabilities valued at amortised cost
Trade receivables	869	869	518	518
Tax liabilities	109	109	13	13
Lease liabilities	228	228	–	–
Other liabilities	1,171	1,171	1,022	1,022
Principal payments for financial leasing liabilities	–	–	17	17
Total	2,377	2,377	1,569	1,569
Total financial liabilities	2,441	2,441	1,615	1,615

The original book value of accounts payable and other interest-free liabilities corresponds to their fair value because the effect of discounting is negligible in view of the maturity of the liabilities.

18 SENSITIVITY ANALYSIS OF THE CALCULATION OF THE FAIR VALUE

PRINCIPLES OF FAIR VALUE MEASUREMENT REGARDING INVESTMENT CATEGORIZED AS FAIR VALUE TROUGH OTHER COMPREHENSIVE INCOME

The investment in unlisted Gentic Analysis AS (GA) is valuated based on discounted cash flow model. The basis of discounted cash flow model has been budget data prepared by Genetic Analysis AS's management.

The previous year valuation was based on the actual transaction but because there was no transactions during the review period the company used discounted cash flow model in balance sheet date valuation. The fair value calculation includes significant management judgment and estimation and the investment is categorized on the hierarchical level 3 in the fair value categorisation.

GA's future operations is dependent on external financing. The fair value has been calculated based on the assumption that company receives external financing in the next 12 months period. This is significant management judgement. The valuation also includes significant amount of management estimation relating the development of the GA's future revenue and the profit.

The most significant estimation on the level 3 input data and related sensitivity analysis is described in the table below.

	2019
Fair value of the investment (1,000 €)	3,724
WACC, %	15%
Termainal growth, %	2%

The company has used the cutter for the budget prepared by GA's management which has reduced forecasted revenue and operating profit accordingly. When the cutter is between 0-62% and all the other factors are unchanged, investment value is higher than its current value on the balance sheet 31 December 2019.

GENETIC ANALYSIS AS SENSITIVITY ANALYSIS

		Updated fair value
1,000 €	Impact on the fair value	31 Dec 2019
WACC -2%-units, impact on investment's value	+1,003	4,727
WACC +2%-units, impact on investment's value	–644	3,080

Terminal growth - 2%-units	–350	3,374
Terminal growth + 2%-units	+581	4,305

SENSITIVITY ANALYSIS OF THE CHINA PATENTS FAIR VALUE

1,000 €	2019
In 2019 financial statements value of Hefei patent is 3.0 million euros. The patent is depreciated on a straight-line basis until the end of the year 2021. Impairment testing will be performed on the value of patents whenever there is an indication of impairment. An impairment test was conducted in conjunction with the 2019 financial statements. No impairment was recognised based on the impairment test. There is uncertainty concerning the future cash flows used for impairment testing as illustrated by the sensitivity analysis below for the one factor:
Decrease in demand for GastroPanel® by 20% and impact on the value of patents	–400
Decrease in demand for GastroPanel® by 40% and impact on the value of patents	-1,100

Royalty-based cash flow is dependent on the growth of the Chinese market, successful sales work by the distributor and building up the brand.

The patent is depreciated on a straight-line basis until the end of the year 2021.

19 NET LIABILITIES

1,000 €	2019	2018
Cash and cash equivalents	1,325	1,375
Other investments	8,054	8,004
Current liabilities	–	–17
Non-current liabilities	–5	–46
Lease liabilities	–287	–
Net liabilities	9,088	9,317

Liquid assets and other financial assets	9,380	9,379
Gross liabilities - fixed interest	–292	–63
Net liabilities	9,088	9,317

Other investments are short-term money market investments that are traded on active markets and that are measured at fair value through profit and loss. In addition, the other investments include shares in Genetic Analysis AS, which are measured at fair value through comprehensive income.

		Other	Lease contracts	Lease contracts	Loans maturing	Loans maturing
		financial	maturing within	maturing in more	within less than	in more than
1,000 €		assets	less than one year	than one year	one year	one year	Total
Net liabilities 1 January 2018	1,339	7,377	–	–	–17	–63	8,636
Cash flow	43	–20	–	–	–	17	40
Changes in exchange rates	–7	–	–	–	–	–	–7
Other changes not based on cash flow	–	647	–	–	–	–	647
Net liabilities 31 December 2018	1,375	8,004	–	–	–17	–46	9,317
Impact of IFRS 16 implementation (see note 16)	-	-	–232	–267	17	42	–440
	1,375	8,004	–232	–267	0	–4	8,877
Cash flow	–65	92	–	–	–	–1	26
Purchases, lease contracts	–	–	3	209	–	–	212
Changes in exchange rates	15	–	–	–	–	–	15
Other changes not based on cash flow	–	–42	–	–	–	–	–42
Net liabilities 31 December 2019	1,325	8,054	–228	–59	0	–5	9,088

20 DEFERRED TAXES

Deferred tax assets

		Recognised	other items of
		through profit	comprehensive	Businesses
1,000 €	1 Jan 2019	and loss	income	purchased/sold	31 Dec 2019
Internal inventory margin	6	5	–	–	11
Other items	48	1	–	–32	17
Total	54	6	–	–32	28

Deferred tax liabilities

		Recognised	other items of
		through profit	comprehensive	Businesses
1,000 €	1 Jan 2019	and loss	income	purchased/sold	31 Dec 2019
Capitalisation of tangible assets	3	–	–	0	3
Financial securities measured via the fair value reserve"	376	–	–28	–	349
Total	380	–	–28	0	352

Deferred tax assets

		Recognised under
		Recognised	other items of
		through profit	comprehensive	Businesses
1,000 €	1 Jan 2018	and loss	income	purchased/sold	31 Dec 2018
Internal inventory margin	6	0	–	–	6
Other items	61	–	–	–13	48
Total	67	0	–	–13	54

Deferred tax liabilities

			Recognised under
		Recognised	other items of
		through profit	comprehensive	Businesses
1,000 €	1 Jan 2018	and loss	income	purchased/sold	31 Dec 2018
Capitalisation of intangible assets	76	–	–	–76	–
Capitalisation of tangible assets	6	–	–	–3	3
Financial securities measured via the fair value reserve	229	–11	158	–	376
Total	311	–11	158	–79	380

The Group has tax-deductible losses of EUR 21.6 million for the periods from 2009 to 2019 for which no deferred tax assets have been recognised.

EUR 21.2 million of the loss is in Finland (2019: EUR 1.4 million, 2018: EUR 2.2 million, 2009-2017: EUR 17.5 million)

and EUR 0.4 million is in Italy. The losses expire in 10 years in Finland.

21 INVENTORIES

1,000 €	2019	2018
Materials and supplies	409	296
Work in progress	19	90
Finished products/goods	562	440
Total inventories	990	826

22 TRADE AND OTHER RECEIVABLES

Long-term receivables

1,000 €	2019	2018
Long-term interest-free receivables	30	56
Total	30	56

Short-term receivables

1,000 €	2019	2018
Trade receivables	2,595	1,655
Accrued income	263	317
Other receivables	44	54
Total	2,902	2,025

The age analysis of the trade receivables is presented in note 28

23 CASH AND CASH EQUIVALENTS

1,000 €	2019	2018
Cash and cash equivalents	1,325	1,375

24 NOTES RELATED TO SHAREHOLDERS' EQUITY

Biohit Oyj's share capital is EUR 2,350,350.81 (EUR 2,350,350.81) and there are 15,045,593 (14,952,041) shares, of which 2,975,500 (2,975,500) belong to Series A and 12,070,093 (11,976,541) belong to Series B. Series B is listed on the stock exchange.

The shares have no nominal value. Shares in Series A and B differ from each other in that each Series A share entitles its holder to twenty (20) votes at general meetings, while each Series B share carries one (1) vote.

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. When this regulation is applied, the nominal value of the shares is taken to be EUR 0.17, which was the nominal value of the company's shares when it decided to discontinue using nominal values for shares.

The shareholders' equity has been paid in full.

Description of shareholders' equity funds:

The translation differences reserve includes the translation differences arising when the financial statements of foreign subsidiaries and joint ventures are translated into euros.

The invested unrestricted equity fund includes other investments similar to shareholders' equity and the subscription prices of shares insofar as no specific decision is taken to recognise these under shareholders' equity.

25 SHARE-BASED PAYMENTS

Subscription period for the share options I 2013 ended 31.5.2019 and the company currently does not have any ongoing option programs.

Share-based payments

Terms of share-based incentive schemes Biohit Oyj established an option programme within the framework of the share-based incentive scheme. The option programme is intended for senior managers and employees.

In addition, the company granted options to two individuals as one-off compensation for amendments to the terms and conditions of certain old contracts. In accordance with the terms of the option programme, options are granted without cash payment, but a subscription price is set for the shares. The key terms and conditions of the incentive scheme, such as the terms relating to the creation of rights, are shown in the table below.

	I 2013
Scheme	Types A, B, C, D, E	II 2013
Nature of the scheme	Share options	Share options
Date of granting	19 June 2013	19 June 2013
Number of instruments granted	500,000	420,000
Subscription price	EUR 3.00	EUR 3.00
Share price at the time of granting	EUR 5.36 - 7.35	EUR 5.36
Period of validity (years)"	6	2
Realisation	In shares	In shares

The share options lapse if they are not exercised by the deadline specified in the programme. Under programme I 2013, an employee forfeits his/her incentives if he/she leaves the Group before the right ultimately arises

The incentives provided for by programme II 2013 were earned in full before 31 December 2013.

Options in circulation

Number of options	2019	2018
Options in circulation at the beginning of the financial period	113,552	178,750
Options exercised	93,552	65,198
Options expired	20,000	-
Options in circulation at the end of the financial period	0	113,552
Exercisable options at the end of the financial period	0	113,552
Weighted average strike price per share (EUR)	2.28	2.28

The strike price is affected by dividends paid in accordance with the terms of the option programme. No dividend was paid for the financial period that ended on 31 December 2019, so the strike price did not change

The following section describes the range of strike prices for options in circulation at the end of the financial period, as well as the weighted average period of validity remaining in accordance with the agreement.

2018	0.0	0.4	113,552
2019	–	–	–
	prices (EUR)	validity (years)	of stock options
	of strike	period of	Number
	Range	Weighted average

Determining fair value

The Group uses the Black Scholes model to determine the fair value of its option schemes. The anticipated volatility is defined on the basis of the actual trend shown by the parent company's share price, taking into consideration the remaining period of validity of the options. The fair value of the shares in the option schemes is based on the quoted share price.

Presumptions used to determine fair value during the 2019 financial period

Scheme	I 2013	II 2013
Anticipated volatility	45% - 88%	70%
Anticipated average period of validity of options
on the issue date (years)	6	2
Risk-free rate (%)	0.40% - 1.12%	0.39%
	subtracted from	subtracted from
	the subscription	the subscription
Anticipated dividends (dividend yield)	value	value
Fair value of the instrument defined on the
date of issue (EUR)	5.36 - 7.35	5.36

The amount recognised as expenses is included in note 7 Expenses arising from employment benefits

26 INTEREST-BEARING LIABILITIES

Balance sheet values of interest-bearing liabilities
1,000 €	2019	2018
Non-current interest-bearing liabilities
Financial leasing liabilities	–	42
Lease liabilities	59	–
Total interest-bearing non-current liabilities	59	42

Current interest-bearing liabilities
Principal payments for financial leasing liabilities	–	17
Lease liabilities	228	–
Total interest-bearing current liabilities	228	17
Total interest-bearing current liabilities	287	59

The fair values of financial liabilities are presented in note 17.

Covenants connected to long-term loans

There are no special covenants attached to the company's non-current financial lease liabilities.

Subordinated loans

The company has no subordinated loans.

27 TRADE PAYABLES AND OTHER LIABILITIES

Non-current interest-free liabilities

1,000 €	2019	2018
Deferred tax liabilities	352	380
Other non-current liabilities	5	4
Total	357	383

Current interest-free liabilities

1,000 €	2019	2018
Trade payables	869	518
Advances received	2	73
Tax liabilities	109	13
Accurrals and deferred income	1,169	949
Total	2,149	1,552

Total interest-free liabilities	2,506	1,935

The most substantial item included in accruals and deferred income is the deferral of employment benefits 602 thousand euros (355 thousand euros).

28 MANAGEMENT OF FINANCING RISKS

Biohit's management of financing risks focuses on analysing and minimising the following financing risks:

Exchange rate risk

Exchange rate risks are associated with international business activities. When calculated using comparable currencies, Biohit's net sales are not materially different to the reported values. Overall, exchange rate changes did not significant affect the company's profitability in the last financial period. The company's sales are primarily denominated in euros and the company does not have any exchange rate hedging.

Sensitivity analysis in accordance with IFRS 7 for exchange rate changes

2019

1,000 €	GBP	USD	CNY
Non-current liabilities	–	–	-
Open position	–	–
Current assets
Trade and other receivables	568	–	850
Current liabilities
Interest-free liabilities	-276	–	–
Open position	292	–	850
Net position	292	–	850
2018
1,000 €	GBP	USD	CNY
Non-current liabilities	–	–	–
Open position	–	–	–
Current assets
Trade and other receivables	244	–	–
Current liabilities
Interest-free liabilities	–253	–	–
Open position	–9	–	–
Net position	–9	–	–

The net position includes financial assets denominated in foreign currencies, as well as receivables and liabilities to Group companies and external parties translated into euros at the exchange rate on the final day of the reporting period.

Interest rate risk

Interest rate changes have a minor effect on Biohit's earnings. For this reason, the Group did not use any separate hedging against this risk in the financial period.

Liquidity risk

Liquidity risk management aims to safeguard the Group's finances under all circumstances. The Group's current financial assets on the balance sheet date amounted to EUR 5.6 million (EUR 5.5 million). The company also holds shares in Genetic Analysis AS worth EUR 3.7 million (EUR 3.9 million). The aim of the investment activities related to the company's current liquid assets is to achieve profit at very low risk of capital loss.

The Group's equity ratio was 83.9% (89.2%).

Analysis of the maturities of financial liabilities in 2019

1,000 €	<1 year	1-5 year	>5 year	Total
Accounts payable and other interest-free liabilities	869	–	–	869
Lease contracts	228	59	–	287
Total	1,097	59	–	1,156

Analysis of the maturities of financial liabilities in 2018

1,000 €	<1 year	1-5 year	>5 year	Total
Accounts payable and other interest-free liabilities	518	–	–	518
Principal payments for financial leasing liabilities	17	42	–	59
Interest expenses for financial leasing liabilities	3	8	–	11
Total	538	50	–	588

Commodity risk

The company is not using derivatives to hedge against commodity risks because the company is not exposed to commodity risks by virtue of the nature of its business.

Credit and counterparty risk

The business units are responsible for the credit risks connected to their trade receivables, and they have evaluated the risk of credit losses for each customer. Biohit's customer base primarily consists of solvent companies. As such, Biohit's risk of credit losses cannot be considered significant. The company has not used credit insurance. The majority of customer relationships are long-term in nature and business relations are active, so the company will become aware of changes in customers' creditworthiness at an early stage.

The investment portfolio consists of direct corporate bond loans, structured products, corporate loan funds, money market funds and cash in bank accounts. Some of the products in the investment portfolio are listed, while others are not. Sufficient diversification of investments between asset categories, investment instruments and counterparties is essential. The company uses at least two partners in its investment activities. Approximately 19% of the investment portfolio is cash, low-risk money market fund investments and investment-grade investments. Approximately 34% of the portfolio is investments rated BB-B, while investments without credit ratings account for 47%.

On 31 December 2019, trade receivables totalled EUR 2.6 million (EUR 1.7 million). The majority of the trade receivable balance is due to be paid by Biohit HealthCare (Hefei) Co. Ltd. The maximum amount of credit risk is the book value of the trade receivables.

Age distribution of trade receivables

1,000 €	2019	Impairment loss	Net 2019	2018	Impairment loss	Net 2018
Not yet at maturity	1,070	0	1,070	1,101	–3	1,098
Less than 30 days overdue	1,313	–1	1,312	283	–2	281
30–60 days overdue	60	0	60	182	–8	174
61–90 days overdue	43	0	43	51	–7	44
More than 90 days overdue	110	0	110	78	–20	57
Total	2,596	–1	2,595	1,696	–40	1,655

EUR 1 thousand was recognised in credit losses for 2019 and at the same time 39 thousand euros earlier credit losses was reversed. EUR 33 thousand was recognised in credit losses for 2018.

Capital structure management

The equity ratio – an indicator of the company's capital structure – is calculated by dividing the Group's equity by the balance sheet total less advances received. The result of this calculation is then multiplied by one hundred.

Equity ratio
1,000 €	2019	2018
Total shareholders' equity	14,580	15,892
Balance sheet total	17,372	17,887
Advances received	–2	–73
Equity ratio	83.9%	89.2%

29 RELATED-PARTY TRANSACTIONS

Parties are considered to be related parties if one of the parties is able to exercise control or considerable influence over the other's decision-making related to finances and business. The Group's related parties include the members of the Board of Directors and the Group Management Team, as well as the President & CEO.

Salaries and other short-term employment benefits

1,000 €	2019	2018
Parent company
Management teams	393	524
President & CEO	204	202
Members of the scientific advisory board	209	223

Osmo Suovaniemi has been employed by the company as a member of the scientific advisory board by the Board of Directors' decision. The compensation, including fringe benefits, is EUR 209 thousand (EUR 205 thousand)

1,000 €	2019	2018
Subsidiaries
Managing Directors	115	106

Board of Directors' remuneration

1,000 €		2019	2018
Parent company
Osmo Suovaniemi	Chairman	9	8
Franco Aiolfi	Member	9	8
Matti Härkönen	Member	9	8
Eero Lehti	Member	8	5
Stina Syrjänen	Member	–	5
Liu Feng	Member	8	5
Lea Paloheimo	Member	8	–
Total board remuneration		50	36

Liu Feng is the owner of Biohit HealthCare (Hefei) Co. Ltd, and he exercises control over the company.

Share-based payments
----------------------	--

1,000 €	2019	2018
Parent company
Management Teams	20	11
President & CEO	–	86
Key sales personnel	–	11

These correspond to 50.5% of all of the shares in the company and 88.9% of all of the votes.

Franco Aiolfi, a member of the Board of Directors, was the majority owner of Euroclone S.p.A 31.12.2019 via a company called Arsfin Consult S.r.l. Euroclone S.p.A. owned 92,807 series B shares. .

The Group's parent company and subsidiaries

	Group
Parent company: Biohit Oyj, Finland	ownership
Biohit Healthcare Ltd, United Kingdom	100%
Biohit Healthcare S.r.l., Italy	100%

Sales of goods and services to related party companies

1,000 €	2019	2018
Sales of goods
Biohit HealthCare (Hefei) Co. Ltd	2,537	2,751
Sales of services
Biohit HealthCare (Hefei) Co. Ltd	1,018	201
Total	3,555	2,953

In 2018, Biohit HealthCare (Hefei) Co. Ltd purchased 33.2% of all of the shares in Biohit Oyj, acquiring 29.5% of the voting rights based on shares. The transaction took place on 8 June 2018 and it resulted in Biohit HealthCare (Hefei) Co. Ltd obtaining substantial control over Biohit Oyj as per the IAS 28 standard. As a consequence, the transactions between 8 June 2018 and 31 December 2018 are classified as related party transactions and, as such, the sales of EUR 3.0 million for 2018 as referred to above are calculated according to this

Other operating expenses

1,000 €	2019	2018
Consultancy, administration and logistics fees (companies under the control of members of the Board of Directors)
Euroclone S.p.A., Franco Aiolfi	77	66
Biobrick, Franco Aiolfi	25	25
Oy Tech Know Ltd, Matti Härkönen	46	55
Total	148	146

30 COLLATERAL AND CONTINGENT LIABILITIES

1,000 €	2019	2018

Collateral pledged on the company's own behalf
Guarantees	4	4

Other liabilities	–
Leasing commitments:
Due for payment in one year		26
Due for payment in more than one year but
less than five years		14
Due for payment in more than five years	–	–
Total	–	40
	–
Other lease commitments:	–
Due for payment in one year		178
Due for payment in more than one year but
less than five years	–	86
Due for payment in more than five years	–	–
Total	–	264
	–
Total other liabilities		304
	–
Total collateral and contingent liabilities	4	307

31 EVENTS AFTER THE FINANCIAL PERIOD

The company's management is not aware of any material events since the balance sheet date.

3 KEY INDICATORS

3.1 INDICATORS OF FINANCIAL TRENDS

	IFRS	IFRS	IFRS	IFRS	IFRS
	2015	2016	2017	2018	2019
Net sales, 1,000 €	6,051	8,195	8,979	9,931	10,052
Change in net sales %	38.7	35.4	9.6	10.6	1.2
Operating profit/loss 1,000 €	–2,900	–3,356	6,356	–1,965	–1,412
Proportion of net sales (%)	–47.9	–41.0	70.8	–19.8	–14.0
Profit/loss before extraordinary items and taxes, 1,000 €	–2,903	–3,275	6,405	–2,024	–1,227
Proportion of net sales (%)	–48.0	–40.0	71.3	–20.4	–12.2
Profit/loss before taxes, 1,000 €	–2,903	–3,275	6,405	–2,024	–1,227
Proportion of net sales (%)	–48.0	–40.0	71.3	–20.4	–12.2
Return on equity (%)	–25.3	–31.1	45.8	–12.2	–8.1
Return on investments (%)	–22.8	–29.4	46.3	–10.9	–8.0
Equity ratio (%)	87.9	83.0	91.3	89.2	83.9
Investments in fixed assets , 1,000 €	832	115	7,232	13	48
Proportion of net sales (%)	13.8	1.4	80.6	0.1	0.5
Research and development expenditure, 1,000 €	1,914	1,852	1,209	1,290	1,232
Proportion of net sales (%)	31.6	22.6	13.5	13.0	12.3
Balance sheet total, 1,000 €	11,728	12,989	18,895	17,887	17,372
Average number of personnel	52	53	51	50	46

3.2 SHARE-SPECIFIC INDICATORS

	IFRS	IFRS	IFRS	IFRS	IFRS
	2015	2016	2017	2018	2019
Earnings per share, undiluted (EUR)	–0.20	–0.22	0.42	–0.14	–0.09
Shareholders' equity attributable to the owners of the parent
company (EUR per share)	0.72	0.73	1.16	1.06	0.97
Price-to-earnings ratio (P/E)	0.0	0.0	9.0	–21.1	–37.3
Dividend per share)
Repayment of capital per share
Dividend payout ratio (%)
Effective dividend yield (%)	0.00	0.00	0.00	0.00	0.00
Series B share price trend (EUR)
- average	5.45	5.57	5.44	4.37	2.99
- low	4.22	4.71	3.74	2.94	2.10
- high	7.14	6.42	6.85	6.20	3.70
- Prince 31 December	5.61	6.05	3.77	2.96	3.36
Market capitalisation EUR 1,000
(presuming the same market value for Series A shares
as for Series B shares)	80,495	88,926	56,123	44,258	50,553
Turnover of Series B shares EUR 1,000	4,014	2,159	3,302	8,616	3,362
- proportion of the total (%)	37.0	19.9	27.7	71.9	27.9
Average ex-rights adjusted number of
shares	14,276,519	14,685,071	14,764,411	14,901,904	15,005,253
- taking into consideration the diluting effect of options and
convertible bonds	14,703,579	15,052,131	14,943,161	15,015,256	15,005,253
Ex-rights adjusted number of
shares at the end of the financial period	14,348,533	14,698,533	14,886,843	14,952,041	15,045,593
- taking into consideration the diluting effect of options and
convertible bonds	14,775,593	15,065,593	15,065,593	15,065,593	15,045,593

taking into consideration the diluting effect of options and convertible bonds

4 SHARES AND SHAREHODLERS

SHARE PRICE AND VOLUME 2019

SHAREHOLDINGS BY OWNER GROUP 31 DECEMBER 2019

	Number of owners		Number of owners
Series A shares	shares	%	shares	%
1. Companies	1	11.1	24,990	0.8
2. Households	8	88.9	2,950,510	99.2
Shares on the waiting list			0	0.0
Total number of Series A shares	9	100.0	2,975,500	100.0

	Number of owners		Number of owners
Series B shares	shares	%	shares	%
1. Households	6,732	96.6	6,058,326	50.2
2. Financial and insurance institutions	13	0.2	362,100	3.0
3. Companies and housing companies	188	2.7	667,203	5.5
4. Non-profit organisations	8	0.1	3,481	0.0
5. Public corporations	0	0.0	0	0.0
6. Nominees and foreign owners	30	0.4	4,123,391	34.2
In joint and clearing accounts		0.0	855,592	7.1
Total number of Series B shares	6,971	100.0	12,070,093	100.0
Total number of Series A and Series B
shares	6,980		15,045,593

	Number of	Number of
Series A shares	owners shares	%	owners shares	%
1–1,000	0	0.0	0	0.0
1,001–10,000	5	55.6	25,000	0.8
10,001–100,000	2	22.2	82,190	2.8
More than 100,001	2	22.2	2,868,310	96.4
Total number of Series A shares	9	100.0	2,975,500	100.0

	Number of owners	Number of owners
Series B shares	shares	%	shares	%
1–1,000	5,949	85.3	1,535,963	12.7
1,001–10,000	893	12.8	2,644,265	21.9
10,001–100,000	125	1.8	3,024,822	25.1
More than 100,001	4	0.1	4,009,451	33.2
Shares in joint and clearing accounts	0	0.0	855,592	7.1
Total number of Series B shares	6,971	100.0	12,070,093	100.0
Total number of Series A and Series B
shares	6,980		15,045,593

LARGEST REGISTERED SHAREHOLDERS 31 DECEMBER 2019

			Total
10 largest owners in terms of the	Series A	Series B	number of
number of shares	shares	shares	shares	%
Biohit Healthcare (Hefei) Co., Ltd.	850,000	4,095,415	4,945,415	32.9
Suovaniemi Osmo Antero	2,018,310	0	2,018,310	13.4
Härkönen Matti	57,200	267,965	325,165	2.2
Oy Etra Invest Ab	0	200,000	200,000	1.3
Interlab Oy	0	130,000	130,000	0.9
Suovaniemi Vesa Jukka Markku	0	85,353	85,353	0.6
Syrjälä Pekka	0	79,100	79,100	0.5
Harmes Arjo	0	74,500	74,500	0.5
Jaakkola Sami Juhani	0	72,883	72,883	0.5
Ruusila Ari Tapio	0	70,000	70,000	0.5

			Total
10 largest owners in terms of the	Series A	Series B	number of
number of votes	shares	shares	shares	%
Suovaniemi Osmo Antero	2,018,310	0	40,366,200	56.4
Biohit Healthcare (Hefei) Co., Ltd.	850,000	4,095,415	21,095,415	29.5
Härkönen Matti	57,200	267,965	1,411,965	2.0
Oy Tech Know Ltd	24,990	43,600	543,400	0.8
Oy Etra Invest Ab	0	200,000	200,000	0.3
Interlab Oy	0	130,000	130,000	0.2
Suovaniemi Vesa Jukka Markku	0	85,353	85,353	0.1
Syrjälä Pekka	0	79,100	79,100	0.1
Harmes Arjo	0	74,500	74,500	0.1
Jaakkola Sami Juhani	0	72,883	72,883	0.1

Senior management ownership 31 December 2019

On 31 December 2019, the members of the Board of Directors and President & CEO owned a total of 2,950,500 Series A shares and 4,653,533 Series B shares, either directly or through companies under their control. These correspond to 50.5 per cent of all of the shares in the company and 88.9 per cent of all of the votes.

Franco Aiolfi, a member of the Board of Directors, was the majority owner of Euroclone S.p.A. via a company called Arsfin Consult Euroclone S.p.A. owned 92,807 series B shares on 31 December 2019.

5 FORMULAE FOR CALCULATING KEY INDICATORS

Return on equity, %	Return on equity, % shareholders' equity (average for the year)	× 100
Return on investments, %	profit before extraordinary items + interest and other financial expenses balance sheet total - interest-free liabilities (average for the year)	× 100
Equity ratio, %	shareholders' equity on the balance sheet balance sheet total - advances received	× 100
Earnings per share (EUR)	Earnings per share (EUR) average number of ex-rights shares during the period
Shareholders' equity per share (EUR)	shareholders' equity on the balance sheet number of shares on the balance sheet date
Dividend per share	dividend distributed for the financial period number of shares on the balance sheet date
Dividend payout ratio, %	Dividend per share Dividend per share	× 100
Effective dividend yield , %	Dividend per share last transaction rate in the financial period	× 100
Price-to-earnings ratio (P/E)	last transaction rate in the financial period earnings per share

The new instructions issued by the European Securities and Markets Authority (ESMA) on Alternative Performance Measures (APMs) took effect for the 2016 financial period. In conjunction with the transition to an income statement model based on expense types, Biohit will present APMs to describe the financial development of its business and improve comparability between different periods. APMs should not be considered substitutes for the key indicators specified in the IFRS norms for financial statements. The operational key indicators have been adjusted for certain measurement items that do not constitute part of ordinary business activities or that do not affect cash flow during the period but that affect comparability. The items that affect comparability and the APMs used by Biohit Oyj are defined as follows:

Items that affect comparability:

Certain business transactions that do not constitute part of ordinary business activities or measurement items that do not affect cash flow but that have a significant effect on the income statement for the period have been adjusted for items that affect comparability. This items arise through non-recurring transactions such as:

Asset impariments
Asset sales or purchases
Expense entries for benefits in accordance with IFRS 2

In addition, Biohit Oyj presents the following APMs:

EBITDA (EUR) = operating profit + depreciation and impairment

Operative EBITDA (EUR) = operating profit + depreciation, impairment - items affecting comparability

Free cash flow(FCF) (EUR) = Cash flow from operating activities - Investments and tangible and intangible assets + Revenue from disposal of tangible and intangible assets

PARENT COMPANY'S INCOME STATEMENT (FAS)

€ 1,000	Note	01 Jan - 31 Dec 2019	01 Jan - 31 Dec 2018

Net sales	2	7,422	7 427
Change in inventories of finished and unfinished
products		70	151
Other operating income	3	495	205
Materials and services	4	–2,410	–2,728
Personnel expenses	5	–2,725	–2,780
Other operating expenses	6	–2,649	–2,911
EBITDA		202	–635
Depreciation and amortization	7	–1,711	–1,715
Operating profit/loss		–1,509	–2,350
Financial income and expenses	9	511	849
Profit/loss before appropriations and taxes		–998	–1,502
Withholding tax	10	–119	–14
Profit/loss for the financial period		–1,117	–1,516

PARENT COMPANY'S BALANCE SHEET (FAS)

€ 1,000	Notes	31 Dec 2019	31 Dec 2018

Assets
Non-current assets
Intangible assets	11	3,163	4,736
Tangible assets	12	410	508
Investments
Shares in Group companies	13	31	232
Other investments	13	2	1
Total fixed assets		3,606	5,477

Current assets
Inventories	14	783	699
Long-term receivables	15	312	255
Short-term receivables	15	2,584	1,822
Financial securities	16	7,984	7,992
Cash at bank and in hand	18	998	912
Total current assets		12,662	11,680

TOTAL ASSETS		16,267	17,157

€ 1,000	Notes	31 Dec 2019	31 Dec 2018
Liabilities and shareholders' equity
Shareholders' equity
Share capital	19	2,350	2,350
Fair value reserve	19	1,395	1,505
Invested unrestricted equity found	19	4,042	3,829
Retained earnings	19	7,495	9,011
Profit/loss for the financial period	19	–1,117	–1,516
Total shareholders' equity		14,165	15,179
Liabilities
Long-term liabilities	20	373	719
Short-term liabilities	22	1,729	1,259
Total liabilities		2,102	1,978
TOTAL LIABILTIES AND SHAREHOLDERS' EQUITY		16,267	17,157

PARENT COMPANY'S CASH FLOW STATEMENT

1,000 € Note	2019	2018
Cash flow from operating activities:
Profit/loss before appropriations and taxes	–998	–1,502
Adjustments:
Planned depreciation	1,711	1,715
Unrealised exchange rate gains and losses	–	–1
Other income and expenses unconnected to payment	–148	1
Financial income and expenses 9	–511	–849
Change in working capital:
Increase (-)/decrease (+) in short-term interest-free trade receivables	–843	–106
Increase (-)/decrease (+) in inventories	–84	–150
Increase (+)/decrease (-) in short-term interest-free liabilities	416	292
Interest paid and payments on other operating financial expenses	–71	–71
Dividends received	321	895
Income and interest received from business activities	175	136
Cash flow from operating activities	–31	361
Cash flow from operating activities
Investments in tangible and intangible assets	–40	–10
Revenue from disposal of tangible and intangible assets	–	–2
Investments in other instruments	–1,497	-2,112
Revenue from disposal of other investments	1,462	2,131
Loans	–57	–
Cash flow from investments	–132	7
Cash flow from financing activities:
Paid share issue	213	148
Repayment of long-term loans	–17	–17
Cash flow from financing activities	196	131
Increase (+)/decrease (-) in cash and cash equivalents	33	500
Cash and cash equivalents at the beginning of the period	912	413
Cash and cash equivalents transferred with the merger	53	–
Cash and cash equivalents at the end of the period 18	998	912

NOTES TO THE PARENT COMPANY'S FINANCIAL STATEMENTS

1 ACCOUNTING PRINCIPLES

When preparing the financial statements in accordance with good accounting practices, the company's senior managers are called upon to make estimates and assumptions that affect the content of the financial statements. The outcomes may differ from these estimates.

The parent company's financial statements have been prepared in accordance with the Finnish Accounting Act.

The financial statements present figures in thousands of euros based on the original values of business transactions, with the exception of financial securities, a component of current assets, which are measured at fair value.

Valuation of property, plant and equipment

Property, plant and equipment are recognised on the balance sheet at acquisition cost, less received contributions, planned depreciation and impairments. Planned depreciation is calculated using a straight-line model based on the useful life of the asset.

The planned depreciation periods are as follows:
Intangible rights	3–10 years
Other long-term expenses	5–10 years
Plant and equipment	3–10 years

Valuation on inventories

Inventories are presented in accordance with the FIFO principle at acquisition cost or replacement cost or likely sale price, whichever is lower. The acquisition cost of inventories includes variable costs as well as the allotted proportion of the fixed expenses of purchasing and manufacturing.

Valuation of financial securities

Financial securities, which belong to current assets, are measured at fair value in accordance with section 5.2a of the Finnish Accounting Act. The fair value of investments is determined based on price quotations on active markets, i.e., the buy quotation on the closing date of the financial period. Unrealised profits and losses due to changes in the fair value of money market investments are recognised in the income statement under financial income and expenses in accordance with the Group's updated accounting policies, which took effect at the beginning of 2018. In the comparison period (2017), they were recognised on the balance sheet in the fair value reserve and on the income statement under financial income and expenses in the period when they were realised. Investments recognised via the fair value reserve consist solely of the equity investment in the unlisted shares in Genetic Analysis AS.

Research and development expenditure

Research expenses are recognised as annual expenses in the year in which they were incurred.

Principle for revenue recognition

When calculating net sales, indirect sales taxes and discounts are deducted from sales revenues. Sales of work performances are recognised when they are handed over.

Maintenance and repairs

Maintenance and repair expenses are recognised as expenses for the financial period. The costs of renovating leased offices are capitalised under other long-term expenses and are subject to straight-line depreciation for the remained for the lease period.

Pensions

The company's statutory pension cover and any applicable additional benefits is insured by a pension insurance company. Pension expenses are recognised on the basis of work performed by employees during working hours.

Deferred taxes

No deferred taxes have been recognised on the balance sheet. In accordance with general guidelines issued by the Accounting Board on 12 September

2006, the amounts of deferred taxes that must be entered into the balance sheet are presented in the notes, along with the amounts of tax liabilities and assets that should not be entered into the balance sheet because they are unlikely to be realised.

Items denominated in foreign currencies

Receivables and liabilities in foreign currencies have been translated into euros at the exchange rate quoted by the European Central Bank on the balance sheet date. Translation differences have been recognised through profit and loss.

2 NET SALES BY BUSINESS AREA

1,000 €	2019	2018
Diagnostics	7,422	7,427
Total	7,422	7,427

NET SALES BY MARKET AREA

1,000 €	2019	2018
Finland	405	438
Europe, other	1,351	1,153
North and South America	209	158
Asia	3,897	4,682
Other countries	1,561	996
Total	7,422	7,427

3 OTHER OPERATING INCOME

1,000 €	2019	2018
From Group companies	306	188
Others	189	17
Total	495	205

In 2019, other operating income includes Finio Oy's merger profit EUR 149 thousand.

4 MATERIALS AND SERVICES

1,000 €	2019	2018
Purchases during the financial period	2,424	2,726
Change in inventories	–13	2
Total materials and supplies	2,410	2,728
Total materials and services	2,410	2,728

5 PERSONNEL EXPENSES AND NUMBER OF PERSONNEL

1,000 €	2019	2018
Salaries	2,339	2,404
Pension expenses	353	345
Other personnel expenses	33	32
Total personnel expenses	2,725	2,780

In the financial period, the parent company

employed an average of	2019	2018
Office personnel	38	42
Average number of personnel	38	42
Number of personnel at the end of the financial period	38	41

6 MATERIALS AND SERVICES

1,000 €	2019	2018
Travel expenses and other personnel expenses	230	320
Rents and maintenance expenses	285	299
Sales and marketing expenses	718	852
Other external services	895	942
Change in value of trade receivables	12	13
Other operating expenses	510	486
Total	2,649	2 911

7 DEPRECIATION AND IMPAIRMENT

1,000 €	2019	2018
Intangible assets	1,573	1 570
Plant and equipment	138	145
Total	1,711	1 715

8 AUDITORS' FEES

1,000 €	2019	2018
Companies belonging to the
PricewaterhouseCoopers chain
Auditors' fees	75	85
Assignments according Auditing Act 1.1,2 §	5	10
Other services	4	9
Total fees paid to the auditor	84	104

Assignments relating Auditing Act 1.1,2 § included for example statements regarding option program and mergers.

Other services in 2019 included expert services regarding IFRS 16 implementation and other consulting services.

Other services in 2018 included expert services related to amending the articles of association and the effects of adopting IFRS 16, IFRS 15 and IFRS 9 implementation and other consulting services.

9 FINANCIAL INCOME AND EXPENSES

1,000 €	2019	2018
Dividend income
From Group companies	321	895
Total dividend income	321	895
Total dividend income
From Group companies	6	6
From others*	159	152
Other interest and financial income	166	158
Total financial income	486	1,053
Interest expenses and other financial expenses
To Group companies	–	–2
To others	24	–202
Total financial expenses	24	–204
Total financial income and expenses	511	849
Financial income and expenses include foreign
exchange gains/losses (net)	0	0

The items above operating profit include foreign exchange losses/gains (net) or EUR 14 thousand (EUR -5 thousand)

10 INCOME TAXES

1,000 €	2019	2018
Withholding tax	119	14
Total	119	14

11 INTANGIBLE ASSETS

2019

	Intangible
1,000 €	rights	Total
Acquisition cost at the beginning of the
financial period	7,942	7,942
Acquisition cost at the end of the
financial period	7,942	7,942

Accumulated depreciation and
impairment in the financial period	–3,205	–3,205
Depreciation and impairment in the
financial period	–1,573	–1,573
Accumulated depreciation at the end of
the financial period	–4,778	–4,778

Book value at the beginning of the
financial period	4,736	4,736
Book value at the end of the financial
period	3,163	3,163

2018

	Intangible
1,000 €	rights	Total
Acquisition cost at the beginning of the
financial period	7,942	7,942
Acquisition cost at the end of the
financial period	7,942	7,942
Accumulated depreciation and
impairment in the financial period	–1,636	–1,636
Depreciation and impairment in the
financial period	–1,570	–1,570
Accumulated depreciation at the end of
the financial period	–3,205	–3,205
Book value at the beginning of the
financial period	6,306	6,306
Book value at the end of the financial
period	4,736	4,736

12 TANGIBLE ASSETS

2019

	Plant and
1,000 €	equipment	Total
Acquisition cost at the beginning of the
financial period	1,519	1,519
Increases	40	40
Acquisition cost at the end of the
financial period	1,559	1,559
Accumulated depreciation and
impairment in the financial period	–1,011	–1,011
Depreciation in the financial period	–138	–138
Accumulated depreciation at the end of
the financial period	–1,149	–1,149
Book value at the beginning of the
financial period	508	508
Book value at the end of the financial
period	410	410

2018

	Plant,and
1,000 €	equipment	Total
Acquisition cost at the beginning of the
financial period	1,570	1,570
Increases	32	32
Decreases	–83	–83
Acquisition cost at the end of the
financial period	1,519	1,519
Accumulated depreciation and
impairment in the financial period	–927	–927
Accumulated depreciation of decreases	61	61
Depreciation in the financial period	–145	–145
Accumulated depreciation at the end of
the financial period	–1,011	–1,011
Book value at the beginning of the
financial period	643	643
Book value at the end of the financial
period	508	508

13 INVESTMENTS

Shares 2019 1,000 € Group companies Others Total Book value at the beginning of the financial period 232 1 233 Increases - 1 1 Decreases -201 – –201 Book value at the end of the financial period 31 2 32 Shares 2018 1,000 € Group companies Others Total Book value at the beginning of the financial period 232 1 233 Book value at the end of the financial period 232 1 233

14 INVENTORIES

1,000 €	2019	2018
Materials and supplies	409	296
Work in progress	19	90
Finished products/goods	355	314
Total inventories	783	699

15 RECEIVABLES

1,000 €	2019	2018
Long-term receivables
Receivables from Group companies
Loan receivables	255	255
Other receivables
Loan receivables	57	–
Total non-current receivables	312	255

Short-term receivables
Receivables from Group companies
Trade receivables	323	172
Other receivables	–	57
Accured income	6	6
Other receivables
Trade receivables	1,986	1,244
Other receivables	145	208
Accured income	123	134
Total curret receivables	2,584	1,822

16 FINANCIAL SECURITIES

Assets measured at fair value
1,000 €	2019	Level 1	Level 2	Level 3
Traded securities and investment to unlisted
company *	7,984	1,250	2,911	3,823

* Genetic Analysis AS 3 724 thousand euros and one of the corporate loans 99 thousand euros on the level 3

Assets measured at fair value

1,000 €	2018	Level 1	Level 2	Level 3
Traded securities and
investment to unlisted
company*	7,992	0	4,130	3,862

* Genetic Analysis AS 3 862 thousand euros on the level 3

Financial securities consist of fixed-income investments, corporate loans and money market investments.

17 SENSITIVITY ANALYSIS OF THE CALCULATION OF THE FAIR VALUE

PRINCIPLES OF FAIR VALUE MEASUREMENT REGARDING INVESTMENT CATEGORIZED AS FAIR VALUE TROUGH OTHER COMPREHENSIVE INCOME

The most significant estimation on the level 3 input data and related sensitivity analysis is described in the table below.

	2019
Fair value of the investment (1,000 €)	3,724
WACC, %	15
Termainal growth, %	2

The company has used the cutter for the budget prepared by GA's management which has reduced forecasted revenue and operating profit accordingly.

When the cutter is between 0-62% and all the other factors are unchanged, investment value is higher than its current value on the balance sheet 31.12.2019.

GENETIC ANALYSIS AS SENSITIVITY ANALYSIS

	Impact on the	Updated fair value
1,000 €	fair value	31 Dec 2019
WACC -2 %-units, impact on investment's value	+1,003	4,727
WACC +2 %-units, impact on investment's value	–644	3,080

Terminal growth - 2 %-units	–350	3,374
Terminal growth + 2 %-units	+581	4,305

SENSITIVITY ANALYSIS OF THE CHINA PATENTS FAIR VALUE

1,000 €	2019
In 2019 financial statements value of Hefei patent is 3.0 million euros. The patent is depreciated on a straight-line basis until the end of the year 2021. Impairment testing will be performed on the value of patents whenever there is an indication of impairment. An impairment test was conducted in conjunction with the 2019 financial statements. No impairment was recognised based on the impairment test. There is uncertainty concerning the future cash flows used for impairment testing as illustrated by the sensitivity analysis below for the one factor:
Decrease in demand for GastroPanel® by 20% and impact on the value of patents	–400
Decrease in demand for GastroPanel® by 40% and impact on the value of patents	–1,100

Royalty-based cash flow is dependent on the growth of the Chinese market, successful sales work by the distributor and building up the brand. The patent is depreciated on a straight-line basis until the end of the year 2021.

18 CASH AND CASH EQUIVALENTS

1,000 €	2019	2018
Cash in hand and at bank	998	912

19 SHAREHOLDERS' EQUITY

1,000 €	2019	2018
Share capital 1 January	2,350	2,350
Share capital 31
December	2,350	2,350

Fair value reserve 1 January	1,505	914
Increases	–	632
Change in accounting policies, investments	–	–41
Decreases	–110	–
Fair value reserve 31 December	1,395	1,505

Invested unrestricted equity fund 1 January	3,829	3,681
Subscription of options	213	148
Invested unrestricted equity fund 31 December	4,042	3,829

Retained earnings 1 January	7,495	8,970
Change in accounting policies, investments	–	41
Retained earnings 31 December	7,495	9,011
Reported profit/loss for the financial
period	–1,117	–1,516
Total shareholders' equity	14,165	15,179

Shares and voting rights

Biohit's shares are divided into Series A and Series B shares. The series from each other in that each Series A share entitles its holder to twenty (20) votes at general meetings, while each Series B share carries one (1) vote. 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. When this regulation is applied, the nominal value of the shares is taken to be EUR 0.17, which was the nominal value of the company's shares when it decided to discontinue using nominal values for shares.

Calculation of distributable equity 31 December	2019	2018
Retained earnings	7,495	9,011
Profit/loss for the
financial period	–1,117	–1,516
Invested unrestricted equity fund	4,042	3,829
Total	10,420	11,324

	2019			2018
Parent company's share capital structure	shares	% of shares	% of votes	shares
Series A shares (20 votes
per share)	2,975,500	19.8	83.1	2,975,500
Series B shares (1 vote
per share)	12,070,093	80.2	16.9	11,976,541
Total	15,045,593	100.0	100.0	14,952,041

The company's share capital is EUR 2,350,350.81. The company does not hold any of its own shares. Based on a resolution of the AGM held on 25 April 2018, the Board of the company is authorised to decide on the issue of shares and to issue the special rights referred to in Chapter 10 of the Limited Liability Companies Act so that the maximum number of new Series B shares to be issued pursuant to the special rights is 3,000,000, which corresponds to approximately 25.0% of all of the company's Series B shares. In 2018, the company did not issue any new shares under the authorisation granted on 25 April 2018.

20 LONG-TERM LIABILITIES

1,000 €	2019	2018
Loans from Group companies	–	301
Loans from financial institutions	25	42
From others	349	376
Total	373	719

Long-term liabilities from others are deferred tax liabilities.

21 DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax liabilities

1,000 €	2019	2018
Assets classed as available for sale	349	376
Total	349	376

The company only recognises fair value changes in Genetic Analysis AS in the fair value reserve, and the deferred tax related to this is presented on the balance sheet.

The deferred tax assets due to confirmed losses have not been recognised on the balance sheet. Confirmed losses, including the loss for the 2019 financial period, total EUR 21.2 million of the loss is in Finland (2019: EUR 1.4 million, 2018: EUR 2.2 million, 2009-2017: EUR 17.5 million)

22 SHORT-TERM LIABILITIES

1,000 €	2019	2018
Loans from financial institutions, current proportion	17	17
Advances received	2	73
Trade payables	746	433
Accruals and deferred
income	760	536
Other liabilities	204	164
Liabilities to Group companies
Accruals and deferred income	–	37
Total short-term liabilities	1,729	1,259

The significant items of accruals and deferred income are salary-related deferred items valued at EUR 602 thousand (EUR 355 thousand).

23 PLEDGES, CONTINGENT LIABILITIES AND OTHER LIABILITIES

1,000 €	2019	2018
Debts for which mortgages have been pledged
The company has not pledged any collateral.
Leasing commitments
Payable in the next financial period	18	8
Payable later	24	2
Total	42	10
Rental commitments
Payable in the next financial period	87	171
Payable later	–	86
Total	87	257
Other contingent liabilities
Guarantees	4	4

Leasing and rental fees mainly consist of fixed-term leasing and rental agreements lasting longer than one year.

The company has no contingent liabilities on behalf of Group companies.

BOARD OF DIRECTOR'S PROPOSAL REGARDING THE DISTRIBUTION OF PROFITS

On 31 December 2019, the parent company's distributable assets (unrestricted equity) amounted to EUR 10,420,384.40, including the loss for the financial period of EUR 1,116,686.74. The Board of Directors proposes to the Annual General Meeting that the company distribute no divided for the last financial year and that the profit for the financial year be transferred to retained earnings.

Helsinki, 17 February 2020

Osmo Suovaniemi Franco Aiolfi Liu Feng Chairman of the Board of Directors Member of the Board of Directors Member of the Board of Directors

Matti Härkönen Eero Lehti Lea Paloheimo Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors

Semi Korpela President & CEO

Auditor's statement

A statement has been issued today on the completed audit.

Helsinki, 21 February 2020

PricewaterhouseCoopers Oy Firm of auditors

Pasi Karppinen Authorised Public Accountant

AUDITOR'S REPORT

To the Annual General Meeting of Biohit Oyj

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OPINION

In our opinion

the consolidated financial statements give a true and fair view of the group's financial position and financial performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements in Finland and comply with statutory requirements.

Our opinion is consistent with the additional report to the Board of Directors.

What we have audited

We have audited the financial statements of Biohit Oyj (business identity code 0703582-0) for the year ended 31 December 2019. The financial statements comprise:

the consolidated balance sheet, consolidated comprehensive income statement, statement of changes in consolidated shareholders' equity, consolidated cash flow statement, and notes to the consolidated financial statements, including a summary of significant accounting policies
the parent company's balance sheet, income statement, statement of cash flows and notes.

BASIS FOR OPINION

We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

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

Independence

We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and to the group companies are in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 2.9 to the Financial Statements.

OUR AUDIT APPROACH

Summary

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Overall group materiality	€ 180 thousand (€ 179 thousand in 2018)
How we determined it	We used total assets as benchmark and 1 % rule of thumb to determine overall group materiality.
Rationale for the materiality benchmark applied	Biohit group's business has been clearly loss making, excluding disposal gain on Chinese joint venture in 2017. Based on our as sessment the total assets provide a more solid base for deter mining the materiality than the commonly used income statement based benchmarks.

How we tailored our group audit scope

We tailored the scope of our audit, taking into account the structure of the group, the accounting processes and controls, and the industry in which the group operates. Biohit Oyj is a Finnish biotechnology company operating on global markets, which has foreign subsidiaries in Great Britain and Italy.

We determined the type of work that needed to be performed at group companies. This work was performed by the group audit team. Audit was performed for the parent company and for Biohit Healthcare Ltd, UK. For the Italian subsidiary, we performed selected audit procedures on specified account balances as well as analytical procedures. In addition, we performed audit procedures on the group level.

By performing the procedures above we have obtained sufficient and appropriate evidence regarding the financial information of the Group as a whole to provide a basis for our opinion on the consolidated financial statements.

Key audit matter in the audit of the group How our audit addressed the key audit matter

CUT-OFF OF REVENUE RECOGNITION

Refer to the financial statements accounting principles and the financial statements note 2.3

Biohit Oyj is a Finnish Biotechnology company operating on global markets. Biohit's product portfolio consists of diagnostic tests, analysis systems, products that bind carcinogen acetaldehyde in monoclonal antibodies and service laboratory operations. The Group's revenue is predominately generated from distribution agreements signed with several distributors who then sell the products further to healthcare operators.

Revenue from distribution agreement-based product sales are recognized at a point of time when the control has transferred to a distributor in accordance with delivery terms.

For other sources of revenue there is no material risk of misstatement associated with the timing of revenue recognition.

In revenue recognition there is a risk that revenue in the financial statements is recognized in an incorrect period due to either errors or fraud.

We gained an understanding of the revenue recognition process and we performed substantive audit procedures to ensure revenue is recorded in the correct period. Our substantive audit procedures included:

testing a sample of selected distribution agreements in order to ensure the correctness of revenue recognition criteria applied
testing revenue transaction that occurred close to the year end
testing certain revenue related balances recognised in the balance sheet
Testing a sample of revenue transactions occurred during the year
Testing the basis for selected manual journal entries posted in revenue accounts

VALUATION OF GENETIC ANALYSIS AS SHARES

Reference to the accounting principles and the financial statements note 2.17 and 2.18.

As per December 31, 2019, the value of Genetic Analysis shares amounts to 3,7 million euros both in the parent company's and in the group's balance sheet. Genetic Analysis AS shares are classified as short term financial assets. The shares are valued at fair value through other comprehensive income

As Genetic Analysis AS is an unlisted entity, the fair value is measured using alternative information available. In previous years the value was based on marked-based transactions between third parties. As sufficiently recent transactions in 2019 were not available, the company used discounted cashflow method in order to determine the value of the shares in 2019 financial statements. The valuation involves significant management judgement in terms of future revenue, future profit development and financing, among other things.

Due to the estimation uncertainty and significance of the investment, we have determined valuation of the Genetic Analysis AS investment to be key audit matter in the audit of the financial statements.

This matter is a significant risk of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014.

Key audit matter in the audit of the group How our audit addressed the key audit matter

We have assessed the appropriateness of the valuation of the Genetic Analysis AS shares. Our substantive audit procedures included:

we discussed with the management of Genetic Analysis AS their view on the future developments and possible factors impacting the valuation of their shares
we obtained the supporting evidence that Biohit used in valuation of the shares and agreed the Company´s valuation calculation to the supporting documentation.
we used our own auditor's expert and with his assistance, we generated our own comparative calculation of the value of the shares, which we compared to the client's calculation results
we assessed the contents of the Notes disclosures relating to the valuation of Genetic Analysis AS shares

Key audit matter in the audit of the group How our audit addressed the key audit matter

VALUATION OF INTANGIBLE ASSETS (PATENTS)

Reference to the financial statements accounting principles and the financial statement notes 2.14 and 2.18.

As part of disposal of Biohit HealthCare (Hefei) Co. Ltd in 2017, certain intellectual property rights (patents) were recognized on the balance sheet as a result of the transaction. Balance sheet value of those patents amounts to 3,0 million euros as per December 31, 2019. The patents are amortized straight-line by the end of 2021.

The value of patents is subject to impairment testing always when there is indication of impairment. An impairment test was performed in connection with preparation of 2019 financial statements. Based on the impairment test no impairment was recognized.

In the valuation of the patents there is significant management judgement involved relating to the future royalties from Biohit Healtcare Hefei. Due to the management judgement and estimation uncertainty related to the valuation of the patents, we consider this as a key audit matter for the audit of the financial statements.

We have assessed the appropriateness of the valuation of the patents at the year-end. As part of the valuation assessment we have performed the following audit procedures:

we evaluated the reliability of estimates used by management by comparing forecasts made in prior years to actual outcomes
we assessed key inputs in the calculations such as revenue growth, EBITDA and discount rate, by reference to management's forecasts
we tested the mathematical accuracy of the calculations
we compared the recoverable amount of the patents to its carrying value in the financial statements.

The above-mentioned Key audit matters Valuation of intangible assets (patents) and Valuation of Genetic Analysis AS shares and are also key audit matters with respect to our audit of the parent company financial statements. The value of patents amounted to 3,0 million euros and the value of Genetic Analysis shares amounted to 3,7 million euros in the parent company's balance sheet as of December 31, 2019. Our audit procedures were aligned with the ones presented above.

The valuation of Genetic Analysis shares is a significant risk of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 also in the parent company financial statements.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR FOR THE FINANCIAL STATEMENTS

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, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or to cease operations, or there is no realistic alternative but to do so.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 parent company's or the group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of the Board of Directors' and the Managing Director's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company's or the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

OTHER REPORTING REQUIREMENTS

APPOINTMENT

We were first appointed as auditors by the annual general meeting on 14 April 2014. Our appointment represents a total period of uninterrupted engagement of 6 years.

OTHER INFORMATION

The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report and the Annual Report is expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.

In our opinion

the information in the report of the Board of Directors is consistent with the information in the financial statements
the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Helsinki, 21 February 2020

PricewaterhouseCoopers Oy

Authorised Public Accountants

Pasi Karppinen Authorised Public Accountant (KHT)

BIOHIT OYJ Laippatie 1 00880 Helsinki Finland Tel: +358 9 773 861 [email protected] www.biohithealthcare.com

AI Terminal

Biohit Oyj

3304_10-k_2020-03-27_1e41451e-a2a5-447b-a6b9-6b05174885ad.pdf

CONTENTS

BIOHIT OYJ IN BRIEF

HIGHLIGHTS OF THE YEAR 2019

SATYA ABADI PHARMA TO BECOME ACETIUM® LOZENGE'S DISTRIBUTOR IN INDONESIA

GASTROPANEL® 14 929 PEOPLE STUDY IN CHINA

ACETIUM® AVAILABLE IN THAILAND IN 2019

EUR10.1MILLION 83.9% NET SALES EQUITY RATIO

EUR +0.6 MILLION OPERATIVE EBITDA

NET SALES 2015-2019, MEUR

OUR PROFITABILITY IMPROVED

WE INCREASED OUR DISTIBUTION NETWORK

GASTROPANEL® QUICK TEST AND THE RESULTS OF THE CLINICAL STUDIES

CHINA, RUSSIA AND MIDDLE-EAST

SIGNIFICANT CONFIRMATORY EVIDENCE TO THE EXISTING DATA ON GASTROPANEL® BIOMARKERS AS PREDICTORS OF GASTRIC CANCER WAS PROVIDED.

OUTLOOK FOR 2020

-

STRATEGY 2019–2022

OUR STRATEGIC DECISIONS

SIMPLIFICATION AND STREAMLINING OF OPERATIONS AND SERVICES

CUSTOMER PERSPECTIVE

QUALITY FIRST

VISION: TO BE THE WORLD'S LEADING BIOTECHNOLOGY COMPANY IN OUR CHOSEN MARKETS OF THE DIGESTIVE TRACT. OUR CHOSEN SYNERGISTIC MARKETS FOR UNMET NEED ARE:

WE AIM TO INCREASE NET SALES PRIMARILY IN THE FOLLOWING AREAS:

MISSION: INNOVATING FOR HEALTH

INNOVATIVE PRODUCTS

GASTROPANEL® –A HEALTH TEST FOR YOUR STOMACH

ACETIUM® LOZENGE – QUIT SMOKING WITHOUT NICOTINE

1988–1999

2000–2009

2010

2011–2012

2015

2016 2017-2019

CORPORATE GOVERNANCE STATEMENT 2019

INTRODUCTION

RULES OBSERVED BY BIOHIT

BIOHIT'S ADMINISTRATIVE BODIES IN 2019

Annual General Meeting

Board of Directors

Board of Directors in 2019

Biohit Oyj's Board of Directors on 31 December 2019

Professor Osmo Suovaniemi (b. 1943), MD, PhD

Lea Paloheimo (b. 1951), PhD

Board committees

President & CEO

Semi Korpela (b. 1970)

Group Management Team

Jukka Kainulainen (b. 1982)

Ilari Patrakka, b.1980

Minna Mäki (b. 1969)

Daniela Söderström (b. 1987)

Management of subsidiaries

REMUNERATION STATEMENT Decision-making procedure concerning remuneration and main principles of remuneration

Remuneration of members of the Board of Directors

President & CEO and other company management

Pension plans

Remuneration and other benefits 2019

Companies under the control of members of the Board of Directors

Remuneration for the President & CEO

Remuneration for members of the Management Team (excluding the President & CEO)

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

Control environment

Risk assessment

Control measures

Disclosure policy

Monitoring

AUDIT 2019

AUDITOR AND AUDITOR'S FEES

RELATED-PARTY TRANSACTIONS

INSIDERS

BOARD OF DIRECTORS

OSMO SUOVANIEMI

Other relevant experience:

Other relevant experience:

Other relevant experience:

Other relevant experience:

b. 1972