Quarterly Report • Oct 30, 2018
Quarterly Report
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FIRST NINE MONTHS 2018
| € (thousands) | First nine months 2018 |
% | First nine months 2017 |
% | Change 2018/2017 |
% |
|---|---|---|---|---|---|---|
| Total revenue | 1,013,308 | 100.0 | 963,827 | 100.0 | 49,481 | 5.1 |
| Italy | 206,704 | 20.4 | 198,554 | 20.6 | 8,150 | 4.1 |
| International | 806,604 | 79.6 | 765,273 | 79.4 | 41,331 | 5.4 |
| € (thousands) | First nine months 2018 |
% of revenue |
First nine months 2017 |
% of revenue |
Change 2018/2017 |
% |
|---|---|---|---|---|---|---|
| Revenue | 1,013,308 | 100.0 | 963,827 | 100.0 | 49,481 | 5.1 |
| EBITDA(1) | 380,050 | 37.5 | 341,961 | 35.5 | 38,089 | 11.1 |
| Operating income | 336,969 | 33.3 | 307,502 | 31.9 | 29,467 | 9.6 |
| Net income | 237,877 | 23.5 | 219,806 | 22.8 | 18,071 | 8.2 |
(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
| € (thousands) | 30 September | 31 December | Change | % |
|---|---|---|---|---|
| 2018 | 2017 | 2018/2017 | ||
| Net financial position(2) | (462,710) | (381,780) | (80,930) | 21.2 |
| Shareholders' equity | 988,036 | 1,027,237 | (39,201) | (3.8) |
(2) Short‐term financial investments, cash and cash equivalents, less bank overdrafts and loans which include the measurement at fair value of hedging derivatives.
| € (thousands) | Third quarter | Change | ||||
|---|---|---|---|---|---|---|
| 2018 | % | Third quarter 2017 |
% | 2018/2017 | % | |
| Total revenue | 317,254 | 100.0 | 312,959 | 100.0 | 4,295 | 1.4 |
| Italy | 60,913 | 19.2 | 56,139 | 17.9 | 4,774 | 8.5 |
| International | 256,341 | 80.8 | 256,820 | 82.1 | (479) | (0.2) |
| € (thousands) | Third quarter 2018 |
% of revenue |
Third quarter 2017 |
% of revenue |
Change 2018/2017 |
% |
|---|---|---|---|---|---|---|
| Revenue | 317,254 | 100.0 | 312,959 | 100.0 | 4,295 | 1.4 |
| EBITDA(1) | 120,033 | 37.8 | 117,929 | 37.7 | 2,104 | 1.8 |
| Operating income | 105,038 | 33.1 | 104,304 | 33.3 | 734 | 0.7 |
| Net income | 73,689 | 23.2 | 72,819 | 23.3 | 870 | 1.2 |
(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
The financial results obtained in the first nine months of the year confirm the continued growth of the Group, with further improvement of the profitability. Consolidated revenue is € 1,013.3 million, up by 5.1% compared to the same period of the preceding year. International sales grow by 5.4%. EBITDA, at 37.5% of sales, is € 380.1 million, an increase of 11.1% over the first nine months of 2017. Operating income, at 33.3% of sales, is € 337.0 million, an increase of 9.6% over the same period of the preceding year. Net income, at 23.5% of sales, is € 237.9 million, an increase of 8.2% over the first nine months of 2017.
Net financial position at 30 September 2018 records a net debt of € 462.7 million compared to net debt of € 381,8 million at 31 December 2017. During the period own shares were purchased for an overall disbursement of € 169.8 million, dividends were distributed for an amount of € 87.1 million. Furthermore, the Italian company Natural Point S.r.l. was acquired for a value of € 75 million. Shareholders' equity is € 988.0 million.
In April an agreement with Mylan for the acquisition of the rights to Cystagon® (cysteamine bitartrate), indicated for the treatment of proven nephropathic cystinosis in children and adults, for certain territories, including Europe, was concluded. The product was previously commercialized by Orphan Europe (a Recordati group company) under license from Mylan. The definitive acquisition of the rights allows the Group to continue offering this life‐saving treatment to patients.
In June Recordati acquired 100% of the share capital of Natural Point S.r.l., an Italian company, based in Milan, active in the food supplements market. The company realized sales of € 15 million in 2017 and has an excellent profitability profile. The signing and closing of the transaction took place at the same time. Natural Point was established in 1993 with the objective of promoting a culture of healthy use of food supplements. It offers a wide portfolio of very efficacious supplements in highly bioavailable formulations, produced with safe active ingredients, to improve health and well‐being. The company's main product is a particular formulation of magnesium carbonate and citric acid that has the characteristic of being easily assimilated into the body, apart from its having an agreeable flavor.
Recordati is the exclusive global partner of NovaBiotics Ltd, a biotechnology company based in Aberdeen, Scotland, for the commercialization of Lynovex®, a first‐in‐class oral intervention for acute infectious exacerbations associated with cystic fibrosis (CF). Cystic fibrosis exacerbations are major contributors to the irreversible decline in lung function and overall health of people with CF. Treatments that increase recovery from exacerbations might reduce the damaging effects of exacerbations. Lynovex® is designated as an orphan drug in Europe and in the U.S. and is the first multi‐active therapy of its kind (anti‐infective, mucolytic, anti‐biofilm, antibiotic potentiating) to be developed specifically for alleviating the infectious trigger and symptoms of CF exacerbations. In July top line data from a recent clinical study (CARE CF 1) of oral Lynovex® in cystic fibrosis exacerbations was announced.
Net revenue in the first nine months of 2018 is € 1,013.3 million, up 5.1% over the same period of the preceding year and includes the consolidation of the sales of Seloken®, Seloken® ZOK and Logimax® for an amount of € 50.1 million in the first half of 2018, the consolidation as from 1 July 2018 of sales amounting to € 3.7 million generated by Natural Point S.r.l., the Italian company acquired in June, as well as an estimated negative currency exchange rate effect of € 39.1 million. Excluding these items growth would have been of 3.6%. International sales grow by 5.4% to € 806.6 million, which represent 79.6% of total sales. Pharmaceutical sales are € 982.6 million, up by 5.3% while pharmaceutical chemicals sales are € 30.7 million, down by 1.0%, and represent 3.0% of total revenues.
The Group's pharmaceutical business, which represents 97.0% of total revenue, is carried out in the main European markets, including Central and Eastern Europe, in Russia, Turkey, North Africa, the United States of America, Canada, Mexico, in some South American countries and in Japan through our own subsidiaries and in the rest of the world through licensing agreements with pharmaceutical companies of high standing.
The performance of products sold directly in more than one country (corporate products) during the first nine months of 2018 is shown in the table below.
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
% |
|---|---|---|---|---|
| Zanidip® (lercanidipine) | 95,611 | 96,103 | (492) | (0.5) |
| Zanipress® (lercanidipine+enalapril) | 46,120 | 53,708 | (7,588) | (14.1) |
| Urorec® (silodosin) | 76,141 | 69,532 | 6,609 | 9.5 |
| Livazo® (pitavastatin) | 34,395 | 29,193 | 5,202 | 17.8 |
| Seloken®/Seloken® ZOK/Logimax® (metoprolol/metoprolol+felodipine) |
73,845 | 22,659 | 51,186 | n.s. |
| Other corporate products* | 200,994 | 202,611 | (1,617) | (0.8) |
| Drugs for rare diseases | 162,989 | 161,266 | 1,723 | 1.1 |
* Include the OTC corporate products for an amount of € 77.6 million in 2018 and € 76.3 million in 2017 (+1.7%).
Zanidip® is a specialty containing lercanidipine, Recordati's original calcium channel blocker for the treatment of hypertension. Our lercanidipine based products are sold directly to the market by our own marketing organizations in Europe, including Central and Eastern Europe, in Russia, in Turkey and in North Africa. In the other markets they are sold by licensees, and in some of the above co‐marketing agreements are in place.
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
% |
|---|---|---|---|---|
| Direct sales | 51,333 | 53,319 | (1,986) | (3.7) |
| Sales to licensees | 44,278 | 42,784 | 1,494 | 3.5 |
| Total lercanidipine sales | 95,611 | 96,103 | (492) | (0.5) |
Lercanidipine direct sales are down by 3.7% mainly due to the reduction of sales in Algeria, realized directly by our French subsidiary, following importation restrictions on products for which there is local production. Sales increase mainly in Greece and in Germany. Sales to licensees, which represent 46.3% of total lercanidipine sales, are up by 3.5%.
Zanipress® is an original specialty also indicated for the treatment of hypertension developed by Recordati which consists of a fixed combination of lercanidipine with enalapril. This product is successfully marketed directly by Recordati and/or by its licensees in 30 countries.
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
% |
|---|---|---|---|---|
| Direct sales | 36,947 | 42,397 | (5,450) | (12.9) |
| Sales to licensees | 9,173 | 11,311 | (2,138) | (18.9) |
| Total lercanidipine+enalapril sales | 46,120 | 53,708 | (7,588) | (14.1) |
Direct sales of Zanipress® in the first nine months of 2018 are down by 12.9% mainly due to competition from generic versions of the product. Sales to licensees represent 19.9% of total Zanipress® sales and are down by 18.9% mainly due to lower sales to licensees in France.
Urorec® (silodosin) is a specialty indicated for the treatment of symptoms associated with benign prostatic hyperplasia (BPH). Currently the product has been successfully launched in 39 countries with sales of € 76.1 million in the first nine months of 2018, up 9.5% due to the good performance of the product in all main markets.
Sales of Livazo® (pitavastatin), a statin indicated for the reduction of elevated total and LDL cholesterol, in Spain, Portugal, Ukraine, Greece, Switzerland, Russia, other C.I.S. countries and Turkey, are € 34.4 million in the first nine months of 2018, up by 17.8% due to the performance of the product in Turkey and in all the other markets where it has been launched.
On 30 June 2017 the agreement with AstraZeneca for the acquisition of the rights to Seloken®/Seloken® ZOK (metoprolol succinate) and associated Logimax® fixed dose combination (metoprolol succinate and felodipine) treatments in Europe was concluded. Revenues generated by these products in the European countries covered by the agreement are consolidated as from 1 July 2017. In the first nine months of 2018 sales are of € 73.8 million. These products contribute significantly to the growth of our subsidiaries mainly in Germany, Poland, France, the Czech Republic and Romania.
In the first nine months of 2018 sales of other corporate products totaled € 201.0 million, down by 0.8% compared to the same period of the preceding year due mainly to competition from generic versions of the rupatadine based brands and to the negative exchange rate effect in Russia. Other corporate products comprise both prescription and OTC products and are: Lomexin® (fenticonazole), Urispas® (flavoxate), Kentera® (oxybutynin transdermal patch), TransAct® LAT (flurbiprofen transdermal patch), Rupafin®/Wystamm® (rupatadine), Lopresor® (metoprolol), Procto‐Glyvenol® (tribenoside), Tergynan® (fixed association of anti‐infectives) as well as CitraFleet®,
Casenlax®, Fleet enema, Phosphosoda®, Reuflor®/Reuteri® (lactobacillus Reuteri) and Lacdigest® (tilactase), gastroenterological products, Polydexa®, Isofra® and Otofa®, ENT anti‐infective products, the Hexa line of products indicated for seasonal disorders of the upper respiratory tract, Abufene® and Muvagyn® for gynecological use, Virirec® (alprostadil), Fortacin® (lidocaine+prilocaine) and Reagila® (cariprazine).
In the first nine months of 2018, our specialties indicated for the treatment of rare diseases, marketed directly throughout Europe, in the Middle East, in the U.S.A., Canada, Mexico, in some South American countries and in Japan and through partners in other parts of the world, generated sales of € 163.0 million, up by 1.1%. Sales in the United States of America are down by 10.0% due to competition from a generic version of Cosmegen® and to a negative currency exchange rate effect. Sales in the rest of the world grow by 12.9%.
The pharmaceutical sales of the Recordati subsidiaries, which include the abovementioned product sales, are shown in the following table.
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
% |
|---|---|---|---|---|
| Italy | 200,894 | 192,705 | 8,189 | 4.2 |
| Germany | 101,345 | 87,105 | 14,240 | 16.3 |
| France | 98,084 | 91,692 | 6,392 | 7.0 |
| Russia, other C.I.S. countries and Ukraine | 75,120 | 79,275 | (4,155) | (5.2) |
| U.S.A. | 75,060 | 83,359 | (8,299) | (10.0) |
| Spain | 64,655 | 59,615 | 5,040 | 8.5 |
| Turkey | 57,577 | 65,394 | (7,817) | (12.0) |
| Portugal | 30,994 | 30,114 | 880 | 2.9 |
| Other C.E.E. countries | 49,347 | 31,736 | 17,611 | 55.5 |
| Other Western European countries | 42,873 | 38,659 | 4,214 | 10.9 |
| North Africa | 31,732 | 31,210 | 522 | 1.7 |
| Other international sales | 154,920 | 141,937 | 12,983 | 9.1 |
| Total pharmaceutical revenue | 982,601 | 932,801 | 49.800 | 5.3 |
Both years include sales as well as other income.
Sales in countries affected by currency exchange oscillations are shown hereunder in their relative local currencies.
| Local currency (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
% |
|---|---|---|---|---|
| Russia (RUB) | 4,397,329 | 4,375,516 | 21,813 | 0.5 |
| Turkey (TRY) | 297,179 | 244,380 | 52,798 | 21.6 |
| U.S.A. (USD) | 92,596 | 95,686 | (3,091) | (3.2) |
Net revenues in Russia and in Turkey exclude sales of products for rare diseases. Sales in the U.S.A. include the sales in Canada.
Sales of pharmaceuticals in Italy are up by 4.2% compared to those of the same period of the preceding year. Worth mentioning is the good performance of Urorec® and Cardicor® (bisoprolol), the significant growth of the treatments for rare diseases and the integration in the product portfolio, as from July 2017, of the metoprolol based products acquired from AstraZeneca and, as from July 2018 the sales of Natural Point S.r.l., the Italian company acquired in June.
In Germany sales are up by 16.3% mainly thanks to the sales generated by the metoprolol based products acquired from AstraZeneca, consolidated as from 1 July 2017, and to the launch of Reagila® (cariprazine), a new drug for the treatment of schizophrenia.
Pharmaceutical sales in France are up by 7.0%. Worth mentioning is the good performance of Urorec®, in addition to the sales of Lercan® (lercanidipine) which is now marketed directly by our subsidiary following the termination of the license agreement with Pierre Fabre and the integration in the product portfolio of the metoprolol based brands acquired from AstraZeneca and of Transipeg® and Colopeg®, the gastrointestinal products acquired from Bayer in December 2017. The treatments for rare diseases are also growing strongly.
Revenue generated in Russia, Ukraine and in the countries within the Commonwealth of Independent States (C.I.S.) is € 75.1 million, down by 5.2% compared to the same period of the preceding year and includes estimated currency exchange losses of € 8.7 million. Sales in Russia, in local currency, are RUB 4,397.3 million, up by 0.5% compared to the same period of the preceding year. Worth mentioning is the growth of the corporate products Procto‐ Glyvenol®, Urorec®, Livazo® and Zanidip®. Sales generated in Ukraine and in the C.I.S. countries, mainly Belarus, Kazakhstan and Georgia are growing significantly and have reached € 13.1 million.
The Group's pharmaceutical business in the U.S.A. is dedicated to the marketing of products for the treatment of rare diseases. Sales in the first nine months of 2018 are € 75.1 million, down by 10.0% due to competition from a generic version of Cosmegen® and to estimated currency exchange rate losses of € 5.5 million. The main products are Panhematin® (haemin for injection) for the amelioration of recurrent attacks of acute intermittent porphyria, Carbaglu® (carglumic acid), indicated for the treatment of acute hyperammonaemia associated with NAGS deficiency, Cosmegen® (dactinomycin for injection) used in the treatment of three rare cancers and Cystadane® (betaine anhydrous) indicated in the treatment of homocystinuria.
In Spain sales are € 64.7 million, up by 8.5% mainly due to the performance of Livazo® and Urorec® as well as to the integration in the product portfolio, as from July 2017, of the metoprolol based brands acquired from AstraZeneca. Sales of the treatments for rare diseases are also growing significantly.
Sales in Turkey are down by 12.0% and include a negative currency exchange effect estimated to be of € 20.3 million. In local currency sales of our Turkish subsidiary grow by 21.6% thanks to the good performance of all the corporate products, in particular Livazo®, Lercadip®, Urorec®, Zanipress®, Procto‐Glyvenol®, Kentera® and Gyno Lomexin®, as well as the local products Ciprasid® (ciprofloxacin), Mictonorm® (propiverine), Cabral® (phenyramidol), Kreval® (butamirate citrate) and Colchicum® (colchicine).
Sales in Portugal are up by 2.9% thanks mainly to the good performance of Livazo®, Urorec® and TransAct® LAT.
Sales in other Central and Eastern European countries include the sales of Recordati subsidiaries in Poland, the Czech Republic, Slovakia and Romania, in addition to sales generated by Orphan Europe in this area. In the first nine months of 2018 overall sales are up by 55.5% thanks mainly to the revenue contribution as from 1 July 2017 generated by the sales of the metoprolol based products acquired from AstraZeneca. Sales of the treatments for rare diseases in these countries are up by 8.1%.
Sales in other countries in Western Europe, up by 10.9%, comprise sales of products for the treatment of rare diseases in these countries (+11.3%) and sales of specialty and primary care products generated by the Recordati subsidiaries in the United Kingdom, Ireland, Greece and Switzerland and in the Nordic countries (Finland, Sweden and Denmark). The increase in sales is to be attributed mainly to the performance of the Greek subsidiary thanks to the growth of Livazo® and Lercadip® (lercanidipine), the direct sales of lercanidipine based brands previously co‐ marketed by licensees and to the consolidation as from 1 July 2017 of the sales of the metoprolol based products acquired from Astra Zeneca.
Sales in North Africa are € 31.7 million, up by 1.7%, and comprise both the export sales generated by Laboratoires Bouchara Recordati in these territories, in particular in Algeria, and sales generated by Opalia Pharma, the Group's Tunisian subsidiary. Sales in Tunisia in the first nine months of 2018, in local currency, are up by 18.3%.
Other international sales are up by 9.1% as compared to the same period of the preceding year and comprise the sales to, and other revenues from, our licensees for our corporate products, Laboratoires Bouchara Recordati's and Casen Recordati's export sales, as well as the sales of products for the treatment of rare diseases in the rest of the world. The growth is to be attributed mainly to the revenues generated, as from 1 July 2017, by the sales of the metoprolol based products acquired from AstraZeneca in countries where the Group is not present directly with its own subsidiaries.
The following table shows the profit and loss accounts, including their expression as a percent of sales and change versus the first nine months of 2017:
| € (thousands) | First nine | % of | First nine | % of | Change | % |
|---|---|---|---|---|---|---|
| months 2018 | revenue | months 2017 | revenue | 2018/2017 | ||
| Revenue | 1,013,308 | 100.0 | 963,827 | 100.0 | 49,481 | 5.1 |
| Cost of sales | (296,015) | (29.2) | (287,596) | (29.8) | (8,419) | 2.9 |
| Gross profit | 717,293 | 70.8 | 676,231 | 70.2 | 41,062 | 6.1 |
| Selling expenses | (250,258) | (24.7) | (246,544) | (25.6) | (3,714) | 1.5 |
| R&D expenses | (79,436) | (7.8) | (72,145) | (7.5) | (7,291) | 10.1 |
| G&A expenses | (48,543) | (4.8) | (48,670) | (5.0) | 127 | (0.3) |
| Other income (expense), net | (2,087) | (0.2) | (1,370) | (0.1) | (717) | 52.3 |
| Operating income | 336,969 | 33.3 | 307,502 | 31.9 | 29,467 | 9.6 |
| Financial income (expense), net | (13,757) | (1.4) | (11,753) | (1.2) | (2,004) | 17.1 |
| Pretax income | 323,212 | 31.9 | 295,749 | 30.7 | 27,463 | 9.3 |
| Provision for income taxes | (85,335) | (8.4) | (75,943) | (7.9) | (9,392) | 12.4 |
| Net income | 237,877 | 23.5 | 219,806 | 22.8 | 18,071 | 8.2 |
| Attributable to: | ||||||
| Equity holders of the parent | 237,841 | 23.5 | 219,778 | 22.8 | 18,063 | 8.2 |
| Non‐controlling interests | 36 | 0.0 | 28 | 0.0 | 8 | 28.6 |
Revenue for the period is € 1,013.3 million, an increase of € 49.5 million compared to the first nine months of 2017. For a detailed analysis please refer to the preceding "Review of Operations".
Gross profit is € 717.3 million with a margin of 70.8% on sales, an increase over that of the same period of the preceding year due to the further growth of products with higher margins and to the positive effect of the
consolidation of the metoprolol based products acquired from AstraZeneca.
Selling expenses increase less than sales and are therefore down as a percent of revenue compared to the same period of the preceding year thanks to the increased efficiency of the group's commercial organizations.
R&D expenses are € 79.4 million, up by 10.1% compared to those recorded in the first nine months of 2017 due to the initiation of new development programs and the amortization of the acquired rights to the metoprolol based products.
G&A expenses are down by 0.3% and diminish as percent of sales to 4.8%.
Net financial charges are € 13.8 million, an increase of € 2.0 million compared to the same period of the preceding year due to the interest on the medium/long term loans.
The effective tax rate during the period is 26.4%, higher than that of the same period of the preceding year due to an adjustment of the tax risk provision in part compensated by a tax credit in Turkey, for an overall net effect of € 5.6 million.
Net income at 23.5% of sales is € 237.9 million, an increase of 8.2% over the same period of the preceding year.
The net financial position is set out in the following table:
| Loans – due after one year (1) | 108,055 (570,765) |
233,790 (615,570) |
(125,735) 44,805 |
(53.8) (7.3) |
|---|---|---|---|---|
| Net liquid assets | ||||
| Loans – due within one year | (59,530) | (51,710) | (7,820) | 15.1 |
| Bank overdrafts and short‐term loans | (67,580) | (16,577) | (51,003) | 307.7 |
| Cash and short‐term financial investments | 235,165 | 302,077 | (66,912) | (22.2) |
| € (thousands) | 30 September 2018 |
31 December 2017 |
Change 2018/2017 |
% |
(1) Includes change in fair value of the relative currency risk hedging instruments (cash flow hedge).
At 30 September 2018 the net financial position shows a net debt of € 462.7 million compared to net debt of € 381.8 million at 31 December 2017. During the period a € 10.0 million milestone was paid as per the license agreement with Gedeon Richter for the rights to Reagila® (cariprazine), own shares were purchased for an overall amount of € 169.8 million and dividends were distributed for an amount of € 87.1 million. Furthermore, the Italian company Natural Point S.r.l. was acquired for a value of € 75 million.
In July the Parent company received a loan of € 4.3 million to fund investments in research and development from the Banca del Mezzogiorno‐Mediocredito Centrale, of which € 3.9 million at a reduced fixed interest rate of 0.50% to be repaid in six semi‐annual installments starting 30 June 2019 through 31 December 2021, and € 0.4 million at a variable interest rate equal to the 6 months' Euribor plus a spread of 220 basis points, to be repaid in two installments on 30 June and 31 December 2021.
During the period two loans were fully repaid: the € 50,0 million loan received by the Parent company on 30
September 2013 from Banca Nazionale del Lavoro, with the payment of the last two installments for a total of € 12.5 million, and the loan received by subsidiary Recordati Ilaç on 30 November 2015 from ING Bank, with the payment of the 5.9 million Turkish lira bullet, equivalent to € 1.3 million.
The following table shows the profit and loss accounts, including their expression as a percent of sales and change versus the third quarter of 2017:
| € (thousands) | Third quarter 2018 |
% of revenue |
Third quarter 2017 |
% of revenue |
Change 2018/2017 |
% |
|---|---|---|---|---|---|---|
| Revenue | 317,254 | 100.0 | 312,959 | 100.0 | 4,295 | 1.4 |
| Cost of sales | (93,002) | (29.3) | (90,854) | (29.0) | (2,148) | 2.4 |
| Gross profit | 224,252 | 70.7 | 222,105 | 71.0 | 2,147 | 1.0 |
| Selling expenses | (77,465) | (24.4) | (78,023) | (24.9) | 558 | (0.7) |
| R&D expenses | (25,809) | (8.1) | (24,993) | (8.0) | (816) | 3.3 |
| G&A expenses | (15,403) | (4.9) | (14,829) | (4.7) | (574) | 3.9 |
| Other income (expense), net | (537) | (0.2) | 44 | 0.0 | (581) | n.s. |
| Operating income | 105,038 | 33.1 | 104,304 | 33.3 | 734 | 0.7 |
| Financial income (expense), net | (5,299) | (1.7) | (4,762) | (1.5) | (537) | 11.3 |
| Pretax income | 99,739 | 31.4 | 99,542 | 31.8 | 197 | 0.2 |
| Provision for income taxes | (26,050) | (8.2) | (26,723) | (8.5) | 673 | (2.5) |
| Net income | 73,689 | 23.2 | 72,819 | 23.3 | 870 | 1.2 |
| Attributable to: | ||||||
| Equity holders of the parent | 73,677 | 23.2 | 72,811 | 23.3 | 866 | 1.2 |
| Non‐controlling interests | 12 | 0.0 | 8 | 0.0 | 4 | 50.0 |
Net revenue is € 317.3 million, up by 1.4% over the third quarter 2017 and includes the consolidation as from 1 July 2018 of the sales generated by Natural Point S.r.l., the Italian company acquired in June, for an amount of € 3.7 million as well as a negative currency effect estimated at € 12.0 million, mainly due to the further devaluation of the Turkish Lira. Excluding these effects growth would have been 4.0%. Pharmaceutical sales are € 307.4 million, up by 0.8%. Pharmaceutical chemical sales are € 9.8 million, up by 24.9%.
Gross profit is € 224.3 million with a margin of 70.7% on sales, substantially in line with that of the same period of the preceding year.
Selling expenses are substantially stable and are therefore down as a percent of revenue compared to the same period of the preceding year thanks to the increased efficiency of the group's commercial organizations.
R&D expenses are € 25.8 million, up by 3.3% compared to those recorded in the third quarter of 2017 due to the advancement of new development programs.
G&A expenses increase by 3.9% but remain substantially stable as percent of sales.
Net financial charges are € 5.3 million, an increase of € 0.5 million compared to the same period of the preceding year due to the increase in net foreign exchange losses compared to those in the third quarter of 2017.
Net income at 23.2% of sales is € 73.7 million, an increase of 1.2% over the same period of the preceding year.
The growth of Group's business continued during October. Taking into account the strong devaluation of the Turkish lira, which we estimate will have, on its own, an impact of around € 30 million for the full year, we expect for the whole of 2018 to achieve sales ranging from € 1,340 million to € 1,350 million, whilst we confirm our objectives for EBITDA of between € 490 and € 500 million, EBIT of between € 430 and € 440 million and net income of between € 310 and € 315 million.
Milan, 30 October 2018
on behalf of the Board of Directors the Vice Chairman and Chief Executive Officer Andrea Recordati
The consolidated financial statements are presented in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) issued or revised by the International Accounting Standards Board (IASB) and adopted by the European Union, and were prepared in accordance with the IAS 34 requirements for interim reporting.
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2018
| 2018 2017 1,013,308 963,827 Revenue Cost of sales (296,015) (287,596) 717,293 676,231 Gross profit (250,258) (246,544) Selling expenses (79,436) (72,145) R&D expenses G&A expenses (48,543) (48,670) (2,087) (1,370) Other income (expense), net 336,969 307,502 Operating income (13,757) (11,753) Financial income (expense), net Pretax income 323,212 295,749 (85,335) (75,943) Provision for income taxes Net income 237,877 219,806 Attributable to: Equity holders of the parent 237,841 219,778 36 28 Non‐controlling interests Earnings per share Basic € 1.163 € 1.064 Diluted € 1.137 € 1.051 |
€ (thousands) | First nine months | First nine months |
|---|---|---|---|
Earnings per share (EPS) are based on average shares outstanding during each year, 204,556,132 in 2018 and 206,627,645 in 2017, net of average treasury stock which amounted to 4,569,024 shares in 2018 and to 2,497,511 shares in 2017. Diluted earnings per share is calculated taking into account stock options granted to employees.
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2018
| Total non‐current assets | 1,353,094 | 1,282,722 |
|---|---|---|
| Deferred tax assets | 75,611 | 69,162 |
| Other non‐current assets | 6,725 | 5,944 |
| Other investments | 20,785 | 24,171 |
| Goodwill | 545,601 | 539,871 |
| Intangible assets | 606,424 | 540,565 |
| Property, plant and equipment | 97,948 | 103,009 |
| Non‐current assets | ||
| 2018 | 2017 | |
| € (thousands) | 30 September | 31 December |
| Inventories | 185,717 | 179,100 |
|---|---|---|
| Trade receivables | 248,079 | 244,117 |
| Other receivables | 26,251 | 39,730 |
| Other current assets | 7,606 | 4,836 |
| Fair value of hedging derivatives (cash flow hedge) | 4,142 | 3.825 |
| Short‐term financial investments, | ||
| cash and cash equivalents | 235,165 | 302,077 |
| Total current assets | 706,960 | 773,685 |
| Total assets | 2,060,054 | 2,056,407 |
|---|---|---|
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2018
| € (thousands) | 30 September | 31 December |
|---|---|---|
| 2018 | 2017 | |
| Shareholders' equity | ||
| Share capital | 26,141 | 26,141 |
| Additional paid‐in capital | 83,719 | 83,719 |
| Treasury stock | (151,311) | (17,029) |
| Hedging reserve (cash flow hedge) | (7,753) | (5,867) |
| Translation reserve | (161,325) | (124,004) |
| Other reserves | 40,239 | 40,684 |
| Retained earnings | 920,302 | 822,154 |
| Net income for the year | 237,841 | 288,762 |
| Interim dividend | 0 | (87,470) |
| Group shareholders' equity | 987,853 | 1,027,090 |
| Non‐controlling interests | 183 | 147 |
| Shareholders' equity | 988,036 | 1,027,237 |
| Non‐current liabilities | ||
| Loans – due after one year | 568,911 | 612,462 |
| Staff leaving indemnities | 21,207 | 21,093 |
| Deferred tax liabilities | 33,474 | 17,554 |
| Other non‐current liabilities | 2,516 | 2,515 |
| Total non‐current liabilities | 626,108 | 653,624 |
| Current liabilities | ||
| Trade payables | 123,400 | 141,740 |
| Other payables | 89,177 | 82,779 |
| Tax liabilities | 45,075 | 24,373 |
| Other current liabilities | 1,272 | 486 |
| Provisions | 51,872 | 48,322 |
| Fair value of hedging derivatives (cash flow hedge) | 8,004 | 9,559 |
| Loans – due within one year | 59,530 | 51,710 |
| Bank overdrafts and short‐term loans | 67,580 | 16,577 |
| Total current liabilities | 445,910 | 375,546 |
| Total equity and liabilities | 2,060,054 | 2,056,407 |
|---|---|---|
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 SEPTEMBER 2018
| Net income for the period 237,877 219,806 (1,886) 2,107 Gains/(losses) on cash flow hedges, net of tax Gains/(losses) on translation of foreign financial statements, net of tax (37,321) (34,889) (1,742) 3,764 Gains/(losses) on equity‐accounted investees, net of tax Income and expense for the period recognized directly in equity (40,949) (29,018) Comprehensive income for the period 196,928 190,788 Attributable to: Equity holders of the parent 196,892 190,760 |
€ (thousands) | First nine months 2018 |
First nine months 2017 |
|---|---|---|---|
| Non‐controlling interests | 36 | 28 |
The notes to the financial statements are an integral part of the consolidated condensed financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
| € (thousands) | Share | Additional | Treasury | Hedging | Translation | Other | Retained | Net income | Interim | Non‐con‐ | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| capital | paid‐in capital |
stock | reserve | reserve | reserves | earnings | for the period |
dividend | trolling interests |
||
| Balance at 31.12.2016 | 26,141 | 83,719 | (76,761) | (7,420) | (78,309) | 35,295 | 756,004 | 237,406 (72,245) | 110 | 903,940 | |
| Allocation of 2016 net income: |
|||||||||||
| ‐ Dividends | (34,280) | (110,102) 72,245 | (72,137) | ||||||||
| ‐ Retained earnings | 127,304 | (127,304) | 0 | ||||||||
| Change in the reserve for share based payments |
368 | 2,604 | 2,972 | ||||||||
| Disposal of own shares | 57,651 | (28,255) | 29,396 | ||||||||
| Other changes | (63) | (63) | |||||||||
| Comprehensive income for the year |
2,107 | (34,889) | 3,764 | 219,778 | 28 | 190,788 | |||||
| Balance at 30.9.2017 | 26,141 | 83,719 | (19,110) | (5,313) | (113,198) | 39,427 | 823,314 | 219,778 | 0 | 138 | 1,054,896 |
| Balance at 31.12.2017 | 26,141 | 83,719 | (17,029) | (5,867) | (124,004) | 40,684 | 822,154 | 288,762 (87,470) | 147 | 1,027,237 | |
| Allocation of 2017 net income: |
|||||||||||
| ‐ Dividends | 37,910 | (212,506) 87,470 | (87,126) | ||||||||
| ‐ Retained earnings | 76,256 | (76,256) | 0 | ||||||||
| Change in the reserve for share based payments |
1,297 | 1,664 | 2,961 | ||||||||
| Purchase of own shares | (169,769) | (169,769) | |||||||||
| Disposal of own shares | 35,487 | (17,903) | 17,584 | ||||||||
| Other changes | 221 | 221 | |||||||||
| Comprehensive income for the year |
(1,886) | (37,321) | (1,742) | 237,841 | 36 | 196,928 | |||||
| Balance at 30.9.2018 | 26,141 | 83,719 (151,311) | (7,753) | (161,325) | 40,239 | 920,302 | 237,841 | 0 | 183 | 988,036 |
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2018
| € (thousands) | First nine months 2018 |
First nine months 2017 |
|---|---|---|
| Operating activities | ||
| Cash flow | ||
| Net Income | 237,877 | 219,806 |
| Depreciation of property, plant and equipment | 10,181 | 10,735 |
| Amortization of intangible assets | 32,900 | 23,724 |
| Total cash flow | 280,958 | 254,265 |
| (Increase)/decrease in deferred tax assets | (6,302) | (28,216) |
| Increase/(decrease) in staff leaving indemnities | 0 | 122 |
| Increase/(decrease) in other non‐current liabilities | 824 | (11,104) |
| 275,480 | 215,067 | |
| Changes in working capital | ||
| Trade receivables | (97) | (40,250) |
| Inventories | (5,848) | (10,852) |
| Other receivables and other current assets | 10,763 | 1,656 |
| Trade payables | (19,669) | 7,349 |
| Tax liabilities | 19,103 | 10,250 |
| Other payables and other current liabilities | 7,052 | 3,812 |
| Provisions | 3,550 | 16,746 |
| Changes in working capital | 14,854 | (11,289) |
| Net cash from operating activities | 290,334 | 203,778 |
| Investing activities | ||
| Net (investments)/disposals in property, plant and equipment | (12,430) | (8,555) |
| Net (investments)/disposals in intangible assets | (39,796) | (271,671) |
| Investments in equity | (83,577) (1) | 0 |
| Net (investments)/disposals in equity investments | 0 | 28 |
| Net (increase)/decrease in other non‐current receivables | (781) | (933) |
| Net cash used in investing activities | (136,584) | (281,131) |
| Financing activities | ||
| Net short‐term financial position* of acquired companies | 8,971 | 0 |
| Medium/long term loans granted | 4,547 | 300,117 |
| Re‐payment of loans | (41,707) | (30,573) |
| Increase in treasury stock | (169,769) | 0 |
| Decrease in treasury stock | 17,584 | 29,396 |
| Effect on shareholders' equity of application of IAS/IFRS | 2,961 | 2,972 |
| Other changes in shareholders' equity | 221 | (63) |
| Dividends paid | (87,126) | (72,137) |
| Net cash from/(used in) financing activities | (264,318) | 229,712 |
| Changes in short‐term financial position | (110,568) | 152,359 |
| Short‐term financial position at beginning of year * | 285,500 | 122,804 |
| Change in translation reserve | (7,347) | (10,271) |
| Short‐term financial position at end of period * | 167,585 | 264,892 |
* Includes cash and cash equivalents net of bank overdrafts and short‐term loans.
(1) Acquisition of Natural Point S.r.l.: Working capital (1,628), short‐term financial position* (8,971), fixed assets (63,764), goodwill (27,872), personnel leaving indemnity 114, medium/long‐term loans 1,351, deferred tax liabilities 17,193.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2018
The consolidated condensed financial statements at 30 September 2018 comprise Recordati S.p.A. (the Company) and subsidiaries controlled by the Company. The companies included in the consolidated accounts, the consolidation method applied, their percentage of ownership and a description of their activity are set out in attachment 1. During the period ended 30 September 2018 the consolidation perimeter changed consequent to the following events:
These financial statements are presented in euro (€) and all amounts are rounded to the nearest thousand euro unless otherwise stated.
The first nine months consolidated financial statements were prepared in accordance with the IAS 34 requirements for interim reporting. The statements do not include the full information required for the annual financial statements and must therefore be read together with the annual report for the full year ended 31 December 2017, prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and adopted by the European Union.
The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Valuation exercises, in particular complex calculations such as those required to identify impairment loss, are carried out in depth only for the preparation of the year‐end consolidated financial statements, except when there is an indication that an asset has suffered an impairment loss which would require an immediate estimate of the loss.
Two new accounting principles enter into effect as from 1 January 2018. IFRS 9, "Financial instruments", introduces new requisites for the classification, measurement and impairment of financial assets and liabilities and new rules governing hedge accounting. IFRS 15, "Revenue from contracts with customers", sets out five requirements for the recognition of revenue that apply to contracts with customers, except for those to which
other IAS/IFRS principles apply. Based on the analysis for the identification of the areas of application and the determination of the relative effects no significant impacts on the consolidated profit or net equity were identified. In particular, the main areas of application are: with reference to IFRS 15 the accounting treatment of the up‐front payments associated with the licensing‐out contracts, with reference to IFRS 9 the determination of the impairment losses of the financial assets based on an expected loss model, considering past events, current conditions and foreseeable future economic conditions.
Furthermore, IFRS 16, "Leases", will apply as from 1 January 2019. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance. The lessee is required to recognize a right‐of‐use asset and a lease liability representing the obligation of making the payments stipulated in the contract, as well as the effects on profit and loss of the amortization of the asset and the financial expense connected with the financial liability. The impact resulting from the application of the new standard is under evaluation.
Disclosure of the net financial position and of events subsequent to the end of the period are included under the preceding management review.
Net revenue for the first nine months of 2018 is € 1,013.3 million (€ 963.8 million in the same period of the preceding year) and can be broken down as follows:
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
|---|---|---|---|
| Net sales | 1,002.510 | 953,207 | 49,303 |
| Royalties | 4,605 | 3,300 | 1,305 |
| Up‐front payments | 2,035 | 3,291 | (1,256) |
| Other revenue | 4,158 | 4,029 | 129 |
| Total revenue | 1,013,308 | 963,827 | 49,481 |
Overall operating expenses in the first nine months of 2018 are € 676.3 million, an increase as compared to the € 656.3 million in the same period of the preceding year and are analyzed by function as follows:
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
|---|---|---|---|
| Cost of sales | 296,015 | 287,596 | 8,419 |
| Selling expenses | 250,258 | 246,544 | 3,714 |
| Research and development expenses | 79,436 | 72,145 | 7,291 |
| General and administration expenses | 48,543 | 48,670 | (127) |
| Other income (expense), net | 2,087 | 1,370 | 717 |
| Total operating expenses | 676,339 | 656,325 | 20,014 |
Other income (expense) comprises non‐recurring events, operations and matters which are not often repeated in the ordinary course of business.
Total operating expenses are analyzed by nature as follows:
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
|---|---|---|---|
| Material consumption | 230,368 | 221,925 | 8,443 |
| Payroll cost | 172,931 | 172,159 | 772 |
| Other employee costs | 29,606 | 29,353 | 253 |
| Variable sales expenses | 50,606 | 47,946 | 2,660 |
| Depreciation and amortization | 43,081 | 34,459 | 8,622 |
| Utilities and consumables | 21,967 | 21,977 | (10) |
| Other expenses | 127,780 | 128,506 | (726) |
| Total operating expenses | 676,339 | 656,325 | 20,014 |
Personnel remuneration includes a cost for stock options of € 3.0 million both in the first nine months of 2018 and in the first nine months of 2017.
Depreciation charges are € 10.2 million, down by € 0.6 million compared to the first nine months of 2017, while amortization charges are € 32.9 million, an increase of € 9.2 million over the same period of the preceding year and are mainly attributable to the rights related to the metoprolol based products acquired from AstraZeneca in June 2017.
In the first nine months of 2018 and in the same period of 2017 financial items record a net expense of € 13.8 million and € 11.8 million respectively and are comprised as follows:
| Total financial income (expense), net | (13,757) | (11,753) | (2,004) |
|---|---|---|---|
| Interest cost in respect of defined benefit plans | (168) | (148) | (20) |
| Net interest income (expense) on short‐term financial position |
(2,510) | (2,008) | (502) |
| Interest expense on loans | (9,330) | (7,307) | (2,023) |
| Currency exchange gains (losses) | (1,749) | (2,290) | 541 |
| € (thousands) | First nine months 2018 |
First nine months 2017 |
Change 2018/2017 |
The composition and variation of property, plant and equipment are shown in the following table:
| € (thousands) | Land & buildings |
Plant & machinery |
Other equipment |
Advances/ construction in progress |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2017 | 76,513 | 225,772 | 66,105 | 8,309 | 376,699 |
| Additions | 565 | 1,872 | 1,701 | 7,897 | 12,035 |
| Disposals | (27) | (26) | (474) | 0 | (527) |
| Changes in reporting entities | 3,605 | 0 | 178 | 0 | 3,783 |
| Other changes | (4,910) | (3,806) | 393 | (4,029) | (12,352) |
| Balance at 30 September 2018 | 75,746 | 223,812 | 67,903 | 12,177 | 379,638 |
| Accumulated depreciation | |||||
| Balance at 31 December 2017 | 41,000 | 180,717 | 51,973 | 0 | 273,690 |
| Depreciation for the period | 1,679 | 5,554 | 2,948 | 0 | 10,181 |
| Disposals | (19) | (26) | (486) | 0 | (531) |
| Changes in reporting entities | 1,078 | 0 | 141 | 0 | 1,219 |
| Other changes | (446) | (2,013) | (410) | 0 | (2,869) |
| Balance at 30 September 2018 | 43,292 | 184,232 | 54,166 | 0 | 281,690 |
| Carrying amount at | |||||
| 30 September 2018 | 32,454 | 39,580 | 13,737 | 12,177 | 97,948 |
| 31 December 2017 | 35,513 | 45,055 | 14,132 | 8,309 | 103,009 |
The additions during the period are € 12.0 million and refer to investments in the Italian plants and in the headquarters building for an amount of € 7.0 million.
The fixed assets of the recently acquired company Natural Point S.r.l. are initially recognized under "Changes in reporting entities" for an overall amount of € 2.6 million. This amount refers mainly to the net book value of a leased plant, where the company has its headquarters, determined as prescribed by IAS 17.
The conversion into euros of the tangible assets booked in different currencies gives rise to a net decrease of € 9.9 million as compared to 31 December 2017, almost entirely attributable to the devaluation of the Turkish lira.
The composition and variation of intangible assets are shown in the following table:
| € (thousands) | Patent rights and marketing authorizations |
Distribution, license, trademark and similar rights |
Other | Advance payments |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at 31 December 2017 | 584,105 | 197,421 | 18,354 | 46,680 | 846,560 |
| Additions | 112 | 24,366 | 1,479 | 14,381 | 40,338 |
| Disposals | (151) | (1,334) | (6) | 0 | (1,491) |
| Changes in reporting entities | 0 | 61,200 | 23 | 0 | 61,223 |
| Other changes | (2,127) | 43,973 | (1,047) | (44,202) | (3,403) |
| Balance at 30 September 2018 | 581,939 | 325,626 | 18,803 | 16,859 | 943,227 |
| Accumulated amortization | |||||
| Balance at 31 December 2017 | 160,169 | 129,269 | 16,557 | 0 | 305,995 |
| Amortization for the period | 21,945 | 10,679 | 276 | 0 | 32,900 |
| Disposals | 0 | (1,334) | (6) | 0 | (1,340) |
| Changes in reporting entities | 0 | 0 | 23 | 0 | 23 |
| Other changes | (328) | (127) | (320) | 0 | (775) |
| Balance at 30 September 2018 | 181,786 | 138,487 | 16,530 | 0 | 336,803 |
| Carrying amount at | |||||
| 30 September 2018 | 400,153 | 187,139 | 2,273 | 16,859 | 606,424 |
| 31 December 2017 | 423,936 | 68,152 | 1,797 | 46,680 | 540,565 |
The main increases during the period include:
"Changes in reporting entities" includes a value of € 61.2 million which has been preliminarily allocated to Magnesio Supremo®, a food supplement and the main product sold by Natural Point S.r.l., as calculated during the acquired assets and liabilities fair value identification process. Based on knowledge of the market in which the acquired company operates and considering the historical trend of the product's sales, a useful life of 20 years has been estimated for this asset.
The conversion into euros of the intangible assets booked in different currencies gives rise to a net decrease of € 2.2 million as compared to 31 December 2017, mainly attributable to the devaluation of the Turkish lira (decrease of € 2.3 million) and of the Russian ruble (decrease of € 1.9 million) and to the revaluation of the U.S. dollar (increase of € 1.8 million).
Net goodwill at 30 September 2018 amounts to € 545.6 million, an increase of € 5.7 million as compared to that at 31 December 2017, and is attributed to the operational areas, which represent the same number of cash generating units:
The acquisition of Natural Point S.r.l. determined an increase of € 27.9 million. The preliminary process for the measurement of the fair value of the assets and liabilities at the date of acquisition resulted in the identification of added value for the intangible asset Magnesio Supremo®. Therefore, an amount of € 61.2 million of the difference between the amount paid and the book value of the assets and liabilities acquired was allocated to this asset and € 17.1 million to the relative deferred tax liabilities, while € 27.9 million were allocated to goodwill. The allocation is to be considered not yet definite, as allowed by IFRS 3.
Goodwill related to acquisitions made in countries outside the European Monetary Union is calculated in local currency and converted into euros at the period‐end exchange rate. Conversion at 30 September 2018 resulted in an overall net decrease of € 22.2 million, compared to that at 31 December 2017, to be attributed to the acquisitions in Turkey (decrease of € 19.0 million), Russia (decrease of € 1.4 million), Tunisia (decrease of € 1.6 million), Poland (decrease of € 0.4 million), Czech Republic (decrease of € 0.1 million) and Switzerland (increase of € 0.3 million).
In compliance with IFRS 3 goodwill is not systematically amortized. Instead, it is tested for impairment on an annual basis or more frequently if specific events or circumstances indicate a possible loss of value. During the first nine months of 2018 no events or circumstances arose to indicate possible value loss related to any of the abovementioned items.
At 30 September 2018 other investments amount to € 20.8 million, a decrease of € 3.4 million compared to those at 31 December 2017.
The main investment is that made in the U.K. company PureTech Health plc, specialized in investment in start‐ up companies dedicated to innovative therapies, medical devices and new research technologies. Starting 19 June 2015 the shares of the company were admitted to trading on the London Stock Exchange. At 30 September 2018 the overall fair value of the 9.554.140 shares held is of € 17.6 million. The € 1.4 million increase
in value compared to that at 31 December 2017 is recognized directly in equity, net of the relative tax effect, and shown on the statement of comprehensive income.
This account also comprises € 3.1 million regarding an investment made during 2012 in Erytech Pharma S.A., a late development stage French biopharmaceutical company focused on orphan oncology and rare diseases. The investment, originally structured as a non‐interest bearing loan, was converted into 431,034 shares of the company in May 2013. As compared to 31 December 2017 the value of the investment was reduced by € 4.8 million to bring it in line with its fair value. This amount, net of its tax effect, is recognized directly in equity and shown on the statement of comprehensive income.
At 30 September 2018 deferred tax assets are € 75.6 million, a net increase of € 6.4 million compared to those at 31 December 2017 and include a tax credit in Turkey. Deferred tax liabilities are € 33.5 million, a net increase of € 15.9 million compared to those at 31 December 2017, mainly due to the deferred tax liability associated with the increase in value allocated to the product Magnesio Supremo® resulting from the measurement of the fair value of the Natural Point S.r.l. acquired assets and liabilities.
Shareholders' Equity at 30 September 2018 is € 988.0 million, a reduction of € 39.2 million compared to that at 31 December 2017 for the following reasons:
The Italian subsidiary of Orphan Europe is 99% owned giving rise to a minority interest of € 183.0 thousand.
As at 30 September 2018 the Company has three stock option plans in favor of certain group employees in place, the 2010‐2013 plan, under which options were granted on 9 February 2011, on 8 May 2012, on 17 April 2013 and on 30 October 2013, the 2014‐2018, plan under which options were granted on 29 July 2014 and on 13 April 2016 and the 2018‐2022 plan, under which options were granted on 3 August 2018. The strike price of the options is the average of the parent company's listed share price during the 30 days prior to the grant date. Stock options are vested over a period of five years and those not exercised within the eighth year of the date of grant expire. Options cannot be exercised if the employee leaves the company before they are vested. Stock options outstanding at 30 September 2018 are analyzed in the following table.
| Strike price (€) |
Options outstanding at 1.1.2018 |
Options granted during 2018 |
Options exercised during 2018 |
Options cancelled or expired |
Options outstanding at 30.9.2018 |
|
|---|---|---|---|---|---|---|
| Date of grant | ||||||
| 9 February 2011 | 6.7505 | 171,500 | ‐ | (95,000) | ‐ | 76,500 |
| 8 May 2012 | 5.3070 | 566,500 | ‐ | (99,000) | ‐ | 467,500 |
| 17 April 2013 | 7.1600 | 37,500 | ‐ | (12,500) | ‐ | 25,000 |
| 30 October 2013 | 8.9300 | 65,000 | ‐ | (50,000) | ‐ | 15,000 |
| 29 July 2014 | 12.2900 | 2,991,000 | ‐ | (667,646) | (32,500) | 2,290,854 |
| 13 April 2016 | 21.9300 | 3,523,000 | ‐ | (350,000) | (76,500) | 3,096,500 |
| 3 August 2018 | 30.7300 | ‐ | 4,818,000 | ‐ | ‐ | 4,818,000 |
| Total | 7,354,500 | 4,818,000 | (1,274,146) | (109,000) | 10,789,354 |
At 30 September 2018, 5,355,425 own shares are held as treasury stock, an increase of 4,492,163 shares as compared to those at 31 December 2017. The change is to be attributed to the disposal of 1,274,146 shares for an overall value of € 17.6 million to service the exercise of stock options issued under the stock option plans, and to the purchase of 5,766,309 shares for an overall value of € 169.8 million. The overall purchase cost of the shares held in treasury stock is € 151.3 million with an average unit price of € 28.25.
At 30 September 2018 medium and long‐term loans are € 628.4 million. The net decrease of € 35.7 million compared to those at 31 December 2017 is determined by reimbursements during the period for an amount of € 41.7 million. During the first nine months, loans were obtained for an overall amount of € 4.5 million. In addition, the consolidation of the recently acquired company Natural Point S.r.l. determined a liability of € 1.4 million related to the financial lease on the building in which the company is headquartered. The conversion of loans in foreign currency gave rise to an increase of € 0.1 million compared to those at 31 December 2017.
In July the Parent received a loan of € 4.3 million to fund investments in research and development from the Banca del Mezzogiorno‐Mediocredito Centrale, of which € 3.9 million at a reduced fixed interest rate of 0.50% to be repaid in six semi‐annual installments starting 30 June 2019 through 31 December 2021, and € 0.4 million at a variable interest rate equal to the 6 months' Euribor plus a spread of 220 basis points, to be repaid in two installments on 30 June and 31 December 2021.
During the period two loans were fully repaid: the € 50,0 million loan received by the Parent company on 30 September 2013 from Banca Nazionale del Lavoro, with the payment of the last two installments for a total of € 12.5 million, and the loan received by subsidiary Recordati Ilaç on 30 November 2015 from ING Bank, with the payment of the 5.9 million Turkish Lira bullet, equivalent to € 1.3 million.
The main other long‐term loans outstanding are:
• the ratio of consolidated operating income to consolidated net interest expense (for a period of twelve consecutive months) must exceed 3.00 to 1.00.
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
The above conditions are amply fulfilled.
h) A loan agreement with Intesa Sanpaolo undersigned by the Parent company in December 2016 for an amount of € 25.0 million, disbursed net of expenses and commissions of € 0.1 million. The main terms and conditions provide for variable interest rate fixed at the six months Euribor plus a spread of 60 basis points and a duration of 5 years with semi‐annual repayments of capital from June 2019 through December 2021. The loan is entirely covered with an interest rate swap, qualifying as a cash flow hedge, effectively converting the interest charges from variable to a fixed rate of 0.68%. The measurement at fair value at 30 September 2018 of the swap generated a liability of € 0.1 million which is recognized directly as a decrease in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current
liabilities (see Note 17). The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are:
The above conditions are amply fulfilled.
The above conditions are amply fulfilled.
The above conditions are amply fulfilled.
k) A loan agreement with IFC‐World Bank undersigned by the subsidiary Recordati Ilaç on 16 October 2014 for an amount of 71.6 million Turkish lira to finance the construction of a new production plant. Main terms are: variable interest rate equivalent to the three months' trlibor plus a spread of 162 basis points, 8‐year duration and reimbursement of principal at the end of every three months starting November 2016 through August 2022. The value in euros of the outstanding loan at 30 September 2018 is of € 6.6 million, resulting in a reduction of the liability by € 5.6 million as compared to that at 31 December 2017, of which € 4.5 million was due to the devaluation of the Turkish lira. The loan agreement includes covenants which, if not
met, could lead to a request for immediate repayment of the loan. The financial covenants are:
The above conditions were amply fulfilled.
l) Privately placed guaranteed senior notes by the Parent company on 30 September 2014 for an amount of \$ 75 million in two tranches: \$ 50 million at a fixed interest rate of 4,28% to be reimbursed bi‐annually as from 30 March 2022 through 30 September 2026, and \$ 25 million at a fixed interest rate of 4.51% to be reimbursed bi‐annually as from 30 March 2023 through 30 September 2029. The conversion of the loan into euros at 30 September 2018 resulted in an increase of the liability by € 2.3 million as compared to that at 31 December 2017 due to the revaluation of the U.S. dollar. The loan was simultaneously covered with two currency rate swaps transforming the overall debt to € 56.0 million, of which € 37.3 million at a fixed interest rate of 2.895% on the 12‐year tranche and € 18.7 million at a fixed interest rate of 3.15% on the 15‐year tranche. At 30 September 2018 the measurement at fair value of the hedging instruments generated an overall positive amount of € 4.1 million recognized directly to equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current assets (see Note 17).
The note purchase agreement covering the senior guaranteed notes issued by Recordati S.p.A. includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
The above conditions were amply fulfilled during the period.
n) A loan agreement with Centrobanca undersigned by the Parent company on 30 November 2010 to fund a three‐year research and investment program. The loan, for which Centrobanca received funding from the European Investment Bank, amounts to € 75.0 million of which € 30.0 million were cashed in during 2010 and € 45.0 million in the first quarter of 2011, net of the € 0.3 million expenses. The main terms and conditions provide for a variable interest rate and a duration of 12 years with semi‐annual repayments of capital from June 2012 through December 2022. At 30 September 2018 the outstanding amount of the loan is € 30.6 million. During the month of June 2012 interest on the whole loan was covered with an interest
rate swap qualifying as a cash flow hedge. The current interest rate on the loan is 2.575%. The measurement at fair value of the hedging instrument at 30 September 2018 generated a liability of € 1.1 million which is recognized directly as a decrease in equity and stated as an increase of the 'Fair value of hedging derivatives (cash flow hedge)' under current liabilities (see Note 17). The loan agreement includes covenants which, if not met, could lead to a request for immediate repayment of the loan. The financial covenants are the following:
The above conditions were amply fulfilled during the period.
The staff leaving indemnity fund at 30 September 2018 is of € 21.2 million and is measured as prescribed by IAS 19.
Other non‐current liabilities at 30 September 2018 are € 2.5 million and refer entirely to the debt for the acquisition of a further 10% of the share capital of Opalia Pharma which, in line with the put and call options in the purchase agreement, is expected to be settled not before the next 12 months.
Inventories are € 185.7 million, an increase of € 6.6 million compared to those stated at 31 December 2017.
Trade receivables at 30 September 2018 are € 248.1 million, an increase of € 4.0 million compared to that at 31 December 2017 due to the increase in sales and the consolidation of the recently acquired company (€ 3.5 million). Trade receivables are stated net of a € 15.2 million provision for doubtful accounts, in reduction by € 0.2 million with respect to 31 December 2017, which reflects the collection risk connected with certain customers and geographic areas. Days sales outstanding are 69.
Other receivables, at € 26.3 million, decrease by € 13.5 million compared to those at 31 December 2017.
Other current assets are € 7.6 million and refer mainly to prepaid expenses.
Trade payables, which include the accrual for invoices to be received, are € 123.4 million, of which € 1.1 million belonging to the recently acquired company.
Other payables are € 89.2 million, an increase of € 6.4 million compared to those at 31 December 2017, and relate mainly to amounts owed to personnel and social security institutions. This account also includes:
• € 7.5 million to be paid to the Italian health authorities resulting from the 1.83% claw‐back applicable on the price to the public before VAT of pharmaceutical products reimbursed by the National Health Service and the pay‐back due in substitution for a 5% price reduction on selected products.
Tax payables are € 45.1 million, an increase of € 20.7 million compared to those at 31 December 2017. Of these, € 1.1 million are related to Natural Point S.r.l., the recently acquired company.
Provisions are € 51.9 million, an increase of € 3.6 million compared to those at 31 December 2017 mainly due to an adjustment of the provision for tax disputes.
The cross currency swaps covering the cash flows related to the notes issued and privately placed on 30 September 2014, for an amount of \$ 75 million, measured at fair value at 30 September 2018 give rise to a € 4.1 million asset recognized under current assets as 'Fair value of hedging derivatives (cash flow hedge)'. This amounts represents the potential benefit of a lower value in euros of the future dollar denominated capital and interest flows, in view of the revaluation of the foreign currency subsequent to the moment in which the loan and hedging instrument were negotiated. In particular, the change in fair value of the hedging instrument covering the \$ 50 million tranche of the loan, provided by Mediobanca, was positive for an amount of € 2.9 million, and that covering the \$ 25 million tranche of the loan, provided by UniCredit, yielded a € 1.2 million positive value change.
The measurement at fair value of the interest rate swaps covering the cash flows related to medium and long‐ term loans gave rise to a net € 2.0 million liability at 30 September 2018 recognized under current liabilities as 'Fair value of hedging derivatives (cash flow hedge)'. This amount represents the unrealized opportunity of paying the current expected future rates instead of the rates agreed. The amount refers to the interest rate swaps to cover the interest rate risk associated with the loans granted by Centrobanca (€ 1.1 million), Mediobanca (€ 0.2 million), UniCredit (€ 0.2 million), Intesa Sanpaolo (€ 0.2 million), ING Bank (€ 0.2 million) and by Banca Nazionale del Lavoro (€ 0.1 million).
In November 2016, following two loan agreements undersigned by the U.S. company Recordati Rare Diseases and the Parent for a nominal total of \$ 70 million (corresponding to the two tranches of the notes issued by Recordati Rare Diseases in 2013), two cross currency swaps were provided by Unicredit which effectively convert the loan into a total of € 62.9 million, of which € 35.9 million at a fixed interest rate of 1.56% per year corresponding to the tranche expiring in 2023 and € 27.0 million at a fixed interest rate of 1.76% per year for the tranche expiring in 2025. At 30 September 2018 the fair value of the hedging instruments is a liability of € 6.0 million, recognized directly in equity.
Short term financial investments, cash and cash equivalents at 30 September 2018 are € 235.2 million, a reduction of € 66.9 million compared to those at 31 December 2017. They are mostly denominated in euros, U.S. dollars and Pounds Sterling and comprise mainly current accounts and short‐term deposits.
Bank overdrafts and short‐term loans are € 67.6 million at 30 September 2018 and are comprised mainly of temporary use of lines of credit, current account overdrafts and interest accrued on existing loans. The increase compared to 31 December 2017 is to be attributed mainly to the use of two lines of credit granted to the
Parent by UBI Banca and by Banca Passadore for € 40.0 million and € 5.0 million respectively, both for a duration of three months. At 30 September 2018 a total of 20 million Turkish lira, for an equivalent amount of € 2.9 million, were drawn down on the revolving line of credit obtained in July 2017 by Recordati Ilaç, the subsidiary in Turkey, for a maximum amount of 40 million Turkish lira. This short‐term financing instrument, which has 24 months' maximum duration, provides flexibility by combining the fact that it's non‐revocable with the variability of the draw‐downs based on specific financial needs. The agreement contains financial covenants in line with those already in place for other loans.
The following table summarizes the effects of the consolidation of Natural Point S.r.l., the Italian company of which the group acquired 100% of the share capital on 11 June 2018.
| € (migliaia) | Book value | Fair value adjustments |
Fair value of assets and liabilities acquired |
|---|---|---|---|
| Non‐current assets | |||
| Property, plant and equipment | 2,564 | 0 | 2,564 |
| Intangible assets | 0 | 61,200 | 61,200 |
| Current assets | |||
| Inventories | 769 | 0 | 769 |
| Trade receivables | 3,865 | 0 | 3,865 |
| Other receivables | 7 | 0 | 7 |
| Tax receivable | 1 | 0 | 1 |
| Other current assets | 47 | 0 | 47 |
| Short‐term financial investments, cash and cash equivalents | 8,971 | 0 | 8,971 |
| Non‐current liabilities | |||
| Loans – due after one year | (1,248) | 0 | (1,248) |
| Staff leaving indemnities | (114) | 0 | (114) |
| Deferred tax liabilities | (118) | (17,075) | (17,193) |
| Current liabilities | |||
| Trade payables | (1,329) | 0 | (1,329) |
| Other payables | (133) | 0 | (133) |
| Tax liabilities | (1,599) | 0 | (1,599) |
| Loans – due within one year | (103) | 0 | (103) |
| 11,580 | 44,125 | 55,705 | |
| Goodwill | 27,872 | ||
| Cost of the acquisition | 83,577 |
The identification and measurement at fair value of the assets and liabilities at the date of acquisition resulted in the allocation of a value of € 61.2 million to Magnesio Supremo®, the company's main product consisting of a particular formulation of magnesium carbonate and citric acid that has the characteristic of being easily assimilated into the body. The residual amount of the cost of the acquisition, net of € 17.1 million taxes calculated on the value allocated to intangible assets, of € 27.9 million was allocated to goodwill. The allocation of the cost of the acquisition is however not yet definite, as allowed by IFRS 3, in view of the limited period of time elapsed and the need to obtain further information.
The financial information reported by line of business and by geographical area, in compliance with IFRS 8 – Operating segments, is prepared using the same accounting principles and reporting standards used for the preparation and disclosure of the Group consolidated financial statements. Following the acquisition of Orphan Europe two main business segments can be identified, the pharmaceutical segment and the orphan drugs segment.
The following table shows financial information for these two business segments as at 30 September 2018 and includes comparative data.
| € (thousands) | Pharmaceutical segment* |
Orphan drugs segment |
Non‐allocated | Consolidated accounts |
|---|---|---|---|---|
| First nine months 2018 | ||||
| Revenues | 850,319 | 162,989 | ‐ | 1,013,308 |
| Expenses | (591,346) | (84,993) | ‐ | (676,339) |
| Operating income | 258,973 | 77,996 | ‐ | 336,969 |
| EBITDA(1) | 296,882 | 83,168 | 380,050 | |
| First nine months 2017 | ||||
| Revenues | 802,561 | 161,266 | ‐ | 963,827 |
| Expenses | (568,965) | (87,360) | ‐ | (656,325) |
| Operating income | 233,596 | 73,906 | ‐ | 307,502 |
| EBITDA(1) | 263,087 | 78,874 | 341,961 |
* Includes the pharmaceutical chemicals operations
(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
| € (thousands) | Pharmaceutical segment* |
Orphan drugs segment |
Non‐allocated ** |
Consolidated accounts |
|---|---|---|---|---|
| 30 September 2018 | ||||
| Non‐current assets | 1,125,435 | 206,875 | 20,784 | 1,353,094 |
| Inventories | 168,656 | 17,061 | ‐ | 185,717 |
| Trade receivables | 205,430 | 42,649 | ‐ | 248,079 |
| Other current assets | 29,044 | 4,813 | 4,142 | 37,999 |
| Short‐term investments, cash and | ||||
| cash equivalents | ‐ | ‐ | 235,165 | 235,165 |
| Total assets | 1,528,565 | 271,398 | 260,091 | 2,060,054 |
| Non‐current liabilities | 54,246 | 2,949 | 568,913 | 626,108 |
| Current liabilities | 263,760 | 47,035 | 135,115 | 445,910 |
| Total liabilities | 318,006 | 49,984 | 704,028 | 1,072,018 |
| Net capital employed | 1,210,559 | 221,414 | ||
| 31 December 2017 | ||||
| Non‐current assets | 1,075,356 | 183,195 | 24,171 | 1,282,722 |
| Inventories | 161,561 | 17,539 | ‐ | 179,100 |
| Trade receivables | 210,114 | 34,003 | ‐ | 244,117 |
| Other current assets | 32,343 | 12,223 | 3,825 | 48,391 |
| Short‐term investments, cash and | ||||
| cash equivalents | ‐ | ‐ | 302,077 | 302,077 |
| Total assets | 1,479,374 | 246,960 | 330,073 | 2,056,407 |
| Non‐current liabilities | 37,591 | 2,546 | 613,487 | 653,624 |
| Current liabilities | 262,572 | 35,128 | 77,846 | 375,546 |
| Total liabilities | 300,163 | 37,674 | 691,333 | 1,029,170 |
| Net capital employed | 1,179,211 | 209,286 |
* Includes the pharmaceutical chemicals operations.
** Non‐allocated amounts include: other equity investments, short‐term investments, cash and cash equivalents, loans, hedging instruments, bank overdrafts and short‐term loans.
The pharmaceutical chemicals operations are considered part of the pharmaceutical segment as they are prevalently dedicated to the production of active ingredients for this business, both from a strategic and organizational point of view.
In December 2015 the Italian Tax Police (Guardia di Finanza) notified the Parent of their intention to commence a general income tax inspection covering the years 2009 through 2014 involving the group companies which reside in Ireland and in Luxembourg, Recordati Ireland Ltd and Recordati S.A. Chemical and Pharmaceutical Company respectively. The declared intention of the inspection is to evaluate the operational context of the foreign companies in order to verify whether said companies are in reality only formally localized abroad but are substantially managed/administered from Italy. On 28 February 2017 the Italian Tax Police (Guardia di Finanza) prescribed the extension of the income tax inspection to include the year 2015. After having analysed the documents and completed the investigation process, the Italian Tax Police finally revealed to Recordati Ireland Ltd., on 6 September 2017, their reasons for considering the Irish company subject to tax in Italy for
corporate tax purposes in the reference period, resulting in an assessment of taxes allegedly owed to Italy, in the amount of € 109.4 million, against taxes of € 51.8 million already paid in Ireland. Similarly, the Italian Tax Police finally revealed to Recordati S.A. Chemical and Pharmaceutical Company, on 6 September 2017, their reasons for considering the Luxembourg company subject to tax in Italy for corporate tax purposes in the reference period, resulting in an assessment of taxes allegedly owed to Italy, in the amount of € 7.2 million. Recordati lreland Ltd. and Recordati S.p.A. (as acquiring company by way of merger of Recordati S.A. Chemical & Pharmaceutical Company) filed their comments and observations on the findings reported in the above mentioned Tax Audits Reports within the legal deadlines. At the date of approval of the financial statements the tax reports and the said observations are still under review by the Tax Authorities (Agenzia delle Entrate). Although, as previously stated, the Group considers its fiscal conduct in this matter to be correct, it was deemed necessary to record, based on a more reliable evaluation of the risk involved in the ongoing assessments, a further provision of € 7.4 million in addition to the tax provision of € 22.1 million already created, penalties and interest included.
Tax liabilities shown in the consolidated balance sheet at 30 September 2018 include those payable to the controlling company FIMEI S.p.A. for an amount of € 13.4 million. This amount refers to tax liabilities computed by the parent Recordati S.p.A. based on estimated taxable income and transferred to the controlling company consequent to the participation in a tax consolidation grouping under tax laws in Italy.
Except for the above, to our knowledge, no transactions or contracts have been entered into with related parties that can be considered significant, in value or conditions, or which could in any way materially affect the accounts.
No significant events occurred subsequent to 30 September 2018.
SUBSIDIARIES INCLUDED IN THE CONSOLIDATED ACCOUNTS AT 30 SEPTEMBER 2018
| Consolidated Companies | Head Office | Share Capital | Currency | Consolidation Method |
|---|---|---|---|---|
| RECORDATI S.P.A. Development, production, marketing and sales of pharmaceuticals and pharmaceutical chemicals |
Italy | 26,140,644.50 | Euro | Line‐by‐line |
| INNOVA PHARMA S.P.A. Marketing and sales of pharmaceuticals |
Italy | 1,920,000.00 | Euro | Line‐by‐line |
| CASEN RECORDATI S.L. Development, production, marketing and sales of pharmaceuticals |
Spain | 238,966,000.00 | Euro | Line‐by‐line |
| BOUCHARA RECORDATI S.A.S. Development, production, marketing and sales of pharmaceuticals |
France | 4,600,000.00 | Euro | Line‐by‐line |
| RECORDATI RARE DISEASES COMERCIO DE MEDICAMENTOS LTDA Holds pharmaceutical marketing rights in Brazil |
Brazil | 166.00 | BRL | Line‐by‐line |
| RECORDATI RARE DISEASES INC. Development, production, marketing and sales of pharmaceuticals |
U.S.A. | 11,979,138.00 | USD | Line‐by‐line |
| RECORDATI IRELAND LTD Development, production, marketing and sales of pharmaceuticals |
Ireland | 200,000.00 | Euro | Line‐by‐line |
| LABORATOIRES BOUCHARA RECORDATI S.A.S. Development, production, marketing and sales of pharmaceuticals |
France | 14,000,000.00 | Euro | Line‐by‐line |
| RECORDATI PHARMA GmbH Marketing and sales of pharmaceuticals |
Germany | 600,000.00 | Euro | Line‐by‐line |
| RECORDATI PHARMACEUTICALS LTD Marketing and sales of pharmaceuticals |
United Kingdom | 15,000,000.00 | GBP | Line‐by‐line |
| RECORDATI HELLAS PHARMACEUTICALS S.A. Marketing and sales of pharmaceuticals |
Greece | 10,050,000.00 | Euro | Line‐by‐line |
| JABA RECORDATI S.A. Marketing and sales of pharmaceuticals |
Portugal | 2,000,000.00 | Euro | Line‐by‐line |
| JABAFARMA PRODUTOS FARMACÊUTICOS S.A. Marketing of pharmaceuticals |
Portugal | 50,000.00 | Euro | Line‐by‐line |
| BONAFARMA PRODUTOS FARMACÊUTICOS S.A. Marketing of pharmaceuticals |
Portugal | 50,000.00 | Euro | Line‐by‐line |
| RECORDATI ORPHAN DRUGS S.A.S. Holding company |
France | 57,000,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE SWITZERLAND GmbH Marketing and sales of pharmaceuticals |
Switzerland | 20,000.00 | CHF | Line‐by‐line |
| ORPHAN EUROPE MIDDLE EAST FZ LLC Marketing and sales of pharmaceuticals |
United Arab Emirates |
100,000.00 | AED | Line‐by‐line |
| RECORDATI AB Marketing and sales of pharmaceuticals |
Sweden | 100,000.00 | SEK | Line‐by‐line |
| ORPHAN EUROPE PORTUGAL LDA Marketing and sales of pharmaceuticals |
Portugal | 5,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE S.à R.L. Development, production, marketing and sales of pharmaceuticals |
France | 320,000.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE UNITED KINGDOM LTD Marketing and sales of pharmaceuticals |
United Kingdom | 50,000.00 | GBP | Line‐by‐line |
| ORPHAN EUROPE GERMANY GmbH Marketing and sales of pharmaceuticals |
Germany | 25,600.00 | Euro | Line‐by‐line |
| ORPHAN EUROPE SPAIN S.L. Marketing and sales of pharmaceuticals |
Spain | 1,775,065.49 | Euro | Line‐by‐line |
| ORPHAN EUROPE ITALY S.R.L. Marketing and sales of pharmaceuticals |
Italy | 40,000.00 | Euro | Line‐by‐line |
| Consolidated Companies | Head Office | Share Capital | Currency | Consolidation Method |
|---|---|---|---|---|
| RECORDATI BVBA Marketing and sales of pharmaceuticals |
Belgium | 18,600.00 | Euro | Line‐by‐line |
| FIC MEDICAL S.à R.L. Marketing of pharmaceuticals |
France | 173,700.00 | Euro | Line‐by‐line |
| HERBACOS RECORDATI s.r.o. Development, production, marketing and sales of pharmaceuticals |
Czech Republic | 25,600,000.00 | CZK | Line‐by‐line |
| RECORDATI SK s.r.o. Marketing and sales of pharmaceuticals |
Slovakia | 33,193.92 | Euro | Line‐by‐line |
| RUSFIC LLC Marketing and sales of pharmaceuticals |
Russian Federation | 3,560,000.00 | RUB | Line‐by‐line |
| RECOFARMA ILAÇ Ve Hammaddeleri Sanayi Ve Ticaret L.Ş. Marketing of pharmaceuticals |
Turkey | 10,000.00 | TRY | Line‐by‐line |
| RECORDATI ROMÂNIA S.R.L. Marketing and sales of pharmaceuticals |
Romania | 5,000,000.00 | RON | Line‐by‐line |
| RECORDATI İLAÇ Sanayi Ve Ticaret A.Ş. Development, production, marketing and sales of pharmaceuticals |
Turkey | 120,875,367.00 | TRY | Line‐by‐line |
| RECORDATI POLSKA Sp. z o.o. Marketing and sales of pharmaceuticals |
Poland | 4,500,000.00 | PLN | Line‐by‐line |
| ACCENT LLC Holds pharmaceutical marketing rights |
Russian Federation | 20,000.00 | RUB | Line‐by‐line |
| RECORDATI UKRAINE LLC Marketing of pharmaceuticals |
Ukraine | 1,031,896.30 | UAH | Line‐by‐line |
| CASEN RECORDATI PORTUGAL Unipessoal Lda Marketing and sales of pharmaceuticals |
Portugal | 100,000.00 | Euro | Line‐by‐line |
| OPALIA PHARMA S.A. Development, production, marketing and sales of pharmaceuticals |
Tunisia | 9,656,000.00 | TND | Line‐by‐line |
| OPALIA RECORDATI S.à R.L. Marketing of pharmaceuticals |
Tunisia | 20,000.00 | TND | Line‐by‐line |
| RECORDATI RARE DISEASES S.A. DE C.V. Marketing of pharmaceuticals |
Mexico | 16,250,000.00 | MXN | Line‐by‐line |
| RECORDATI RARE DISEASES COLOMBIA S.A.S Marketing of pharmaceuticals |
Colombia | 150,000,000.00 | COP | Line‐by‐line |
| ITALCHIMICI S.p.A. Marketing of pharmaceuticals |
Italy | 7,646,000.00 | EUR | Line‐by‐line |
| RECORDATI AG Marketing of pharmaceuticals |
Switzerland | 3,000,000.00 | CHF | Line‐by‐line |
| PRO FARMA GmbH Marketing of pharmaceuticals |
Austria | 35,000.00 | EUR | Line‐by‐line |
| RECORDATI RARE DISEASES CANADA Inc. (1) Marketing of pharmaceuticals |
Canada | 350,000.00 | CAD | Line‐by‐line |
| RECORDATI RARE DISEASES JAPAN K.K. (2) Marketing of pharmaceuticals |
Japan | 10,000,000.00 | JPY | Line‐by‐line |
| NATURAL POINT S.r.l. (3) Marketing of pharmaceuticals |
Italy | 10,400.00 | EUR | Line‐by‐line |
| RECORDATI RARE DISEASES AUSTRALIA Pty Ltd (2) Marketing of pharmaceuticals |
Australia | 200,000.00 | AUD | Line‐by‐line |
(1) Established in 2017
(2) Established in 2018
(3) Acquired in 2018
| PERCENTAGE OF OWNERSHIP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated companies | Recordati S.p.A. (Parent) |
Recordati Pharma GmbH |
Bouchara Recordati S.A.S. |
Casen Recordati S.L. |
Recordati Orphan Drugs S.A.S. |
Orphan Europe S.à R.L. |
Herbacos Recordati s.r.o. |
Recordati Ilaç A.Ş. |
Opalia Pharma S.A. |
Recordati AG |
Total |
| INNOVA PHARMA S.P.A. | 100.00 | 100.00 | |||||||||
| CASEN RECORDATI S.L. | 100.00 | 100.00 | |||||||||
| BOUCHARA RECORDATI S.A.S. | 100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES COMERCIO DE MEDICAMENTOS LTDA |
99.398 | 0.602 | 100.00 | ||||||||
| RECORDATI RARE DISEASES INC. | 100.00 | 100.00 | |||||||||
| RECORDATI IRELAND LTD | 100.00 | 100.00 | |||||||||
| LABORATOIRES BOUCHARA RECORDATI S.A.S. |
100.00 | 100.00 | |||||||||
| RECORDATI PHARMA GmbH | 55.00 | 45.00 | 100.00 | ||||||||
| RECORDATI PHARMACEUTICALS LTD |
100.00 | 100.00 | |||||||||
| RECORDATI HELLAS PHARMACEUTICALS S.A. |
100.00 | 100.00 | |||||||||
| JABA RECORDATI S.A. | 100.00 | 100.00 | |||||||||
| JABAFARMA PRODUTOS FARMACÊUTICOS S.A. |
100.00 | 100.00 | |||||||||
| BONAFARMA PRODUTOS FARMACÊUTICOS S.A. |
100.00 | 100.00 | |||||||||
| RECORDATI ORPHAN DRUGS S.A.S. |
90.00 | 10.00 | 100.00 | ||||||||
| ORPHAN EUROPE SWITZERLAND GmbH |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE MIDDLE EAST FZ LLC |
100.00 | 100.00 | |||||||||
| RECORDATI AB | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE PORTUGAL LDA |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE S.à R.L. | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE UNITED KINGDOM LTD |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE GERMANY GmbH |
100.00 | 100.00 | |||||||||
| ORPHAN EUROPE SPAIN S.L. | 100.00 | 100.00 | |||||||||
| ORPHAN EUROPE ITALY S.R.L. | 99.00 | 99.00 | |||||||||
| RECORDATI BVBA | 99.46 | 0.54 | 100.00 | ||||||||
| FIC MEDICAL S.à R.L. | 100.00 | 100.00 |
| PERCENTAGE OF OWNERSHIP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated companies | Recordati S.p.A. (Parent) |
Recordati Pharma GmbH |
Bouchara Recordati S.A.S. |
Casen Recordati S.L. |
Recordati Orphan Drugs S.A.S. |
Orphan Europe S.à R.L. |
Herbacos Recordati s.r.o. |
Recordati Ilaç A.Ş. |
Opalia Pharma S.A. |
Recordati AG |
Total |
| HERBACOS RECORDATI s.r.o. | 100.00 | 100.00 | |||||||||
| RECORDATI SK s.r.o. | 100.00 | 100.00 | |||||||||
| RUSFIC LLC | 100.00 | 100.00 | |||||||||
| RECOFARMA ILAÇ Ve Hammaddeleri Sanayi Ve Ticaret L.Ş. |
100.00 | 100.00 | |||||||||
| RECORDATI ROMÂNIA S.R.L. | 100.00 | 100.00 | |||||||||
| RECORDATI İLAÇ Sanayi Ve Ticaret A.Ş. |
100.00 | 100.00 | |||||||||
| RECORDATI POLSKA Sp. z o.o |
100.00 | 100.00 | |||||||||
| ACCENT LLC | 100.00 | 100.00 | |||||||||
| RECORDATI UKRAINE LLC | 0.01 | 99.99 | 100.00 | ||||||||
| CASEN RECORDATI PORTUGAL Unipessoal Lda |
100.00 | 100.00 | |||||||||
| OPALIA PHARMA S.A. | 90.00 | 90.00 | |||||||||
| OPALIA RECORDATI S.à R.L. |
1.00 | 99.00 | 100.00 | ||||||||
| RECORDATI RARE DISEASES S.A. DE C.V. |
99.998 | 0.002 | 100.00 | ||||||||
| RECORDATI RARE DISEASES COLOMBIA S.A.S. |
100.00 | 100.00 | |||||||||
| ITALCHIMICI S.p.A. | 100.00 | 100.00 | |||||||||
| RECORDATI AG | 100.00 | 100.00 | |||||||||
| PRO FARMA GmbH | 100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES CANADA Inc.(1) |
100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES JAPAN K.K.(2) |
100.00 | 100.00 | |||||||||
| NATURAL POINT S.r.l.(3) | 100.00 | 100.00 | |||||||||
| RECORDATI RARE DISEASES AUSTRALIA Pty Ltd (2) |
100.00 | 100.00 |
(1) Established in 2017
(2) Established in 2018
(3) Acquired in 2018
The manager responsible for preparing the company's financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154‐bis of the Consolidated Law on Finance, that the accounting information contained in this report corresponds to the document results, books and accounting records.
Milan, 30 October 2018
Signed by Fritz Squindo Manager responsible for preparing the Company's financial reports
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