EX-99.2 3 ea145094ex99-2_kamada.htm KAMADA LTD.'S CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2021 (UNAUDITED)

Exhibit 99.2

KAMADA LTD.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2021

(Unaudited)

TABLE OF CONTENTS

	Page

Consolidated Statements of Financial Position	2

Consolidated Statements of Profit or Loss and Other Comprehensive Income	3

Consolidated Statements of Changes in Equity	4-7

Consolidated Statements of Cash Flows	8-9

Notes to the Interim Consolidated Financial Statements	10-20

- - - - - - - - - - -

KAMADA LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	As of June 30,						As of December 31,
	2021			2020			2020
	Unaudited						Audited
	U.S Dollars in thousands
Assets
Current Assets
Cash and cash equivalents	$	68,416		$	57,399		$	70,197
Short-term investments		36,137			47,272			39,069
Trade receivables, net		27,743			19,823			22,108
Other accounts receivables		2,450			2,980			4,524
Inventories		44,601			47,646			42,016
Total Current Assets		179,347			175,120			177,914

Non-Current Assets
Property, plant and equipment, net		25,665			24,574			25,679
Right-of-use-assets		3,453			3,796			3,440
Other long term assets		3,413			1,058			1,573
Contract assets		4,472			911			2,059
Deferred taxes		-			632			-
Total Non-Current Assets		37,003			30,971			32,751
Total Assets	$	216,350		$	206,091		$	210,665
Liabilities
Current Liabilities
Current maturities of bank loans	$	61		$	431		$	238
Current maturities of lease liabilities		1,149			990			1,072
Trade payables		17,948			22,760			16,110
Other accounts payables		6,989			5,497			7,547
Deferred revenues		-			589			-
Total Current Liabilities		26,147			30,267			24,967

Non-Current Liabilities
Bank loans		5			63			36
Lease liabilities		3,401			3,704			3,593
Deferred revenues		3,025			1,025			2,025
Employee benefit liabilities, net		1,429			1,267			1,406
Total Non-Current Liabilities		7,860			6,059			7,060

Shareholder’s Equity
Ordinary shares		11,716			11,662			11,706
Additional paid in capital		209,942			207,731			209,760
Capital reserve due to translation to presentation currency		(3,490	)		(3,490	)		(3,490	)
Capital reserve from hedges		58			411			357
Capital reserve from share-based payments		4,746			6,204			4,558
Capital reserve from employee benefits		(320	)		(356	)		(320	)
Accumulated deficit		(40,309	)		(52,397	)		(43,933	)
Total Shareholder’s Equity		182,343			169,765			178,638
Total Liabilities and Shareholder’s Equity	$	216,350		$	206,091		$	210,665

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Six months period ended						Three months period ended						Year ended
	June 30,						June 30,						December 31,
	2021			2020			2021			2020			2020
	Unaudited						Unaudited						Audited
	U.S Dollars In thousands

Revenues from proprietary products	$	40,193		$	47,942		$	19,323		$	22,625		$	100,916
Revenues from distribution		8,946			18,437			4,916			10,464			32,330

Total revenues		49,139			66,379			24,239			33,089			133,246

Cost of revenues from proprietary products		23,527			27,881			11,059			12,934			57,750
Cost of revenues from distribution		7,609			15,932			4,108			9,040			27,944

Total cost of revenues		31,136			43,813			15,167			21,974			85,694

Gross profit		18,003			22,566			9,072			11,115			47,552

Research and development expenses		5,364			6,970			2,736			3,623			13,609
Selling and marketing expenses		2,547			2,118			1,424			1,178			4,518
General and administrative expenses		6,112			4,619			3,303			2,307			10,139
Other expenses		570			34			563			32			49
Operating income		3,410			8,825			1,046			3,975			19,237

Financial income		209			615			99			298			1,027
Income (expense) in respect of securities measured at fair value, net *		-			102			-			-			102
Income (expenses) in respect of currency exchange differences and derivatives instruments, net		121			65			(145	)		(367	)		(1,535	)
Financial expenses		(116	)		(135	)		(63	)		(58	)		(266	)
Income before tax on income		3,624			9,472			937			3,848			18,565
Taxes on income		-			796			-			390			1,425

Net Income	$	3,624		$	8,676		$	937		$	3,458		$	17,140

Other Comprehensive Income (loss) :
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met
Gain (loss) from securities measured at fair value through other comprehensive income		-			(188	)		-			-			(188	)
Gain (loss) on cash flow hedges		(43	)		441			30			200			876
Net amounts transferred to the statement of profit or loss for cash flow hedges		(256	)		(7	)		(2	)		(41	)		(528	)
Items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement gain (loss) from defined benefit plan		-			-			-			-			64
Tax effect		-			15			-			(12	)		19
Total comprehensive income	$	3,325		$	8,937		$	965		$	3,605		$	17,383

Earnings per share attributable to equity holders of the Company:
Basic net earnings per share	$	0.08		$	0.20		$	0.02		$	0.10		$	0.39
Diluted net earnings per share	$	0.08		$	0.20		$	0.02		$	0.10		$	0.38

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share capital		Additional paid in capital		Capital reserve due to translation to presentation currency			Capital reserve from hedges			Capital reserve from sharebased payments			Capital reserve from employee benefits			Accumulated deficit			Total equity

Balance as of January 1, 2021 (audited)	$	11,706	$	209,760	$	(3,490	)	$	357		$	4,558		$	(320	)	$	(43,933	)	$	178,638
Net income		-		-		-			-			-			-			3,624			3,624
Other comprehensive income (loss)		-		-		-			(299	)		-			-			-			(299	)
Tax effect		-		-		-			-			-			-			-			-
Total comprehensive income (loss)		-		-		-			(299	)		-			-			3,624			3,325
Exercise and forfeiture of share-based payment into shares		10		182		-			-			(182	)		-			-			10
Cost of share-based payment		-		-		-			-			370			-			-			370
Balance as of June 30, 2021	$	11,716	$	209,942	$	(3,490	)	$	58		$	4,746		$	(320	)	$	(40,309	)	$	182,343

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share capital		Additional paid in capital		Capital reserve from securities measured at fair value through other comprehensive income			Capital reserve due to translation to presentation currency			Capital reserve from hedges			Capital reserve from sharebased payments			Capital reserve from employee benefits			Accumulated deficit			Total equity
	Unaudited
	U.S Dollars in thousands

Balance as of January 1, 2020 (audited)	$	10,425	$	180,819	$	145		$	(3,490	)	$	8		$	8,844		$	(359	)	$	(61,073	)	$	135,319
Net income		-		-		-			-			-			-			-			8,676			8,676
Other comprehensive income (loss)		-		-		(188	)		-			434			-			-			-			246
Taxes effect		-		-		43			-			(31	)		-			3			-			15
Total comprehensive income (loss)		-		-		(145	)		-			403			-			3			8,676			8,937
Issuance of ordinary shares		1,217		23,684		-			-			-			-			-			-			24,901
Exercise and forfeiture of share-based payment into shares		20		3,228		-			-			-			(3,228	)		-			-			20
Cost of share-based payment		-		-		-			-			-			588			-			-			588
Balance as of June 30, 2020	$	11,662	$	207,731	$	-		$	(3,490	)	$	411		$	6,204		$	(356	)	$	(52,397	)	$	169,765

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share capital		Additional paid in capital		Capital reserve due to translation to presentation currency			Capital reserve from hedges		Capital reserve from sharebased payments			Capital reserve from employee benefits			Accumulated deficit			Total equity

Balance as of April 1, 2021 (audited)	$	11,713	$	209,859	$	(3,490	)	$	30	$	4,674		$	(320	)	$	(41,246	)	$	181,220
Net income		-		-		-			-		-			-			937			937
Other comprehensive income (loss)		-		-		-			28		-			-			-			28
Taxes effect		-		-		-			-		-			-			-			-
Total comprehensive income (loss)		-		-		-			28		-			-			937			965
Exercise and forfeiture of share-based payment into shares		3		83		-			-		(83	)		-			-			3
Cost of share-based payment		-		-		-			-		155			-			-			155
Balance as of June 30, 2021	$	11,716	$	209,942	$	(3,490	)	$	58	$	4,746		$	(320	)	$	(40,309	)	$	182,343

	Share capital		Additional paid in capital		Capital reserve due to translation to presentation currency			Capital reserve from hedges			Capital reserve from sharebased payments			Capital reserve from employee benefits			Accumulated deficit			Total equity

Balance as of April 1, 2020	$	11,647	$	204,702	$	(3,490	)		264		$	8,903		$	(356	)	$	(55,855	)	$	165,815
Net income		-		-		-			-			-			-			3,458			3,458
Other comprehensive income		-		-		-			159			-			-			-			159
Taxes effect		-		-		-			(12	)		-			-			-			(12	)
Total comprehensive income (loss)		-		-		-			147			-			-			3,458			3,605
Exercise into shares and forfeiture of share-based payment		15		3,029		-			-			(3,029	)		-						15
Cost of share-based payment		-		-		-			-			330			-			-			330
Balance as of June 30, 2020	$	11,662	$	207,731	$	(3,490	)	$	411		$	6,204		$	(356	)	$	(52,397	)	$	169,765

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share capital		Additional paid in capital		Capital reserve from securities measured at fair value through other comprehensive income			Capital reserve due to translation to presentation currency			Capital reserve from hedges		Capital reserve from sharebased payments			Capital reserve from employee benefits			Accumulated deficit			Total equity
	Unaudited
	In thousands

Balance as of January 1, 2020 (audited)	$	10,425	$	180,819	$	145		$	(3,490	)	$	8	$	8,844		$	(359	)	$	(61,073	)	$	135,319
Net income		-		-		-			-			-		-			-			17,140			17,140
Other comprehensive income (loss)		-		-		(188	)		-			348		-			64			-			224
Tax effect		-		-		43			-			1		-			(25	)		-			19
Total comprehensive income (loss)		-		-		(145	)		-			349		-			39			17,140			17,383
Issuance of ordinary shares		1,217		23,678		-			-			-		-			-			-			24,895
Exercise and forfeiture of share-based payment into shares		64		5,263		-			-			-		(5,263	)		-			-			64
Cost of share-based payment		-		-		-			-			-		977			-			-			977
Balance as of December 31, 2020	$	11,706	$	209,760	$	-		$	(3,490	)	$	357	$	4,558		$	(320	)	$	(43,933	)	$	178,638

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months period Ended						Three months period Ended						Year Ended
	June, 30						June, 30						December 31,
	2021			2020			2021			2020			2020
	Unaudited												Audited
	U.S Dollars In thousands
Cash Flows from Operating Activities
Net income	$	3,624		$	8,676		$	937		$	3,458		$	17,140

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to the profit or loss items:

Depreciation and impairment		2,372			2,380			1,225			1,188			4,897
Financial expenses (income), net		(214	)		(647	)		109			127			672
Cost of share-based payment		370			588			155			330			977
Taxes on income		-			796			-			390			1,425
Loss (gain) from sale of property and equipment		-			(6	)		-			(6	)		(7	)
Change in employee benefit liabilities, net		23			(2	)		60			16			201
		2,551			3,109			1,549			2,045			8,165
Changes in asset and liability items:

Decrease (increase) in trade receivables, net		(5,646	)		3,416			(7,231	)		6,432			1,332
Decrease (increase) in other accounts receivables		1,629			741			1,643			(772	)		115
Increase in inventories		(2,401	)		(4,473	)		(3,446	)		(5,859	)		1,157
Decrease (increase) in deferred expenses		(2,362	)		(911	)		(1,209	)		(490	)		(3,085	)
Increase (decrease) in trade payables		1,139			(2,719	)		2,623			4,497			(9,560	)
Increase (decrease) in other accounts payables		(799	)		(314	)		1,346			866			1,736
Decrease in deferred revenues		1,000			793			500			396			1,204
		(7,440	)		(3,467	)		(5,774	)		5,070			(7,101	)
Cash received (paid) during the period for:

Interest paid		(107	)		(107	)		(59	)		(52	)		(209	)
Interest received		217			601			76			150			1,211
Taxes paid		(23	)		(74	)		(9	)		(13	)		(101	)
		87			420			8			85			901

Net cash provided by operating activities	$	(1,178	)	$	8,738		$	(3,280	)	$	10,658		$	19,105

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months period Ended						Three months period Ended						Year Ended
	June, 30						June, 30						December 31,
	2021			2020			2021			2020			2020
	Unaudited												Audited
	U.S Dollars In thousands
Cash Flows from Investing Activities

Proceeds of investment in short term investments, net	$	2,967		$	(15,646	)	$	11,967		$	-		$	(7,646	)
Purchase of property and equipment and intangible assets		(1,463	)		(1,901	)		(1,332	)		(1,005	)		(5,488	)
Proceeds from sale of property and equipment		-			6			-			6			7
Acquisition of subsidiary (LLC), net (1)		(1,404	)		-			-						-
Net cash used in investing activities		100			(17,541	)		10,635			(999	)		(13,127	)

Cash Flows from Financing Activities

Proceeds from exercise of share base payments		10			20			3			15			64
Repayment of lease liabilities		(595	)		(540	)		(306	)		(262	)		(1,103	)
Repayment of long-term loans		(206	)		(247	)		(85	)		(124	)		(492	)
Proceeds from issuance of ordinary shares, net		-			24,895			-			-			24,895

Net cash provided by (used in) financing activities		(791	)		24,128			(388	)		(371	)		23,364

Exchange differences on balances of cash and cash equivalent		88			(588	)		13			(1,177	)		(1,807	)

Increase in cash and cash equivalents		(1,781	)		14,737			6,980			8,111			27,535

Cash and cash equivalents at the beginning of the period		70,197			42,662			61,436			49,288			42,662

Cash and cash equivalents at the end of the period	$	68,416		$	57,399		$	68,416		$	57,399		$	70,197

Significant non-cash transactions
Right-of-use asset recognized with corresponding lease liability	$	588		$	345		$	286		$	287		$	539
Purchase of property and equipment	$	748		$	722		$	748		$	722		$	722

Appendix A (1)	Six months period Ended June, 30 2021
Acquisition of a subsidiary that was first consolidated

Current Assets (exclusive of cash and cash equivalents)		(184	)
Non Current Assets		(1,460	)
Current Liabilities		240
		(1,404	)

The accompanying Notes are an integral part of the Consolidated Financial Statements.

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1:

General

Kamada Ltd. (the “Company”) is a global specialty plasma-derived biopharmaceutical company with a diverse portfolio of marketed products, a robust development pipeline and industry-leading manufacturing capabilities. The Company’s strategy is focused on driving profitable growth from its current commercial products, its plasma-derived development pipeline and its manufacturing expertise, while evolving into a vertically integrated plasma-derived company. The Company’s two leading commercial products are GLASSIA® and KEDRRAB®. GLASSIA was the first liquid, ready-to-use, intravenous plasma-derived AAT product approved by the FDA. The Company markets GLASSIA in the U.S. through a strategic partnership with Takeda Pharmaceuticals Company Limited (“Takeda”) and in other countries through local distributors. Pursuant to an agreement with Takeda, the Company will continue to produce GLASSIA for Takeda through 2021 and Takeda will initiate its own production of GLASSIA for the U.S. market in 2021, at which point Takeda will commence payment of royalties to the Company until 2040. KEDRAB is an FDA approved anti-rabies immune globulin (Human) for post-exposure prophylaxis treatment. KEDRAB is being marketed in the U.S. through a strategic partnership with Kedrion S.p.A. The Company has additional four plasma-derived products administered by injection or infusion, that are marketed through distributors in more than 15 countries, including Israel, Russia, Brazil, Argentina, India and other countries in Latin America and Asia. The Company has two leading development programs; an inhaled AAT for the treatment of AAT deficiency for which the Company is currently conducting the InnovAATe clinical trial, a randomized, double-blind, placebo-controlled, pivotal Phase 3 trial and a plasma-derived hyperimmune immunoglobulin (IgG) product as a potential treatment for coronavirus disease (COVID-19). The Company leverages its expertise and presence in the Israeli pharmaceutical market to distribute in Israel more than 20 products that are manufactured by third parties and have recently added nine biosimilar products to its Israeli distribution portfolio, which, subject to EMA and the Israeli MOH approvals, are expected to be launched in Israel between the years 2022 and 2025.

Pursuant to the agreement with Takeda (as detailed on Note 17 of the Company’s annual financial statements as of December 31, 2020) the Company continues to produce Glassia for Takeda through 2021. Takeda will complete the technology transfer of Glassia and will initiate its own production of Glassia for the U.S. market in 2021. Accordingly, following the transition of manufacturing to Takeda, the Company will terminate the manufacturing and sale of Glassia to Takeda resulting in a significant reduction in revenues. Pursuant to the agreement, upon initiation of sales of Glassia manufactured by Takeda, Takeda will pay royalties to the Company at a rate of 12% on net sales through August 2025, and at a rate of 6% thereafter until 2040, with a minimum of $5 million annually, for each of the years from 2022 to 2040. See note 3c below regarding a recent amendment to the agreement with Takeda.

These financial statements have been prepared in a condensed format as of June 30, 2021 and for the three months then ended (“interim consolidated financial statements”).

These financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2020 and for the year then ended and the accompanying notes (“annual consolidated financial statements”).

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2:

Significant Accounting Policies

Basis of preparation of the interim consolidated financial statements:

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in IAS 34, “Interim Financial Reporting”.

b.	Implementation of new accounting standards:

The accounting policy applied in the preparation of the interim consolidated financial statements is consistent with that applied in the preparation of the annual consolidated financial statements, except for the following:

Amendments to IFRS 9, IFRS 7, IFRS 16, IFRS 4 and IAS 39 regarding the IBOR reform:

In August 2020, the IASB issued amendments to IFRS 9, “Financial Instruments”, IFRS 7, “Financial Instruments: Disclosures”, IAS 39, “Financial Instruments: Recognition and Measurement”, IFRS 4, “Insurance Contracts”, and IFRS 16, “Leases” (the “Amendments”).

The Amendments provide practical expedients when accounting for the effects of the replacement of benchmark InterBank Offered Rates (IBORs) by alternative Risk Free Interest Rates (RFRs).

Pursuant to one of the practical expedients, an entity will treat contractual changes or changes to cash flows that are directly required by the reform as changes to a floating interest rate. That is, an entity recognizes the changes in interest rates as an adjustment of the effective interest rate without adjusting the carrying amount of the financial instrument. The use of this practical expedient is subject to the condition that the transition from IBOR to RFR takes place on an economically equivalent basis.

In addition, the Amendments permit changes required by the IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued, provided certain conditions are met. The Amendments also provide temporary relief from having to meet the “separately identifiable” requirement according to which a risk component must also be separately identifiable to be eligible for hedge accounting.

The Amendments include new disclosure requirements in connection with the expected effect of the reform on an entity’s financial statements, such as how the entity is managing the process to transition to the interest rate reform, the risks to which it is exposed due to the reform and quantitative information about IBOR-referenced financial instruments that are expected to change.

The Amendments are effective for annual periods beginning on or after January 1, 2021. The Amendments are to be applied retrospectively. However, restatement of comparative periods is not required. Early application is permitted.

The adoption of the Amendment does not have an effect on the Company’s financial statements.

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2:

Significant Accounting Policies (continued)

Implementation of new accounting standards (continued):

ii.

Amendment to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current

In January 2020, the IASB issued an amendment to IAS 1, “Presentation of Financial Statements” (the “IAS 1 Amendment “) regarding the criteria for determining the classification of liabilities as current or non-current. The IAS 1 Amendment replaces certain requirements for classifying liabilities as current or non-current. Thus for example, according to the IAS 1 Amendment, a liability will be classified as non-current when the entity has the right to defer settlement for at least 12 months after the reporting period, and it “has substance” and is in existence at the end of the reporting period, this instead of the requirement that there be an “unconditional” right. According to the IAS1 Amendment, a right is in existence at the reporting date only if the entity complies with conditions for deferring settlement at that date. Furthermore, the IAS 1 Amendment clarifies that the conversion option of a liability will affect its classification as current or non-current, other than when the conversion option is recognized as equity.

The IAS 1Amendment is effective for reporting periods beginning on or after January 1, 2023 with earlier application being permitted. The IAS1 Amendment is applicable retrospectively, including an amendment to comparative data.

The Company has not yet commenced examining the effects of applying the IAS 1 Amendment on the financial statements.

iii.

Amendment to IAS 37, Provisions, Contingent Liabilities and Contingent Assets

In May 2020, the IASB issued an amendment to IAS 37, regarding which costs a company should include when assessing whether a contract is onerous (the “IAS 37 Amendment”). According to the IAS 37 Amendment, when assessing whether a contract is onerous, the costs of fulfilling a contract that should be taken into consideration are costs that relate directly to the contract, which include as follows:

Incremental costs; and

An allocation of other costs that relate directly to fulfilling a contract (such as depreciation expenses for fixed assets used in fulfilling that contract and other contracts).

The IAS 37 Amendment is effective retrospectively for annual periods beginning on or after January 1, 2022, in respect of contracts where the entity has not yet fulfilled all its obligations. Early application is permitted. Upon application of the Amendment, the entity will not restate comparative data, but will adjust the opening balance of retained earnings at the date of initial application, by the amount of the cumulative effect of the Amendment.

The Company has not yet commenced examining the effects of the IAS 37 Amendment on the financial statements.

iv.

Amendment to IAS 16, Property, Plant and Equipment

In May 2020, the IASB issued an amendment to IAS 16, “Property, Plant and Equipment” (the “IAS 16 Amendment”) The Amendment annuls the requirement by which in the calculation of costs directly attributable to fixed assets, the net proceeds from selling certain items that were produced while the Company tested the functioning of the asset should be deducted (such as samples that were produced when testing the equipment). Instead, such proceeds shall be recognized in profit or loss according to the relevant standards and the cost of the sold items will be measured according to the measurement requirements of IAS 2, Inventories.

The IAS 16 Amendment is effective for annual periods beginning on or after January 1, 2022. Early application is permitted. The IAS 16 Amendment shall be applied on a retrospective basis, including an amendment of comparative data, only with respect to fixed asset items that have been brought to the location and condition required for them to operate in the manner intended by management subsequent to the earliest reporting period presented at the date of initial application of the IAS 16 Amendment. The cumulative effect of the Amendment will adjust the opening balance of retained earnings for the earliest reporting period presented.

The Company has not yet commenced examining the effects of the Amendment on the financial statements.

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3:

Significant events in the reportimg period

a.	Effects of the COVID-19 Pandemic Outbreak:

Following the global COVID-19 outbreak, there has been a decrease in economic activity worldwide, including Israel. The spread of the COVID-19 pandemic led, inter alia, to a disruption in the global supply chain, a decrease in global transportation, restrictions on travel and work that were announced by the State of Israel and other countries worldwide as well as a decrease in the value of financial assets and commodities across all markets in Israel and the world.

The Company’s business activity and commercial operation were affected by these factors, and the Company has taken several actions to ensure its manufacturing plant remains operational with limited disruption to its business continuity. The Company continues to maintain higher inventory levels of raw materials through its suppliers and service providers to appropriately manage any potential supply disruptions and secure continued manufacturing. In addition, the Company is actively engaging its freight carriers to ensure inbound and outbound international delivery routes remain operational and identify alternative routes, if needed.

The Company is complying with the State of Israel mandates and recommendations with respect to its work-force management and has taken several precautionary health and safety measures to safeguard its employees and continues to monitor and assess orders issued by the State of Israel and other applicable governments to ensure compliance with evolving COVID-19 guidelines.

While COVID-19 related disruption continues to have various effect on the Company’s business activities, commercial operation, revenues and operational expenses, as a results of the actions taken by the Company to date, its overall results of operations were not materially affected however, a number of factors, including but not limited to, continued effect of the factors mentioned above as well as, continued demand for the Company’s products, including GLASSIA and KEDRAB, in the U.S. market and its distributed products in Israel, financial conditions of the Company’s customer, suppliers and services providers, the Company’s ability to manage operating expenses, additional competition in the markets that the Company competes, regulatory delays, prevailing market conditions and the impact of general economic, industry or political conditions in the U.S., Israel or otherwise, may have an effect on the Company’s future financial position and results of operations.

The financial impact of these factors cannot be reasonably estimated at this time due to substantial uncertainty but may materially affect our business, financial condition and results of operations. The Company assess the impact of the COVID-19 pandemic in a number of possible scenarios and concluded that there are no uncertainties that may cast significant doubt on its ability to continue as a going concern or affect significantly on the Company liquidity.

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3:

Significant events in the reportimg period (continued)

b.	Acquisition of an FDA-Licensed Plasma Collection Center:

On March 31, 2021 the Company acquired the plasma collection center and certain related rights and assets from the privately-held B&PR of Beaumont, TX, USA. The plasma collection facility primarily specializes in the collection of hyper-immune plasma used for the Anti-D immunoglobulin, which is manufactured by the Company and distributed in international markets. The acquisition was consummated through Kamada Plasma LLC, a newly formed wholly owned subsidiary of the Company, which will operate the Company’s plasma collection activity in the U.S.

In consideration for the assets acquired, the Company committed to a pay a total amount of $1,654 thousands, of which $ 1,404 thousands was paid at the closing of the acquisition, and the balance in the amount of $250 thousands will be paid on March 31, 2022.

The Company incurred acquisition-related costs of $140 thousand related mainly to legal and other consulting fees. These costs were recorded in general and administrative expenses in the statement of profit and loss during 2020 and the first quarter of 2021.

Identifiable assets acquired and liabilities assumed:

	U.S Dollars in thousands

Inventories	$	184
Intangible assets (1)		1,378
Property, plant and equipment, net		82
Total acquired assets		1,644
Assumed liabilities		(240	)
Net identifiable assets	$	1,404

(1)

The fair value of intangible assets (FDA-License for plasma collection and goodwill) has been determined provisionally pending completion of an independent valuation. If new information is obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date, the Company will retrospectively adjust the relevant amounts that were recognized at the time of the acquisition.

c.	Amendment to GLASSIA® License Agreement with Takeda:

On March 31, 2021, the Company entered into an amendment to the Technology License Agreement with Takeda with respect to GLASSIA. Pursuant to the amendment, upon completion of the transition of GLASSIA manufacturing to Takeda, expected by the end of 2021, the Company will transfer to Takeda the GLASSIA U.S. Biologics License Application (BLA). In consideration for the BLA transfer, the Company will receive a $2,000 thousand payment from Takeda. In addition, the terms of the final sales-based milestone of $5,000 thousand due to Kamada under the license agreement were amended. As a result of such amendment the Company recognized the $5,000 thousand milestone as a revenue during the first quarter of 2021.

d.	Worforce Downsizing:

As a result of the transition of GLASSIA manufacturing to Takeda, Kamada initiated during the second quarter of 2021 a workforce downsizing program which is expected to continue through the beginning of the third quarter of 2021. During the second quarter of 2021 the Company accounted for $550 thousand of costs associated with termination benefits which were recorded as a one-time expense in the other operating expenses.

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4:

Operating Segments

General:

The company has two operating segments, as follows:

Proprietary Products	-	Development, manufacturing, sales and distribution of plasma-derived protein therapeutics.

Distribution	-	Distribute imported drug products in Israel, which are manufactured by third parties.

b.	Reporting on operating segments:

	Six months period ended June 30, 2021
	Proprietary
	Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited

Revenues	$	40,193	$	8,946	$	49,139
Gross profit	$	16,666	$	1,337	$	18,003
Unallocated corporate expenses						(14,593	)
Finance income, net						214
Income before taxes on income					$	3,624

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4:

Operating Segments (continued)

Reporting on operating segments: (continued)

	Six months period ended June 30, 2020
	Proprietary
	Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited

Revenues	$	47,942	$	18,437	$	66,379
Gross profit	$	20,061	$	2,505	$	22,566
Unallocated corporate expenses						(13,741	)
Finance income, net						647
Income before taxes on income					$	9,472

	Three months period ended June 30, 2021
	Proprietary
	Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited

Revenues	$	19,323	$	4,916	$	24,239
Gross profit	$	8,264	$	808	$	9,072
Unallocated corporate expenses						(8,026	)
Finance expenses, net						(109	)
Income before taxes on income					$	937

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4:

Operating Segments (continued)

Reporting on operating segments (continued):

	Three months period ended June 30, 2020
	Proprietary
	Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited

Revenues	$	22,625	$	10,464	$	33,089
Gross profit	$	9,691	$	1,424	$	11,115
Unallocated corporate expenses						(7,140	)
Finance expenses, net						(127	)
Income before taxes on income					$	3,848

	Year Ended December 31, 2020
	Proprietary
	Products		Distribution		Total
	U.S Dollars in thousands
	Audited

Revenues	$	100,916	$	32,330	$	133,246
Gross profit	$	43,166	$	4,386	$	47,552
Unallocated corporate expenses						(28,315	)
Finance expenses, net						(672	)
Income before taxes on income					$	18,565

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4:

Operating Segments (continues)

Reporting on operating segments by geographic region:

	Six months period ended June 30, 2021
	Proprietary Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited
Geographical markets
U.S.A and North America	$	26,556		-	$	26,576
Israel		5,588		8,946		14,534
Europe		3,394		-		3,394
Latin America		3,603		-		3,603
Asia		1,019		-		1,019
Others		33		-		33
	$	40,193	$	8,946	$	49,139

	Six months period ended June 30, 2020
	Proprietary Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited
Geographical markets
U.S.A and North America	$	40,460	$	-	$	40,460
Israel		2,005		18,437		20,442
Europe		3,287		-		3,287
Latin America		1,873		-		1,873
Asia		296		-		296
Others		21		-		21
	$	47,942	$	18,437	$	66,379

	Three months period ended June 30, 2021
	Proprietary Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited
Geographical markets
U.S.A and North America.	$	12,672			$	12,672
Israel		3,602		4,916		8,518
Europe		967				967
Latin America		1,428				1,428
Asia		640				640
Others		14				14
	$	19,323	$	4,916	$	24,239

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4:

Operating Segments (continued)

Reporting on operating segments by geographic region (continued):

	Three months period ended June 30, 2020
	Proprietary Products		Distribution		Total
	U.S Dollars in thousands
	Unaudited
Geographical markets
U.S.A and North America	$	17,256	$	-	$	17,256
Israel		1,417		10,464		11,881
Europe		2,733		-		2,733
Latin America		1,015		-		1,015
Asia		183		-		183
Others		21		-		21
	$	22,625	$	10,464	$	33,089

	Year ended December 31, 2020
	Proprietary Products		Distribution		Total
	U.S Dollars in thousands
	Audited
Geographical markets
U.S.A and North America	$	84,949	$	-	$	84,949
Israel		3,814		32,330		36,144
Europe		4,461		-		4,461
Latin America		6,867		-		6,867
Asia		766		-		766
Others		59		-		59
	$	100,916	$	32,330	$	133,246

KAMADA LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5:

Financial Instruments

Classification of financial instruments by fair value hierarchy:

Financial assets (liabilities) measured at fair value

	Level 1		Level 2
	U.S Dollars in thousands
June 30, 2021
Derivatives instruments	$	-	$	23

June 30, 2020
Derivatives instruments	$	-	$	560

December 31, 2020
Derivatives instruments	$	-	$	448

During the three months ended on June 30, 2021 there were no transfers due to the fair value measurement of any financial instrument from Level 1 to Level 2, and furthermore, there were no transfers to or from Level 3 due to the fair value measurement of any financial instrument.

- - -

Adjusted EBITDA
	Six months period ended						Three months period ended				Year ended
	June 30,						June 30,				December 31,
	2021			2020			2021		2020		2020
	In thousands
Net income	$	3,624		$	8,676		$	937	$	3,458	$	17,140
Taxes on income		-			796			-		390		1,425
Financial expense (income), net		(214	)		(647	)		109		127		692
Depreciation and amortization expense		2,372			2,380			1,225		1,188		4,897
Non-cash share-based compensation expenses		370			588			155		330		977
Adjusted EBITDA	$	6,152		$	11,793		$	2,426	$	5,493	$	25,131

Adjusted net income
	Six months period ended				Three months period ended				Year ended
	June 30,				June 30,				December 31,
	2021		2020		2021		2020		2020
	In thousands
Net income	$	3,624	$	8,676	$	937	$	3,458	$	17,140
Share-based compensation charges		370		588		155		330		977
Adjusted net income	$	3,994	$	9,264	$	1,092	$	3,788	$	18,117