Attached files
file | filename |
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EX-99.3 - EX-99.3 - Mylan II B.V. | d242318dex993.htm |
EX-99.1 - EX-99.1 - Mylan II B.V. | d242318dex991.htm |
EX-23.1 - EX-23.1 - Mylan II B.V. | d242318dex231.htm |
8-K/A - 8-K/A - Mylan II B.V. | d242318d8ka.htm |
Exhibit 99.2
Consolidated income statement
Three Months Ended June 30 |
Six Months Ended June 30 |
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SEK million |
Note | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net sales |
3, 4 | 5,015 | 5,152 | 9,330 | 9,735 | |||||||||||||||
Cost of sales |
1,996 | 1,973 | 3,624 | 3,723 | ||||||||||||||||
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Gross profit |
3,019 | 3,179 | 5,706 | 6,012 | ||||||||||||||||
Selling expenses |
1,124 | 1,035 | 2,134 | 2,084 | ||||||||||||||||
Medicine and business development expenses |
973 | 975 | 2,056 | 1,942 | ||||||||||||||||
Administrative expenses |
318 | 237 | 563 | 518 | ||||||||||||||||
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Operating profit |
604 | 932 | 953 | 1,468 | ||||||||||||||||
Finance income |
6 | 7 | 5 | 13 | 12 | |||||||||||||||
Finance costs |
6 | 228 | 389 | 486 | 865 | |||||||||||||||
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Profit after financial items |
383 | 548 | 480 | 615 | ||||||||||||||||
Tax |
85 | 156 | 109 | 3 | ||||||||||||||||
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Net income |
298 | 392 | 589 | 618 | ||||||||||||||||
Earnings attributable to: |
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Parent company shareholders |
298 | 392 | 589 | 618 | ||||||||||||||||
Noncontrolling interests |
0 | 0 | 0 | 0 | ||||||||||||||||
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298 | 392 | 589 | 618 | |||||||||||||||||
Earnings per share |
7 | |||||||||||||||||||
basic, SEK |
0.81 | 1.07 | 1.61 | 1.69 | ||||||||||||||||
diluted, SEK |
0.81 | 1.07 | 1.61 | 1.69 | ||||||||||||||||
Average number of shares |
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basic (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||||||
diluted (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||||||
Actual number of shares on closing day |
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basic (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||||||
diluted (thousands) |
365,467 | 365,467 | 365,467 | 365,467 |
The accompanying Notes form an integral part of the consolidated financial statements.
1
Consolidated statement of comprehensive income
Three Months Ended June 30 |
Six Months Ended June 30 |
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SEK million |
Note | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net income |
298 | 392 | 589 | 618 | ||||||||||||||||
Items that will not be reclassified to the income statement |
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Revaluation of defined benefit pension plans and similar plans, net after tax |
14 | 53 | 46 | 177 | 27 | |||||||||||||||
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53 | 46 | 177 | 27 | |||||||||||||||||
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Items that may be reclassified to the income statement |
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Translation difference |
14 | 869 | 470 | 824 | 373 | |||||||||||||||
Net investment hedge, net after tax |
14 | 469 | 218 | 490 | 288 | |||||||||||||||
Cash flow hedges, net after tax |
14 | 5 | 8 | 8 | 5 | |||||||||||||||
Available-for-sale financial assets, net after tax |
14 | 2 | 4 | 3 | 5 | |||||||||||||||
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403 | 264 | 339 | 95 | |||||||||||||||||
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Other comprehensive income for the period, net after tax |
350 | 218 | 162 | 68 | ||||||||||||||||
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Total comprehensive income |
648 | 174 | 751 | 550 | ||||||||||||||||
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Total comprehensive income attributable to: |
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Parent company shareholders |
648 | 174 | 751 | 550 | ||||||||||||||||
Non-controlling interests |
0 | 0 | 0 | 0 | ||||||||||||||||
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Total comprehensive income |
648 | 174 | 751 | 550 | ||||||||||||||||
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The accompanying Notes form an integral part of the consolidated financial statements.
2
Consolidated balance sheet
SEK million |
Note | June 30 2016 |
December 31 2015 |
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ASSETS |
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Non-current assets |
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Tangible assets |
8 | 1,490 | 1,504 | |||||||||
Intangible assets |
9 | 46,821 | 47,478 | |||||||||
Deferred tax assets |
1,931 | 1,812 | ||||||||||
Available-for-sale financial assets |
10 | 20 | 23 | |||||||||
Other non-current receivables |
12 | 112 | 262 | |||||||||
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Total non-current assets |
50,374 | 51,079 | ||||||||||
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Current assets |
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Inventories |
11 | 3,011 | 2,876 | |||||||||
Trade receivables |
12 | 4,977 | 4,295 | |||||||||
Other receivables |
314 | 320 | ||||||||||
Tax assets |
211 | 225 | ||||||||||
Prepayments and accrued income |
274 | 290 | ||||||||||
Derivatives |
13 | 216 | 149 | |||||||||
Cash and cash equivalents |
842 | 1,612 | ||||||||||
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Total current assets |
9,845 | 9,767 | ||||||||||
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TOTAL ASSETS |
60,219 | 60,846 | ||||||||||
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The accompanying Notes form an integral part of the consolidated financial statements.
3
Consolidated balance sheet
SEK million |
Note | June 30 2016 |
December 31 2015 |
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EQUITY AND LIABILITIES |
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Equity |
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Share capital |
365 | 365 | ||||||||||
Other capital contributions |
13,788 | 13,788 | ||||||||||
Other reserves |
14 | 537 | 375 | |||||||||
Retained earnings including profit for the year |
6,070 | 6,431 | ||||||||||
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20,760 | 20,959 | |||||||||||
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Non-controlling interest |
3 | 3 | ||||||||||
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Total equity |
20,757 | 20,956 | ||||||||||
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LIABILITIES |
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Non-current liabilities |
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Borrowings |
15 | 22,955 | 22,507 | |||||||||
Derivatives |
13 | | 19 | |||||||||
Deferred tax liabilities |
4,212 | 4,708 | ||||||||||
Pension obligations |
2,544 | 2,273 | ||||||||||
Other non-current liabilities |
16 | 13 | 2,474 | |||||||||
Other provisions |
18 | 334 | 337 | |||||||||
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Total non-current liabilities |
30,058 | 32,318 | ||||||||||
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Current liabilities |
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Trade payables |
1,510 | 1,696 | ||||||||||
Current tax liabilities |
660 | 515 | ||||||||||
Other current liabilities |
17 | 2,827 | 240 | |||||||||
Accruals and deferred income |
1,751 | 1,553 | ||||||||||
Derivatives |
13 | 359 | 205 | |||||||||
Borrowings |
15 | 1,361 | 2,355 | |||||||||
Other provisions |
18 | 936 | 1,008 | |||||||||
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Total current liabilities |
9,404 | 7,572 | ||||||||||
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Total liabilities |
39,462 | 39,890 | ||||||||||
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TOTAL EQUITY AND LIABILITIES |
60,219 | 60,846 | ||||||||||
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The accompanying Notes form an integral part of the consolidated financial statements.
4
Consolidated cash flow statement
Three Months Ended June 30 |
Six Months Ended June 30 |
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SEK million |
Note | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Cash flow from operating activities |
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Profit after financial items |
383 | 548 | 480 | 615 | ||||||||||||||||
Adjustments for items not included in cash flow |
20 | 870 | 629 | 1,673 | 1,638 | |||||||||||||||
Net change in pensions |
8 | 14 | 18 | 31 | ||||||||||||||||
Net change in other provisions |
17 | 143 | 58 | 386 | ||||||||||||||||
Income taxes paid |
77 | 224 | 203 | 291 | ||||||||||||||||
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Cash flow from operating activities before changes in working capital |
1,151 | 796 | 1,874 | 1,545 | ||||||||||||||||
Cash flow from changes in working capital |
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Inventories |
52 | 95 | 102 | 178 | ||||||||||||||||
Receivables |
496 | 191 | 441 | 323 | ||||||||||||||||
Liabilities |
232 | 349 | 38 | 362 | ||||||||||||||||
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Cash flow from operating activities |
939 | 351 | 1,293 | 682 | ||||||||||||||||
Cash flow from investing activities |
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Acquisition of tangible assets |
29 | 52 | 47 | 108 | ||||||||||||||||
Acquisition of intangible assets |
16 | 6 | 44 | 41 | ||||||||||||||||
Acquisition of operation |
| | | 149 | ||||||||||||||||
Divestment of operation |
| | | 6 | ||||||||||||||||
Divestment of financial assets available-for-sale |
| 9 | 1 | 9 | ||||||||||||||||
Increase in financial receivables |
| | 2 | | ||||||||||||||||
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Cash flow from investing activities |
45 | 49 | 92 | 295 | ||||||||||||||||
Cash flow from financing activities |
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Loans raised |
830 | 817 | 1,037 | 1,140 | ||||||||||||||||
Loan repayments |
965 | 419 | 2,100 | 1,506 | ||||||||||||||||
Decrease in financial liabilities |
| 20 | 11 | 60 | ||||||||||||||||
Dividend to parent company shareholders |
914 | 914 | 914 | 914 | ||||||||||||||||
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Cash flow from financing activities |
1,049 | 536 | 1,988 | 1,340 | ||||||||||||||||
Cash flow for the period |
155 | 234 | 787 | 953 | ||||||||||||||||
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Cash and cash equivalents at start of period |
977 | 1,624 | 1,612 | 2,311 | ||||||||||||||||
Exchange rate difference in cash and cash equivalents |
20 | 31 | 17 | 1 | ||||||||||||||||
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Cash and cash equivalents at period´s end |
842 | 1,359 | 842 | 1,359 | ||||||||||||||||
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Interest received and paid |
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Interest received |
5 | 3 | 7 | 8 | ||||||||||||||||
Interest paid |
216 | 325 | 432 | 452 | ||||||||||||||||
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Total |
211 | 322 | 425 | 444 | ||||||||||||||||
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The accompanying Notes form an integral part of the consolidated financial statements.
5
Consolidated statement of changes in equity
Attributable to parent company shareholders | ||||||||||||||||||||||||||||
SEK million |
Share capital |
Other capital contri- butions |
Other reserves |
Retained earnings including profit for the period |
Total | Non- controlling interests |
Total equity |
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January 1, 2015 |
365 | 13,788 | 401 | 6,142 | 20,696 | 16 | 20,680 | |||||||||||||||||||||
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Total comprehensive income |
| | 68 | 618 | 550 | 0 | 550 | |||||||||||||||||||||
Divestment of operation |
| | | | | 3 | 3 | |||||||||||||||||||||
Share-based payments, settled using equity instruments |
| | | 13 | 13 | | 13 | |||||||||||||||||||||
Dividend |
| | | 914 | 914 | 914 | ||||||||||||||||||||||
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June 30, 2015 |
365 | 13,788 | 333 | 5,859 | 20,345 | 19 | 20,326 | |||||||||||||||||||||
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January 1, 2016 |
365 | 13,788 | 375 | 6,431 | 20,959 | 3 | 20,956 | |||||||||||||||||||||
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Total comprehensive income |
| | 162 | 589 | 751 | 0 | 751 | |||||||||||||||||||||
Reclassification of share-based plans from equity-settled to cash-settled |
| | | 36 | 36 | | 36 | |||||||||||||||||||||
Dividend |
| | | 914 | 914 | 914 | ||||||||||||||||||||||
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June 30, 2016 |
365 | 13,788 | 537 | 6,070 | 20,760 | 3 | 20,757 | |||||||||||||||||||||
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The accompanying Notes form an integral part of the consolidated financial statements.
6
Note 1 Basis of preparation of first half-year report
This consolidated interim financial report for the first half-year reporting period ended June 30, 2016, has been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB).
This consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the audited consolidated financial statements of Meda AB for the years ended December 31, 2015, 2014 and 2013 on pages F-2 to F-59 included in the MYLAN N.V. FORM S-4/A Registration Statement for securities to be issued in business combination transactions filed 06/14/16 and any public announcements made by Meda AB during the interim reporting period.
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period. However, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
New standards and interpretations not yet applied by the Group
The following new standards and interpretations have been published:
| IFRS 9 Financial Instruments addresses classification, measurement and recognition of financial liabilities and assets. The full version of IFRS 9 was issued in July 2014 and replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 contains a blended approach to measurement but simplifies it in some respects. There will be three measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The classification of an instrument depends on the companys business model and the nature of the instrument. Investments in equity instruments are to be recognized at fair value through profit or loss. There is, however, an option at initial recognition to recognize the instrument at fair value through other comprehensive income. In such a case, no reclassification is made to profit or loss upon divestment of the instrument. IFRS 9 has also introduced a new model to calculate credit loss provisions based on expected credit losses. For financial liabilities, the classification and measurement are not changed other than in cases where a liability is recognized at fair value through profit or loss based on the fair value option. In these cases, changes in value attributable to changes in the equitys own credit risk are to be recognized in other comprehensive income. IFRS 9 lowers the criteria for the application of hedge accounting by replacing the 80-125 criteria with a requirement for an economic relationship between the hedging instrument and the hedged item, and for the hedging quota to be the same as that used in risk management. The hedge documentation requirement is also changed to some extent in comparison with IAS 39. The standard will be applied for the financial year starting on January 1, 2018. Early adoption is permitted. The Group has not yet assessed the impact of IFRS 9. |
| IFRS 15 Revenue from Contracts with Customers regulates how revenue is to be recognized. The principles upon which IFRS 15 is based give the users of financial statements more useful information on the entitys revenue. Under the increased disclosure requirement, information must be provided on the revenues nature, timing and uncertainty in connection with revenue recognition, as well as cash flows arising from customers with contracts. According to IFRS 15, revenue should be recognized when the customer assumes control of the sold goods or services and is able to use or benefit from the goods or service. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts as well as the related SIC and IFRS Interpretations Committees interpretation. IFRS 15 goes into effect on January 1, 2018. Early adoption is permitted. The Group has not yet assessed the impact of IFRS 15. |
| IFRS 16 Leases. In January 2016, IASB issued a new lease standard that will replace IAS 17 Leases and the related interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires assets and liabilities arising from all leases, with some exceptions, to be recognized on the balance sheet. This model reflects that, at the start of the lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. The accounting for lessors will in all material aspects be unchanged. The standard is effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted. The Group has not yet assessed the impact of IFRS 16. |
7
No other IFRSs or IFRS Interpretations Committee interpretations that have not yet gone into effect are expected to have any significant impact on the Group.
Note 2 Financial risks
The Group is exposed to various financial risks through its operations. Medas management of these risks is centralized to the Groups internal bank and is regulated in the Groups financial policy. The objective is to identify, quantify and keep risks of adverse impact on the Groups income statements, balance sheets and cash flows at suitable levels.
Currency risk
Transaction exposure
Transaction exposure is the risk of impact on the Groups net income and cash flow due to change in the value of commercial flows in foreign currencies in conjunction with exchange rate fluctuations. Meda has sales through its own sales organization in more than 60 countries. Sales to other countries occur as exports in both the customers local currency and other currencies such as EUR and USD. Purchases are mainly made in EUR, SEK and USD. The Group is continually exposed to transaction risk. This exposure is however limited to a few units, and the exposure that rises in trade receivables and trade payables denominated in foreign currency is continuously hedged. On June 30, 2016, currency derivatives that hedged transaction exposure had a net fair value of SEK 19 million compared to SEK 36 million at year-end 2015. Hedge accounting is not applicable to these transactions, which means that changes of the fair value are carried to the income statement.
Translation exposure balance sheet
Most of the Groups operations are conducted in subsidiaries outside Sweden in functional currencies other than SEK. Translation exposure arises in the Group for net investments in foreign operations. Medas translation exposure is for the most part in EUR, but also in USD. The Group hedges risk partially by taking external loans and contracting for currency swaps in the respective currency. Hedge accounting in accordance with IAS 39 is applied for these hedging transactions. Translation differences recognized in other comprehensive income in the first half of 2016 that relates to the net investments in foreign operations amounted to SEK 824 million (373), and translation differences from hedging instruments for the net investments amounted to SEK 490 million (288) after tax.
Translation exposure income statement
Group sales are generated principally in currencies other than SEK. Changes in exchange rates therefore have a significant effect on the consolidated income statement since consolidation of the foreign subsidiaries income statements is in SEK. As the subsidiaries mainly operate in local currencies, these exposures are not hedged. Thus, fluctuations in exchange rates have no significant impact on competition or margins. The next table shows the quarterly and annually theoretical translation effect on Medas net sales and profit before tax. Calculated effects are based on recognized figures for the first quarter 2016 excluding items affecting comparability. The average exchange rates for the first half of 2016 were 9.30187 for EUR/SEK and 8.33546 for USD/SEK.
Parameter |
Change, % |
Effect on net sales, SEK m |
Effect on profit after tax, SEK m |
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On June 30, 2016 |
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EUR/SEK |
+/ | 1 | +/ | 27 | +/ | 11 | ||||||
USD/SEK |
+/ | 1 | +/ | 12 | +/ | 2 | ||||||
Other currencies/SEK |
+/ | 1 | +/ | 8 | +/ | 1 | ||||||
On December 31, 2015 |
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EUR/SEK |
+/ | 1 | +/ | 98 | +/ | 31 | ||||||
USD/SEK |
+/ | 1 | +/ | 36 | +/ | 4 | ||||||
Other currencies/SEK |
+/ | 1 | +/ | 49 | +/ | 1 |
8
Undiscounted financial liabilities, SEK million |
< 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | > 5 years from the reporting date |
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On June 30, 2016 |
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Borrowings |
1,936 | 3,138 | 7,625 | 10,039 | 3,554 | | ||||||||||||||||||
Unconditional deferred payment |
2,553 | | | | | | ||||||||||||||||||
Derivatives |
17 | | | | | | ||||||||||||||||||
Trade payables |
1,510 | | | | | | ||||||||||||||||||
Other liabilities |
92 | | | | | | ||||||||||||||||||
Accrued expenses |
910 | | | | | | ||||||||||||||||||
On December 31, 2015 |
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Borrowings |
2,891 | 3,130 | 7,540 | 9,769 | 3,746 | | ||||||||||||||||||
Unconditional deferred payment |
| 2,458 | | | | | ||||||||||||||||||
Derivatives |
40 | 8 | | | | | ||||||||||||||||||
Trade payables |
1,696 | | | | | | ||||||||||||||||||
Other liabilities |
80 | | | | | | ||||||||||||||||||
Accrued expenses |
907 | | | | | |
The Groups financial derivatives, which will be settled gross, comprised various currency forward contracts on the reporting date (see also Note 13). On the reporting date, the contractually agreed undiscounted cash flows from these instruments, maturing within 12 months, stood at SEK 22,875 million and SEK 22,729 million respectively (SEK 24,445 million and SEK 24,513 million respectively).
Interest rate risk
Interest risk refers to the risk that changes in general interest rates may have an adverse effect on the Groups net income. The time taken for interest rate fluctuations to affect profit/loss depends on the fixed interest period for the loan. As per Group policy, the loan portfolios fixed interest period should be 3-15 months on average. On June 30, 2016, the average period was 4.3 months.
Meda uses interest rate swaps to extend/shorten the period of fixed interest on underlying loans. As per Group policy, the duration of an interest rate swap may not exceed five years. Hedge accounting is applied to these transactions, and fair value is charged to other comprehensive income. In the first half of 2016, interest rate swaps had an impact on other comprehensive income of SEK 8 million (5) from cash flow hedging after tax. The fair value included in the consolidated balance sheet for interest rate swaps as of June 30, 2016, was a net amount of SEK 14 million compared to SEK 23 at year-end 2015.
On June 30, 2016, Group borrowings of SEK 24,316 million were mainly distributed as follow: EUR 1,505 million (SEK 14,186 million), USD 610 million (SEK 5,178 million) and SEK 4,952 million. The average interest rate including credit margins on June 30, 2016 was 2.5% compared to 2.5% at year-end 2015. Yearly interest expense for this loan portfolio at unchanged interest rates would thus amount to approximately SEK 601 million. If interest rates change instantaneously +/ 1 percentage point, Medas net income would change by +/ SEK 40 million on a quarterly basis compared to 168 at year-end 2015 on an annual basis, taking into account the loan amounts and fixed interest rates that existed on June 30, 2016 (December 31, 2015). Further information can be found in Note 15.
9
Refinancing risk
Refinancing risk is the risk that the refinancing of a maturing loan is not feasible, and the risk that refinancing must be done during unfavorable market conditions at unfavorable interest rates. Meda seeks to limit refinancing risk by spreading the maturity structure of the loan portfolio over time and spreading financing over several counterparties. On June 30, 2016, Meda had SEK 28,000 million (28,000) in available credit facilities. The basis of the Groups debt financing is syndicated bank loans of SEK 25,000 million with nine Swedish and foreign banks. This financing is augmented with borrowing via a Swedish MTN program with an upper limit of SEK 7,000 million, a Swedish commercial paper program with an upper limit of SEK 4,000 million, and a bilateral bank loan of SEK 2,000 million.
Confirmed credit facilities were as follow on June 30, 2016:
| Bilateral bank loan of SEK 2,000 million maturing in October 2017 |
| Bond loan of SEK 600 million maturing in April 2018 |
| Bond loan of SEK 750 million maturing in April 2019 |
| Credit facility with nine banks amounting to SEK 25,000 million maturing 20162020 |
| Term loan of SEK 6,063 million maturing in December 2018 |
| Revolving loan of SEK 12,500 million maturing in December 2019 |
| Term loan of SEK 6,151 million maturing in December 2020 (amortization of SEK 2,578 million) |
The syndicated credit facilities are available provided that Meda meets certain key financial ratios concerning net debt in relation to EBITDA and interest coverage ratio. Meda has met its key financial ratios for 2016.
Liquidity risk
The Groups current liquidity is covered by a retained liquidity reserve (cash and bank balances, current investments and the unused portion of confirmed credit facilities) that in the long-term shall be at least 5% of the Groups annual sales. On June 30, 2016, the liquidity reserve was SEK 5 183 million, corresponding to 27% of net sales, rolling 12 months. The table on page 10 (table above) shows the contractually agreed undiscounted cash flows from the Groups financial liabilities and net settled derivatives that constitute financial liabilities classified by the time that, on the closing date, remained until the contractually agreed maturity date. For derivatives with a variable interest rate, the variable rate that applied to each derivative on June 30, 2016, was used for the entire period to maturity.
Credit risk
The Groups financial transactions lead to credit risks in relation to financial counterparties. According to Medas financial policy, financial transactions may only be conducted with the Groups financing banks, or banks with a high official rating corresponding to Standard & Poors long-term A rating or better. Investments in cash and cash equivalents can only be made in government securities or with banks that have a high official rating.
Credit risk exists in the Groups cash and cash equivalents, derivatives, and cash balances with banks and financial institutions and in relation to distributors and wholesalers, including outstanding receivables and committed transactions.
Medas sales are mainly to large, established distributors and wholesalers with robust financial strength in each country. Since sales occur in several countries and to many different customers, the Group has good risk distribution. Meda monitors granted credits on a continuous basis.
Group assets that entail credit risk are reported in Note 12 and 13.
Capital risk
The goal of the capital structure is to secure the Groups ability to continue its operations with the aim of generating return to shareholders and benefit for other stakeholders. The goal is also to keep the costs of capital low, through an optimal capital structure and by that strengthen Medas ability to meet its key financial ratios. Capital in the Meda Group is judged on the basis of the Groups equity/assets ratio. The Groups long-term goal is an equity/assets ratio of 30%. New shares may be issued to maintain the capital structure in conjunction with major acquisitions.
10
Note 3 Segment information
Group management assesses operations from a geographic perspective. Earnings per geographic area are assessed on the basis of EBITDA (earnings before interest, taxes, depreciation, and amortization). On June 30, 2016, the Group was organized in three geographic areas: Western Europe, the US, and Emerging Markets.
Three months ended June 30, 2016 |
|
|||||||||||||||||||
SEK million |
Western Europe |
US | Emerging Markets |
Other Sales | Total | |||||||||||||||
Segments sales |
3,577 | 751 | 1,016 | 51 | 5,395 | |||||||||||||||
Sales between segments |
380 | 0 | 0 | 0 | 380 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
External net sales |
3,197 | 751 | 1,016 | 51 | 5,015 | |||||||||||||||
EBITDA |
1,201 | 227 | 334 | 374 | 1,388 | |||||||||||||||
Depreciation and amortization |
|
784 | ||||||||||||||||||
Finance income |
7 | |||||||||||||||||||
Finance costs |
228 | |||||||||||||||||||
|
|
|||||||||||||||||||
Profit after financial income |
|
383 | ||||||||||||||||||
|
|
|||||||||||||||||||
Three months ended June 30, 2015 |
||||||||||||||||||||
SEK million |
Western Europe |
US | Emerging Markets |
Other Sales | Total | |||||||||||||||
Segments sales |
3,549 | 793 | 949 | 120 | 5,411 | |||||||||||||||
Sales between segments |
259 | 0 | 0 | 0 | 259 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
External net sales |
3,290 | 793 | 949 | 120 | 5,152 | |||||||||||||||
EBITDA |
1,260 | 325 | 343 | 180 | 1,748 | |||||||||||||||
Depreciation and amortization |
|
816 | ||||||||||||||||||
Finance income |
5 | |||||||||||||||||||
Finance costs |
389 | |||||||||||||||||||
|
|
|||||||||||||||||||
Profit after financial income |
|
548 | ||||||||||||||||||
|
|
|||||||||||||||||||
Six months ended June 30, 2016 |
||||||||||||||||||||
SEK million |
Western Europe |
US | Emerging Markets |
Other Sales | Total | |||||||||||||||
Segments sales |
6,656 | 1,420 | 1,826 | 86 | 9,988 | |||||||||||||||
Sales between segments |
658 | 0 | 0 | 0 | 658 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
External net sales |
5,998 | 1,420 | 1,826 | 86 | 9,330 | |||||||||||||||
EBITDA |
2,213 | 431 | 618 | 739 | 2,523 | |||||||||||||||
Depreciation and amortization |
|
1,570 | ||||||||||||||||||
Finance income |
13 | |||||||||||||||||||
Finance costs |
486 | |||||||||||||||||||
|
|
|||||||||||||||||||
Profit after financial income |
|
480 | ||||||||||||||||||
|
|
|||||||||||||||||||
Six months ended June 30, 2015 |
||||||||||||||||||||
SEK million |
Western Europe |
US | Emerging Markets |
Other Sales | Total | |||||||||||||||
Segments sales |
6,683 | 1,579 | 1,768 | 233 | 10,263 | |||||||||||||||
Sales between segments |
528 | 0 | 0 | 0 | 528 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
External net sales |
6,155 | 1,579 | 1,768 | 233 | 9,735 | |||||||||||||||
EBITDA |
2,201 | 633 | 639 | 379 | 3,094 | |||||||||||||||
Depreciation and amortization |
|
1,626 | ||||||||||||||||||
Finance income |
12 | |||||||||||||||||||
Finance costs |
865 | |||||||||||||||||||
|
|
|||||||||||||||||||
Profit after financial income |
|
615 | ||||||||||||||||||
|
|
11
The company is based in Sweden. Geographic breakdown of total non-current assets, other than financial instruments and deferred tax assets is shown in below table
Net sales | Non-current assets | |||||||||||||||||||||||
Three months ended June 30 |
Six months ended June 30 |
June 30 | December 31 | |||||||||||||||||||||
SEK million |
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Western Europe1) |
3,197 | 3,290 | 5,998 | 6,155 | 28,327 | 28,821 | ||||||||||||||||||
US2) |
751 | 793 | 1,420 | 1,579 | 9,814 | 10,066 | ||||||||||||||||||
Emerging Markets |
1,016 | 949 | 1,826 | 1,768 | 10,087 | 10,010 | ||||||||||||||||||
Other Sales |
51 | 120 | 86 | 233 | 163 | 169 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
5,015 | 5,152 | 9,330 | 9,735 | 48,391 | 49,066 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
1) Whereof in Sweden |
8,299 | 8,818 | ||||||||||||||||||||||
2) Whereof in the US |
9,814 | 10,066 |
Three months ended June 30, 2016
Revenues from external customers in Germany amount to SEK 515 million (513), France SEK 402 million (421), Sweden SEK 352 million (351) and Italy SEK 524 million (570). Total revenues from external customers in other countries amount to SEK 3,222 million (3,297). A breakdown of net sales by income type is found in Note 4.
Six months ended June 30, 2016
Revenues from external customers in Germany amount to SEK 944 million (1,020), France SEK 793 million (810), Sweden SEK 705 million (692) and Italy SEK 929 million (969). Total revenues from external customers in other countries amount to SEK 5,959 million (6,244). A breakdown of net sales by income type is found in Note 4.
Geographic areas
Western Europe includes western Europe, excluding the Baltics, Poland, Czech Republic, Slovakia and Hungary. The US comprises the US and Canada, and Emerging Markets includes eastern Europe, including the Baltics, Poland, Czech Republic, Slovakia, Hungary, Turkey, the Middle East, Mexico and other non-European markets. Other Sales concern revenues from contract manufacturing, parts of royalty and other income.
Note 4 Net sales disclosed by type
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
SEK million |
2016 | 2015 | 2016 | 2015 | ||||||||||||
Goods sold |
4,877 | 5,012 | 9,084 | 9,438 | ||||||||||||
Royalties |
89 | 108 | 152 | 217 | ||||||||||||
Revenue from contract manufacturing |
32 | 25 | 65 | 61 | ||||||||||||
Other |
17 | 7 | 29 | 19 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
5,015 | 5,152 | 9,330 | 9,735 |
Note 5 Long-term performance based incentive programs (LTI-programs)
As of June 30, 2016, Meda has two outstanding LTI-programs approved by the AGM in 2014 and 2015. Meda is subject to a public takeover by Mylan which may lead to a change of control (CoC). Therefore, the board of Meda AB decided to modify the programs and convert them with a cash compensation to the participants of the programs in event of CoC, provided that the individuals are still employed by Meda at that date. This means that the LTI-programs have been reclassified from equity settled programs to cash settled programs.
12
The amount of compensation will be based on the number of share rights allotted for each of the programs and the Meda share price at completion of CoC. The vesting period for each program is reduced and runs to August 2016. If CoC does not occur the LTI-programs will continue in full force and effect.
At end of June, 2016 the programs cover, LTI 2014, 82 persons and, LTI 2015, 97 persons. The number of outstanding shares is presented in the following table.
Allotted shares |
LTI 2015 | LTI 2014 | ||||||
Total allotted shares as of December 31, 2015 |
| 338,121 | ||||||
Number of allotted shares |
586,169 | | ||||||
Additional shares due to dividend compensation |
9,643 | 5,465 | ||||||
Number of forfeited shares during the period |
3,831 | 2,463 | ||||||
Number of forfeited shares due to reclassification of share-based plans from equity-settled to cash-settled |
591,981 | 341,123 | ||||||
|
|
|
|
|||||
Total allotted shares as of June 30, 2016 |
0 | 0 | ||||||
|
|
|
|
Cost
The total expense of the programs, which are allocated across their duration, are SEK 139 million excluding social security contributions. In 2016, the programs resulted in an expense of SEK 93 million recognized in the income statement excluding social security contributions of SEK 13 million. SEK 65 million is due to the reduced vesting period excluding social security contributions of SEK 9 million which have been recognized in the second quarter. The total reserve for social security contributions in the balance sheet amounts to SEK 18 million whereof SEK 5 million is related to the CEO and Executive Vice Presidents.
As of June 30, 2016 the outstanding liability related to the programs, which is based on a Meda share price of SEK 152.90 at end of June 2016, amounts to SEK 128 million whereof SEK 34 million is related to the CEO and Executive Vice Presidents.
Note 6 Finance income and finance costs
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
SEK million |
2016 | 2015 | 2016 | 2015 | ||||||||||||
Finance income |
||||||||||||||||
Interest |
7 | 5 | 13 | 12 | ||||||||||||
Total finance income |
7 | 5 | 13 | 12 | ||||||||||||
Finance costs |
||||||||||||||||
Interest |
210 | 286 | 425 | 566 | ||||||||||||
Exchange gains/losses |
12 | 17 | 0 | 8 | ||||||||||||
Costs of raising loans |
15 | 71 | 30 | 85 | ||||||||||||
Interestpensions |
15 | 14 | 30 | 29 | ||||||||||||
Other finance costs |
0 | 1 | 1 | 193 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total finance costs |
228 | 389 | 486 | 865 |
13
Note 7 Earnings per share
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Basic earnings per share |
||||||||||||||||
Profit attributable to parent company shareholders, SEK million |
298 | 392 | 589 | 618 | ||||||||||||
Average no. of shares (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||
No. of shares in calculation of basic earnings per share (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||
Basic earnings per share (SEK) |
0.81 | 1.07 | 1.61 | 1.69 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
||||||||||||||||
Profit attributable to parent company shareholders, SEK million |
298 | 392 | 589 | 618 | ||||||||||||
Average no. of shares (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||
No. of shares in calculation of diluted earnings per share (thousands) |
365,467 | 365,467 | 365,467 | 365,467 | ||||||||||||
Diluted earnings per share (SEK) |
0.81 | 1.07 | 1.61 | 1.69 | ||||||||||||
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
Calculation of earnings per share was based on net profit for the year after tax attributable to parent company shareholders in relation to a weighted average number of shares totaling 365,467,371 (365,467,371).
Note 8 Tangible assets
June 30, 2016 | ||||||||||||||||||||
Buildings and land |
Machinery/ plant |
Equipment and installation |
Construction in progress |
Total | ||||||||||||||||
Opening cost of acquisition, January 1, 2016 |
969 | 1,184 | 650 | 66 | 2,869 | |||||||||||||||
Investments |
| 5 | 15 | 27 | 47 | |||||||||||||||
Sales/disposals |
1 | 41 | 83 | | 125 | |||||||||||||||
Reclassification |
5 | 25 | 5 | 35 | 0 | |||||||||||||||
Translation difference |
22 | 25 | 11 | 1 | 59 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Closing cost of acquisition, June 30, 2016 |
995 | 1,198 | 598 | 59 | 2,850 | |||||||||||||||
Opening depreciation, January 1, 2016 |
362 | 532 | 471 | | 1,365 | |||||||||||||||
Years depreciation |
15 | 50 | 30 | | 95 | |||||||||||||||
Sales/disposals |
1 | 41 | 83 | | 125 | |||||||||||||||
Translation difference |
9 | 10 | 5 | | 24 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Closing depreciation, June 30 2016 |
385 | 551 | 423 | | 1,359 | |||||||||||||||
Carrying amount |
610 | 647 | 175 | 59 | 1,491 | |||||||||||||||
Depreciation per function: |
||||||||||||||||||||
Cost of sales |
9 | 46 | 7 | | 62 | |||||||||||||||
Selling expenses |
| | 3 | | 3 | |||||||||||||||
Medicine and business development expenses |
1 | | 2 | | 3 | |||||||||||||||
Administrative expenses |
5 | 4 | 18 | | 27 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
15 | 50 | 30 | | 95 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
14
December 31, 2015 | ||||||||||||||||||||
Buildings and land |
Machinery/ plant |
Equipment and installation |
Construction in progress |
Total | ||||||||||||||||
Opening cost of acquisition, January 1, 2015 |
994 | 1,367 | 722 | 113 | 3,196 | |||||||||||||||
Investments |
8 | 80 | 48 | 84 | 220 | |||||||||||||||
Sales/disposals |
16 | 26 | 69 | | 111 | |||||||||||||||
Acquired operation |
| | | | 0 | |||||||||||||||
Divested operation |
40 | 320 | 19 | 1 | 380 | |||||||||||||||
Reclassification |
31 | 91 | 38 | 129 | 45 | |||||||||||||||
Translation difference |
8 | 8 | 6 | 1 | 11 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Closing cost of acquisition, December 31, 2015 |
969 | 1,184 | 650 | 66 | 2,869 | |||||||||||||||
Opening depreciation, January 1, 2015 |
363 | 649 | 492 | | 1,504 | |||||||||||||||
Years depreciation |
31 | 116 | 64 | | 211 | |||||||||||||||
Sales/disposals |
15 | 24 | 65 | | 104 | |||||||||||||||
Divested operation |
21 | 204 | 16 | | 241 | |||||||||||||||
Reclassification |
3 | 4 | 13 | | 14 | |||||||||||||||
Translation difference |
1 | 1 | 9 | | 9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Closing depreciation, December 31, 2015 |
362 | 532 | 471 | | 1,365 | |||||||||||||||
Carrying amount |
607 | 652 | 179 | 66 | 1,504 | |||||||||||||||
Depreciation per function: |
||||||||||||||||||||
Cost of sales |
18 | 105 | 16 | | 139 | |||||||||||||||
Selling expenses |
| | 7 | | 7 | |||||||||||||||
Medicine and business development expenses |
1 | | 3 | | 4 | |||||||||||||||
Administrative expenses |
12 | 11 | 38 | | 61 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
31 | 116 | 64 | | 211 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note 9 Intangible assets
June 30, 2016 | ||||||||||||||||
Goodwill | Product rights |
Other assets | Total | |||||||||||||
Opening cost of acquisition, January 1, 2016 |
25,524 | 39,722 | 268 | 65,514 | ||||||||||||
Investments |
| 35 | 9 | 44 | ||||||||||||
Sales/disposals |
| | 7 | 7 | ||||||||||||
Translation difference |
464 | 453 | 7 | 924 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Closing cost of acquisition, June 30, 2016 |
25,988 | 40,210 | 277 | 66,475 | ||||||||||||
Opening depreciation, January 1, 2016 |
| 17,853 | 183 | 18,036 | ||||||||||||
Years depreciation |
| 1,462 | 13 | 1,475 | ||||||||||||
Sales/disposals |
| 7 | 7 | |||||||||||||
Translation difference |
| 145 | 5 | 150 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Closing depreciation, June 30, 2016 |
| 19,460 | 194 | 19,654 | ||||||||||||
Carrying amount |
25,988 | 20,750 | 83 | 46,821 | ||||||||||||
Amortization per function: |
||||||||||||||||
Cost of sales |
| | 3 | 3 | ||||||||||||
Selling expenses |
| | 1 | 1 | ||||||||||||
Medicine and business development expenses |
| 1,462 | 2 | 1,463 | ||||||||||||
Administrative expenses |
| | 7 | 8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
| 1462 | 13 | 1,475 | ||||||||||||
|
|
|
|
|
|
|
|
15
December 31, 2015 | ||||||||||||||||
Goodwill | Product rights |
Other assets | Total | |||||||||||||
Opening cost of acquisition, January 1, 2015 |
25,352 | 40,083 | 232 | 65,667 | ||||||||||||
Investments |
47 | 59 | 20 | 126 | ||||||||||||
Sales/disposals |
| 6 | 14 | 20 | ||||||||||||
Acquired operation |
| | | 0 | ||||||||||||
Divested operation |
| 511 | 7 | 518 | ||||||||||||
Reclassification |
| 1 | 46 | 45 | ||||||||||||
Translation difference |
125 | 98 | 9 | 214 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Closing cost of acquisition, December 31, 2015 |
25,524 | 39,722 | 268 | 65,514 | ||||||||||||
Opening depreciation, January 1, 2015 |
| 14,715 | 154 | 14,869 | ||||||||||||
Years depreciation |
| 3,040 | 33 | 3,073 | ||||||||||||
Sales/disposals |
| 5 | 7 | 12 | ||||||||||||
Divested operation |
| 42 | 4 | 46 | ||||||||||||
Reclassification |
| | 14 | 14 | ||||||||||||
Translation difference |
| 145 | 7 | 138 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Closing depreciation, December 31, 2015 |
| 17,853 | 183 | 18,036 | ||||||||||||
Carrying amount |
25,524 | 21,869 | 85 | 47,478 | ||||||||||||
Amortization per function: |
||||||||||||||||
Cost of sales |
| | 8 | 8 | ||||||||||||
Selling expenses |
| | 4 | 4 | ||||||||||||
Medicine and business development expenses |
| 3,040 | 5 | 3,045 | ||||||||||||
Administrative expenses |
| | 16 | 16 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
| 3,040 | 33 | 3,073 | ||||||||||||
|
|
|
|
|
|
|
|
Note 10 Available-for-sale financial assets
Available-for-sale financial assets include the following:
SEK million |
June 30, 2016 |
December 31, 2015 |
||||||
Funds US |
13 | 16 | ||||||
Listed interest-bearing securities Austria |
6 | 6 | ||||||
Other |
1 | 1 | ||||||
|
|
|
|
|||||
Total |
20 | 23 |
Note 11 Inventories
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Raw materials |
771 | 740 | ||||||
Work in progress |
155 | 134 | ||||||
Finished goods and goods for resale |
2,085 | 2,002 | ||||||
|
|
|
|
|||||
Total |
3,011 | 2,876 |
Note 12 Trade receivables
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Trade receivables |
5,092 | 4,396 | ||||||
Provision for bad debts |
115 | 101 | ||||||
|
|
|
|
|||||
Total |
4,977 | 4,295 |
16
Note 13 Derivatives, financial assets and financial liabilities
On June 30, 2016, the Groups open forward foreign exchange contracts had terms of up to three months. This table shows classification by currency.
Assets |
||||||||||||
Currency pairs |
Exchange rate | Nominal amount, SEK million |
Fair value, SEK million |
|||||||||
EUR/SEK |
9.1885 | 7,153 | 182 | |||||||||
EUR/USD |
1.1346 | 1,338 | 28 | |||||||||
Other |
5 | |||||||||||
|
|
|||||||||||
Total |
215 | |||||||||||
|
|
|||||||||||
Liabilities |
||||||||||||
Currency pairs |
Exchange rate | Nominal amount, SEK million |
Fair value, SEK million |
|||||||||
EUR/SEK |
9.2039 | 1,078 | 235 | |||||||||
USD/SEK |
8.2601 | 2,685 | 68 | |||||||||
Other |
42 | |||||||||||
|
|
|||||||||||
Total |
345 | |||||||||||
|
|
Fair value of financial assets and liabilities
The following table comprises the consolidated financial assets and liabilities that are measured at fair value.
Interest rate swaps and currency forward contracts are reported as level 2 and used for the purpose of hedging. Fair value measurement for interest rate swaps is calculated by discounting with observable market data. Measurement of fair value for currency forward contracts is based on published forward prices.
Available-for-sale financial assets are reported as level 1 and 2. Level 1 comprises quoted interest-bearing securities and fair value measurement is based on quoted prices on an active market. Level 2 mainly comprises fund holdings where fair value measurement is based on observable market data.
Group derivatives are covered by right of set-off between assets and liabilities with the same counterparty. Offsetting of assets and liabilities has not been applied. Derivatives recognized as assets and liabilities are presented in the table below.
No transfers have been made between level 1 and level 2 during the period.
The maximum exposure to credit risk at the end of the reporting period is the fair value of the derivatives that are recognized as assets in the -balance sheet.
June 30, 2016 | December 31, 2015 | |||||||||||||||
SEK million |
Level 1 | Level 2 | Level 1 | Level 2 | ||||||||||||
Assets |
||||||||||||||||
Currency forward contracts |
| 216 | | 149 | ||||||||||||
Available-for-sale financial assets |
6 | 14 | 6 | 17 | ||||||||||||
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|
|
|
|
|
|
|
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Total |
6 | 230 | 6 | 166 | ||||||||||||
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Liabilities |
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Interest rate swaps1) |
| 14 | | 23 | ||||||||||||
Currency forward contracts |
| 345 | | 201 | ||||||||||||
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|
|
|
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|
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|
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Total |
| 359 | | 224 | ||||||||||||
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|
1) | Cash flow hedging. |
17
The following table comprises the fair value of financial assets and liabilities by valuation category compared with their carrying amounts.
June 30, 2016 SEK million |
Loans and receivables |
Assets at fair value through profit and loss |
Derivatives used for hedging |
Available- for-sale financial assets |
Total | Fair value | ||||||||||||||||||
Available-for-sale financial assets |
| | | 20 | 20 | 20 | ||||||||||||||||||
Derivatives |
| 216 | | | 216 | 216 | ||||||||||||||||||
Trade receivables and other receivables |
5,171 | 1) | | | | 5,171 | 5,171 | |||||||||||||||||
Cash and cash equivalents |
842 | | | | 842 | 842 | ||||||||||||||||||
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|
|
|
|
|
|
|
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|
|
|
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Total |
6,013 | 216 | 0 | 20 | 6,249 | 6,249 | ||||||||||||||||||
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|
|
|
|
June 30, 2016 SEK million |
Liabilities at fair value through profit and loss |
Derivatives used for hedging |
Other financial liabilities |
Total | Fair value | |||||||||||||||
Borrowings |
| | 24,316 | 24,316 | 24,322 | |||||||||||||||
Unconditional deferred payment |
| | 2,553 | 2,553 | 2,553 | |||||||||||||||
Trade payables |
| | 1,510 | 1,510 | 1,510 | |||||||||||||||
Derivatives |
284 | 75 | | 359 | 359 | |||||||||||||||
Other liabilities |
| | 1,002 | 1,002 | 1,002 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
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Total |
284 | 75 | 29,381 | 29,740 | 29,746 | |||||||||||||||
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1) | Consists of the Groups trade receivables, parts of other non-current receivables and parts of other short-term receivables. |
2) | Consists of the parts of the Groups other short-term liabilities and other accrued expenses. |
December 31, 2015 SEK million |
Loans and receivables |
Assets at fair value through profit and loss |
Derivatives used for hedging |
Available- for-sale financial assets |
Total | Fair value | ||||||||||||||||||
Available-for-sale financial assets |
| | | 23 | 23 | 23 | ||||||||||||||||||
Derivatives |
| 131 | 18 | | 149 | 149 | ||||||||||||||||||
Trade receivables and other receivables |
4,582 | 1) | | | | 4,582 | 4,582 | |||||||||||||||||
Cash and cash equivalents |
1,612 | | | | 1,612 | 1,612 | ||||||||||||||||||
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|
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|
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|
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Total |
6,194 | 131 | 18 | 23 | 6,366 | 6,366 | ||||||||||||||||||
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|
December 31, 2015 SEK million |
Liabilities at fair value through profit and loss |
Derivatives used for hedging |
Other financial liabilities |
Total | Fair value | |||||||||||||||
Borrowings |
| | 24,862 | 24,862 | 24,838 | |||||||||||||||
Unconditional deferred payment |
| | 2,458 | 2,458 | 2,458 | |||||||||||||||
Trade payables |
| | 1,696 | 1,696 | 1,696 | |||||||||||||||
Derivatives |
169 | 55 | | 224 | 224 | |||||||||||||||
Other liabilities |
| | 987 | 2) | 987 | 987 | ||||||||||||||
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|
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Total |
169 | 55 | 30,003 | 30,227 | 30,203 | |||||||||||||||
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1) | Consists of the Groups trade receivables, parts of other non-current receivables and parts of other short-term receivables. |
2) | Consists of the parts of the Groups other short-term liabilities and other accrued expenses. |
Medas financial instruments attributable to level 1 and 2 and fair value by level are as follow:
June 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
SEK million |
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Financial assets |
6 | 6,243 | 6,249 | 6 | 6,360 | 6,366 | ||||||||||||||||||
Financial liabilities |
| 29,746 | 29,746 | | 30,203 | 30,203 |
18
Note 14 Equity
Dividend per share
At the AGM on April 14, 2016, a dividend of SEK 2.50 per share for a total of SEK 914 million was decided for 2015.
Other reserves, SEK million
Translation difference |
Hedging of net investment |
Cash flow hedging |
Defined benefit pension plans and similar plans |
Available- for-sale financial assets |
Total | |||||||||||||||||||
Other reserves January 1, 2015 |
1,297 | 528 | 17 | 357 | 6 | 401 | ||||||||||||||||||
Translation difference |
376 | | | | | 376 | ||||||||||||||||||
Translation difference transferred to the income statement |
3 | | | | | 3 | ||||||||||||||||||
Earnings from hedging net investment |
| 395 | | | | 395 | ||||||||||||||||||
Tax on earnings from hedging net investment |
| 87 | | | | 87 | ||||||||||||||||||
Earnings from revaluation of derivatives recognized in equity |
| | 1 | | | 1 | ||||||||||||||||||
Tax on earnings from revaluation of derivatives recognized in equity |
| | 0 | | | 0 | ||||||||||||||||||
Earnings from defined benefit pension plans and similar plans |
| | | 66 | | 66 | ||||||||||||||||||
Tax on earnings from defined benefit pension plans and similar plans |
| | | 11 | | 11 | ||||||||||||||||||
Earnings from available-for-sale financial assets |
| | | | 10 | 10 | ||||||||||||||||||
Tax on earnings from available-for-sale financial assets |
| | | | 1 | 1 | ||||||||||||||||||
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Other reserves December 31, 2015 |
918 | 220 | 18 | 302 | 3 | 375 | ||||||||||||||||||
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Other reserves January 1, 2016 |
918 | 220 | 18 | 302 | 3 | 375 | ||||||||||||||||||
Translation difference |
824 | | | | | 824 | ||||||||||||||||||
Earnings from hedging net investment |
| 628 | | | | 628 | ||||||||||||||||||
Tax on earnings from hedging net investment |
| 138 | | | | 138 | ||||||||||||||||||
Earnings from revaluation of derivatives recognized in equity |
| | 9 | | | 9 | ||||||||||||||||||
Tax on earnings from revaluation of derivatives recognized in equity |
| | 2 | | | 2 | ||||||||||||||||||
Earnings from defined benefit pension plans and similar plans |
| | | 251 | | 251 | ||||||||||||||||||
Tax on earnings from defined benefit pension plans and similar plans |
| | | 74 | | 74 | ||||||||||||||||||
Earnings from available-for-sale financial assets |
| | | | 2 | 2 | ||||||||||||||||||
Tax on earnings from available-for-sale financial assets |
| | | | 0 | 0 | ||||||||||||||||||
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Other reserves June 30, 2016 |
1,742 | 710 | 11 | 479 | 5 | 537 | ||||||||||||||||||
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19
Note 15 Borrowings
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Long-term borrowing |
||||||||
Bank loans |
21,598 | 21,150 | ||||||
Bond loans |
1,350 | 1,350 | ||||||
Finance leases |
0 | 0 | ||||||
Other |
7 | 7 | ||||||
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|
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Total |
22,955 | 22,507 | ||||||
Short-term borrowing |
||||||||
Bank loans |
585 | 623 | ||||||
Bond loans |
| 400 | ||||||
Commercial papers |
775 | 1,331 | ||||||
Finance leases |
0 | 0 | ||||||
Factoring |
1 | 1 | ||||||
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|
|
|
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Total |
1,361 | 2,355 | ||||||
Total borrowings |
24,316 | 24,862 |
Fair value deviates from the carrying amount on the Groups bond loans which are recognized in level 2. Fair value measurement is based on observable market data on the OTC market.
Fair value |
||||||||
Level 1 |
| | ||||||
Level 2 |
24,322 | 24,838 | ||||||
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|
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Total |
24,322 | 24,838 |
Maturities for long-term borrowing: |
June 30 2016 |
December 31 2015 |
||||||
Payable within 1-2 years |
2,385 | 2,580 | ||||||
Payable within 2-5 years |
20,570 | 19,927 | ||||||
Payable after 5 years |
| | ||||||
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|
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Total |
22,955 | 22,507 |
Carrying amounts in SEK million, by currency, for the Groups borrowing: |
June 30 2016 |
December 31 2015 |
||||||
EUR |
14,186 | 14,834 | ||||||
USD |
5,178 | 5,149 | ||||||
SEK |
4,952 | 4,879 | ||||||
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|
|
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Total |
24,316 | 24,862 |
Unused credits: |
June 30 2016 |
December 31 2015 |
||||||
Unused unconfirmed credits |
700 | 700 | ||||||
Unused confirmed credits |
4,341 | 5,227 |
Note 16 Other non-current liabilities
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Unconditional deferred payment |
| 2,458 | ||||||
Other non-current liabilities |
13 | 16 | ||||||
|
|
|
|
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Total |
13 | 2,474 |
20
Note 17 Other current liabilities
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Unconditional deferred payment |
2,553 | | ||||||
Other liabilities |
274 | 240 | ||||||
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Total |
2,827 | 240 |
The purchase price for Rottapharm includes an unconditional deferred payment of EUR 275 million which carries no interest and matures in January 2017. This is measured at fair value by discounting to present value using an interest rate of 2.6%. Interest cost for 2016, which is recognized under financial expenses, amounts to SEK 32 million (32).
Note 18 Other provisions
SEK million |
Returns | Personnel | Restructuring | Legal disputes |
Other | Total | ||||||||||||||||||
On January 1, 2016 |
597 | 178 | 254 | 254 | 62 | 1,345 | ||||||||||||||||||
Additional provisions |
241 | 19 | 2 | 1 | 16 | 279 | ||||||||||||||||||
Utilized during the year |
159 | 9 | 102 | 7 | 8 | 285 | ||||||||||||||||||
Reversed unused amounts |
75 | 2 | 9 | | | 86 | ||||||||||||||||||
Translation difference |
6 | 2 | 2 | 2 | 5 | 17 | ||||||||||||||||||
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On June 30, 2016 |
610 | 188 | 147 | 250 | 75 | 1,270 | ||||||||||||||||||
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SEK million |
June 30, 2016 |
|||
Non-current provisions |
334 | |||
Current provisions |
936 | |||
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|
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Total |
1,270 | |||
|
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Expected outflow date, SEK million |
Non-current provisions |
|||
In 2-3 years |
187 | |||
In 4-5 years |
62 | |||
After 5 years |
85 | |||
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Total |
334 | |||
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|
SEK million |
Returns | Personnel | Restructuring | Legal disputes |
Other | Total | ||||||||||||||||||
On January 1, 2015 |
513 | 141 | 620 | 73 | 148 | 1,495 | ||||||||||||||||||
Additional provisions |
488 | 76 | 273 | 213 | 30 | 1,080 | ||||||||||||||||||
Utilized during the year |
300 | 35 | 561 | 30 | 37 | 963 | ||||||||||||||||||
Reversed unused amounts |
141 | 12 | 72 | 2 | 73 | 300 | ||||||||||||||||||
Translation difference |
37 | 8 | 6 | 0 | 6 | 33 | ||||||||||||||||||
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On December 31, 2015 |
597 | 178 | 254 | 254 | 62 | 1,345 | ||||||||||||||||||
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|
SEK million |
December 31, 2015 |
|||
Non-current provisions |
337 | |||
Current provisions |
1008 | |||
|
|
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Total |
1345 | |||
|
|
Expected outflow date, SEK million |
Non-current provisions |
|||
In 2-3 years |
118 | |||
In 4-5 years |
62 | |||
After 5 years |
157 | |||
|
|
|||
Total |
337 | |||
|
|
21
Provisions for return
The provision for returns mainly comprises reserves for products that Meda is obliged to buy back from the Customer a short time before or after their expiry date.
Provision for personnel
SEK 92 million compared to SEK 94 million at year-end 2015 of provisions for personnel relates to health benefits in the US after terminated employment which are unfunded. Accounting method, assumptions and number of evaluation points are similar to those used for defined benefit pension plans. The plans are closed and no actively employed are covered by the plan. Benefits paid during the first half of 2016 from the plans amounted to SEK 2 million. Weighted average maturity for the plans amount to 9 years. The principal actuarial assumptions are the discount rate and long-term Increase in the cost of health care which as of 2016-06-30 amounted to 4.25% and 4.0%.
Other personnel related provisions is mainly related to provisions for terminated contracts in Germany and Italy.
Provision for legal disputes
SEK 182 million of the provision refers to a provision for an ongoing legal dispute in the US related to the product Reglan, which is expected to be closed during the third quarter 2016. See Note 19 for more information. Individual assessment of ongoing disputes occurs continually.
Provision for restructuring
The provision for restructuring amounted to SEK 147 million compared to SEK 254 million at year-end 2015. All is related to Rottapharm and mainly expected to be paid during 2016.
Other provisions
Other provisions include, for example, excise duties, sales commissions and provisions for ongoing tax audits.
Note 19 Contingent liabilities
SEK million |
June 30 2016 |
December 31 2015 |
||||||
Commitments |
||||||||
Guarantees |
42 | 31 | ||||||
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Total |
42 | 31 |
| In-licensing of the global rights to Edluar may lead to milestone payments totaling USD 60 million when defined sales targets are reached. |
| The acquisition of the European rights to the substance sotiromod may lead to milestone payments of USD 10 million when defined development stages are reached. |
| The agreement with Ethypharm for the rights to the ketoprofenomeprazole combination may lead to milestone payments of EUR 5 million upon registration and when defined sales targets are reached. |
| In-licensing of OraDisc A for the European market may lead to milestone payments of EUR 4.8 million. |
| The agreement with Cipla to expand the geographic territory for Dymista and the product development partnership may lead to milestone payments of USD 35 million when defined development stages are reached and upon the launch of new products. |
| The acquisition of ZpearPoint may lead to milestone payments of NOK 40 million when defined development stages and sales targets are reached for the product EB24. |
| The in-licensed rights to Betadine from Mundipharma will expire on December 31, 2017. With this counterparty, Meda has a binding option to acquire an eternal license for the rights to Betadine under certain conditions. The parties have entered into negotiations on future rights to the product. |
| The maximum additional purchase consideration for other product rights is around SEK 35 million. |
| In conjunction with the acquisition of Carter-Wallace in 2001, Meda Pharmaceuticals Inc. (previously MedPointe Inc.) took over certain environment- related obligations. In 1982, US Environmental Protection Agency (EPA) stated that Carter-Wallace, along with more than 200 other companies, were potentially responsible for waste placed at the Lone Pine Landfill waste disposal facility. In 1989 and 1991, without admitting responsibility, Carter-Wallace and 122 other companies entered into an agreement with the EPA to decontaminate Lone Pine. The process is ongoing. The provision for decontamination costs amounted to USD 2.0 million as of June 30, 2016. |
22
| In conjunction with the purchase of Alaven Pharmaceuticals in 2010, Meda Pharmaceuticals Inc. assumed responsibility for ongoing US product liability cases involving the product Reglan (metoclopramide). Presently, there are slightly less than 3,300 cases in which the company is named as one of multiple defendants, with most of the cases in Philadelphia, San Francisco and New Brunswick. In general, the cases involve plaintiffs that took Reglan for long periods of time to control gastric stasis and gastroesophageal reflux and developed the side effect tardive dyskinesia, which is characterized by repetitive, involuntary muscle movements, generally of the face and extremities. Even though the Reglan labeling since 1986 has warned against the side effect if the product was taken for more than 12 weeks, the plaintiffs allege that the warning was not prominent enough. While Meda believes it has meritorious defenses to these claims, in order to avoid the expense and distraction of litigation, Meda has entered into a confidential settlement agreement which establishes a framework to resolve all of the claims. Meda recognized a provision of USD 25 million in the third quarter 2015 whereof USD 2.5 million was paid in the fourth quarter 2015. The settlement is subject to sufficient participation by the plaintiffs as determined in Medas sole discretion. |
| From time to time Meda is involved in legal disputes that are common in the pharmaceutical industry. Although it is not possible to issue any guarantees about the outcome of these disputes, on the basis of Group managements present and fundamental judgment, we do not anticipate that they will have any materially negative impact on our financial position. This standpoint may naturally change over time. |
Note 20 Cash flow
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
SEK million |
2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating activities: |
||||||||||||||||
Depreciation of property, plant and equipment |
40 | 60 | 95 | 119 | ||||||||||||
Amortization of intangible assets |
744 | 756 | 1,475 | 1,507 | ||||||||||||
Bank charges1) |
14 | 89 | 29 | 85 | ||||||||||||
Other |
72 | 98 | 74 | 73 | ||||||||||||
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Total |
870 | 629 | 1,673 | 1,638 | ||||||||||||
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1) Bank charges taken to income during the year
Note 21 Transactions with related parties
Fidim S.r.l. owns 33,016,286 shares in Meda AB, corresponding to 9.0% of the total number of shares. Fidim S.r.l. received 30,000,000 MEDA shares as part of the purchase price for Medas acquisition of Rottapharm. Luca Rovati is a board member of Meda since November 2014 and partner in Fidim S.r.l.
To Meda related parties: |
||||||
Fidim S.r.l. |
Board member Luca Rovati holds shares in Fidim Srl | |||||
RRL Immobiliare SpA |
Fidim Srl owns RRL Immobiliare SpA. Luca Rovati is a board member of RRL Immobiliare SpA | |||||
Rottapharm Biotech S.r.l. |
Fidim Srl owns Rottapharm Biotech Srl | |||||
DemiMonde S.r.l. |
Demi-Monde Srl is owned by related party to board member Luca Rovati | |||||
Day Spa S.r.l. |
Day Spa Srl is owned by related party to board member Luca Rovati | |||||
Johan & Levi S.r.l. |
Johan & Levi Srl is owned by related party to board member Luca Rovati |
23
Transactions with related parties: |
||||||||||
Sales of goods and services and other sales, six months, SEK million |
|
|||||||||
No sales transactions between related parties took place during the period. |
|
|||||||||
Purchases of goods and services, six months, SEK million |
|
|||||||||
RRL Immobiliare SpA |
10 | Refers to rental of office- and factory space | ||||||||
Rottapharm Biotech S.r.l. |
1 | |
Refers to purchase of research and development services | |||||||
Balances as per June 30, 2016, SEK million | ||||||||||
Receivable | Liability | |||||||||
Fidim S.r.l. |
12 | 1) | 2,553 | 2) | ||||||
RRL Immobiliare SpA |
0 | 1 | ||||||||
Rottapharm Biotech S.r.l. |
| 0 | ||||||||
Other related parties |
0 | 123 | 3)4) |
1) Refers to tax related expenses which have been re-charged to Fidim S.r.l.
2) Refer to Note 17
3) Refer to Note 5
4) SEK 84 million refers to accruals for bonuses including social security contributions related to the CEO and EVPs due the potential Mylan takeover.
All transactions between related parties are based on market conditions and negotiations have taken place on an arms length basis.
24