LABORATORIOS FARMACÉUTICOS ROVI, S.A. Audit report, annual accounts and management report for the year ended December 31, PDF

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LABORATORIOS FARMACÉUTICOS ROVI, S.A. Audit report, annual accounts and management report for the year ended December 31, A free translation of the audit report on the 2007 annual accounts originally

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LABORATORIOS FARMACÉUTICOS ROVI, S.A. Audit report, annual accounts and management report for the year ended December 31, A free translation of the audit report on the 2007 annual accounts originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain. In the event of a discrepancy, the Spanish language version prevails AUDIT REPORT ON THE ANNUAL ACCOUNTS To the Shareholders of Laboratorios Farmacéuticos Rovi, S.A. 1. We have audited the annual accounts of Laboratorios Farmacéuticos Rovi, S.A. consisting of the balance sheet at 31 December 2007, the income statement, and the related notes to the annual accounts for the year then ended, the preparation of which is the responsibility of the Directors of the Company. Our responsibility is to express an opinion on the annual accounts taken as a whole, based on the work performed in accordance with auditing standards generally accepted in Spain, which require the examination, on a test basis, of evidence supporting the annual accounts and an evaluation of their overall presentation, the accounting principles applied and the estimates made. 2. In accordance with Spanish corporate law, the Company's Directors have presented, for comparative purposes only, for each item of the balance sheet, the income statement and the statement of source and application of funds, the corresponding amounts for the previous year as well as the amounts for 2007.Our opinion refers exclusively to the annual accounts for the year On June 25, 2007 we issued our Audit Report on the 2006 annual accounts, in which we expressed an unqualified opinion. 3. As indicated in note 1 to the accompanying annual accounts, Laboratorios Farmacéuticos Rovi, S.A. replaced Phivor Pharmaceutical Research, S.L. as the parent of the business group, as a result of the spin off of Phivor, through which all assets, liabilities and investees of Phivor Pharmaceutical Research, S.L. were contributed to Laboratorios Farmacéuticos Rovi, S.A., except for La Parra del Soberal, S.A.. As a result the amounts for the prior year are not comparable to the amounts for the year 2007 as explained in note 2c) to the accompanying annual accounts. 4. As indicated in note 16 to the accompanying annual accounts, a significant amount of transactions have been carried out with Group companies in accordance with the terms agreed among the parties. 5. In our opinion, the accompanying annual accounts for the year 2007 present fairly, in all material respects, the financial position of Laboratorios Farmacéuticos Rovi, S.A. as at December 31, 2007 and the results of its operations and its source and application of funds for the year then ended, and contain all the information necessary for their interpretation and comprehension in accordance with generally accepted accounting principles in Spain, applied on a basis consistent with that of the preceding year. 6. The accompanying Directors' Report for 2007 contains the information that the Company's Directors consider relevant to the Company s position, the development of its business and other matters and does not form an integral part of the annual accounts. We have verified that the accounting information contained in the aforementioned Directors' Report agrees with that of the annual accounts for Our work as auditors is limited to checking the Directors' Report within the scope already mentioned in this paragraph and it does not include a review of information other than that obtained from the accounting records of Laboratorios Farmacéuticos Rovi, S.A. PricewaterhouseCoopers Auditores, S.L. Originally signed by Rafael García Anguita Partner March 28, LABORATORIOS FARMACÉUTICOS ROVI, S.A. Annual accounts and management report for the year ended December 31, TIN A NAME UNIT B X Laboratorios Farmacéuticos Thousands Rovi, S.A. Millions ASSETS A) UNCALLED SHARE CAPITAL B) FIXED ASSETS , ,05 I. Formation expenses II. Intangible assets , ,18 1. Research and development Franchises, patents, licensees, trademarks and other , ,90 3. Goodwill Lease premium Software ,00-6. Leased assets , ,18 7. Prepayments Provisions Amortisation ( ,91) ( ,90) III. Tangible assets , ,36 1. Land and buildings , ,24 2. Plant and machinery , ,64 3. Fixtures, fittings, tools and equipment , ,62 4. Payments on account and assets in course of , ,05 construction.. 5. Other fixed assets , ,51 6. Provisions Depreciation ( ,71) ( ,70) IV. Investments , ,51 1. Shareholdings in Group companies , ,27 2. Loans to Group companies Shareholdings in associated companies Loans to associated companies Securities portfolio , ,69 6. Other loans Deposits and guarantee deposits , ,55 8. Provisions Public Institutions: amounts receivable after more than one year V. Own shares VI. Trade debtors: amounts receivable after more than one year TIN A B2 NAME Laboratorios Farmacéuticos Rovi, S.A. ASSETS C) DEFERRED EXPENSES ,45 D) CURRENT ASSETS , ,73 I. Called up share capital not paid II. Inventories , ,57 1. Goods purchased for resale , ,57 2. Raw materials and other supplies Work-in-progress Finished goods By products, scrap and reusable material Payments on account Provisions III. Debtors , ,95 1. Trade debtors , ,86 2. Group companies , ,59 3. Associated companies Sundry debtors , ,26 5. Loans to employees , ,43 6. Taxes refundable , ,87 7. Provisions ( ,21) ( ,06) IV. Investments , ,70 1. Shareholdings in Group companies Loans to Group companies , ,77 3. Shareholdings in associated companies Loans to associated companies Securities portfolio , ,72 6. Other loans , ,21 7. Deposits and guarantee deposits Provisions V. Own shares VI. Cash at bank an in hand , ,51 VII. Prepayments and accrued income ,33 - TOTAL (A+B+C+D) , ,23 3 TIN A B3 NAME Laboratorios Farmacéuticos Rovi, S.A. LIABILITIES A) CAPITAL AND RESERVES , ,96 I. Share capital , ,17 II. Share premium account III. Revaluation reserves , ,85 IV. Other reserves , ,39 1. Legal reserve , ,88 2. Reserve for own shares held Reserve for the controlling company's shares Statutory reserves Other reserves , ,51 V. Profit and loss account brought forward , ,14 1. Unappropriated surplus , ,14 2. Prior year losses Shareholder contributions to offset losses VI. Profit/ (loss) for the year , ,41 VII. Interim dividend VIII. Own shares for capital reduction B) DEFERRED INCOME ,77-1. Capital grants ,44-2. Exchange gains Other deferred income ,33-4. Deferred tax income C) PROVISIONS FOR LIABILITIES AND CHARGES Provision for pensions Provisions for taxes Other provisions Sinking fund D) CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN , ,22 ONE YEAR... I. Debenture loans and other marketable securities Non-convertible debentures Convertible debentures Other marketable securities TIN A B4 NAME Laboratorios Farmacéuticos Rovi, S.A. LIABILITIES D) CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (Continued)... II. Bank loans , ,00 1. Bank loans due after more than one year , ,00 2. Creditors for long-term finance leases III. Amounts owed to group and associated companies Amounts owed to group companies Amounts owed to associated companies IV. Other creditors , ,22 1. Bills payable Other creditors , ,22 3. Long-term guarantees and deposits received Public institutions: amounts due after more than one year V. Uncalled share capital Group companies Associated companies Other companies VI. Trade creditors E) CREDITORS: AMOUNTS FALLING DUE IN LESS THAN ONE , ,05 YEAR... I. Debenture loans and other marketable securities Non-convertible debentures Convertible debentures Other marketable securities Interest on debentures and other securities II. Bank loans and overdrafts , ,96 1. Loans and other credit facilities , ,96 2. Interest payable Amounts payable under short-term finance leases III. Amounts owed to group and associated companies , ,11 1. Amounts owed to group companies , ,11 2. Amounts owed to associated companies TIN A B5 NAME Laboratorios Farmacéuticos Rovi, S.A. LIABILITIES E) CREDITORS: AMOUNTS FALLING DUE IN LESS THAN ONE YEAR (Continued)... IV. Trade creditors , ,72 1. Advances from customers Creditors for purchases and services received , ,72 3. Bills of exchange payable V. Other creditors , ,91 1. Taxes and social security contributions , ,51 2. Bills of exchange payable Other creditors , ,89 4. Accrued wages and salaries , ,37 5. Deposits and guarantees received ,15 68,14 VI. Trade provisions , ,35 VII. Accruals and deferred income F) SHORT-TERM PROVISIONS FOR LIABILITIES AND CHARGES. TOTAL (A+B+C+D+E+F) , ,23 6 TIN A P1 NAME X Laboratorios Farmacéuticos Thousands Rovi, S.A. Millions EXPENSES A) EXPENSES (A.1 to A.16) , ,19 A.1. Reduction in stocks of finished goods and work in progress ,95 A.2. Raw materials and consumables , ,39 a) Consumption of goods purchased for resale , ,68 b) Consumption of raw and consumable material , , c) Other external expenses , ,70 A.3. Staff costs , ,14 a) Wages, salaries and similar remuneration , ,60 b) Social Security contributions , ,54 A.4. Fixed asset depreciation , ,34 A.5. Changes in trade provisions ,22 ( ,33) a) Provision for inventory depreciation b) Bad debt expense , ,20 c) Other trade provisions ,07 ( ,53) A.6. Other operating charges , ,03 a) External services , ,50 b) Taxes , ,53 c) Other administrative expenses d) Appropriation to sinking fund A.I. OPERATING PROFIT (B.1+B.2+B.3+B.4-A.1-A.2-A.3-A.4-A.5-A.6) , ,37 A.7. Financial expense and similar costs , ,50 a) Amounts owed to group companies b) Amounts owed to associated companies c) Amounts owed to third parties and similar , ,50 expenses... d) Loss on sale of investments ,57 - A.8. Changes in provisions for investments A.9. Losses on exchange , ,30 A.II. NET FINANCIAL INCOME (B.5+B.6+B.7+B.8-A.7-A.8-A.9) , ,13 7 TIN A P2 NAME Laboratorios Farmacéuticos Rovi, S.A. EXPENSES A.III. PROFIT FROM ORDINARY ACTIVITIES (A.I+A.II-B.I-B.II) , ,50 A.10. Changes in provisions for depreciation of tangible and intangible fixed assets and controlling shareholdings A.11. Loss on disposal of fixed assets A.12. Loss on dealings in own shares and debentures A.13. Extraordinary expenses , ,84 A.14. Prior-year expenses and losses ,04 A.IV. NET EXTRAORDINARY PROFIT (B.9+B.10+B.11+B.12+B.13-A.10-A.11-A.12-A.13-A.14) ,14 - A.V. PROFIT BEFORE TAXES (A.III+A.IV-B.III-B.IV) , ,40 A.15. Corporate income tax ,03 ( ,87) A.16. Other taxes (13 206,68) ,86 A.VI. PROFIT FOR THE YEAR , ,41 8 TIN A P3 NAME Laboratorios Farmacéuticos Rovi, S.A. INCOME B) INCOME (B.1 a B.13) , ,60 B.1. Net turnover , ,57 a) Sales , ,27 b) Services rendered c) Returned goods and volume discounts ( ,75) ( ,70) B.2. Increase in inventories of finished goods and work in progress ,52 - B.3. Own work capitalised B.4. Other operating income , ,32 a) Sundry income , ,01 b) Revenue Grants , ,31 c) Excess provision for liabilities and charges B.I. OPERATING LOSS (A.1+A.2+A.3+A.4+A.5+A.6-B.1-B.2-B.3-B.4) B.5. Income from shareholdings ,00 - a) Group companies ,00 b) Associated companies c) Non-group companies B.6. Income from other marketable securities and long-term loans to a) Group companies b) Associated companies c) Non-group companies B.7. Other interest and similar income from , ,31 a) Group companies b) Associated companies c) Other holdings , ,76 d) Gains on sale of investments , ,55 B.8. Gains on exchange ,77 160,62 B.II. NET FINANCIAL EXPENSE (A.7+A.8+A.9-B.5-B.6-B.7-B.8) TIN A P4 NAME Laboratorios Farmacéuticos Rovi, S.A. INCOME B.III. LOSS FROM ORDINARY ACTIVITIES (B.I+B.II-A.I-A.II) B.9. Profit from disposal of tangible and intangible fixed assets and controlling shareholdings , ,20 B.10. Profit from dealings in own shares and debentures B.11. Capital grants released to income during the year B.12. Extraordinary income , ,29 B.13. Prior-year income and profits , ,29 B.IV. NET EXTRAORDINARY LOSS (A.10+A.11+A.13+A.14-B.9-B.10-B.11-B.12-B.13) ,10 B.V. LOSS BEFORE TAXES (B.III+B.IV-A.III-A.IV) B.VI. LOSS FOR THE YEAR (B.V+A.15+A.16) Free translation of the consolidated annual accounts originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain. In the event of discrepancy, the Spanish version prevails LABORATORIOS FARMACEUTICOS ROVI, S.A. ANNUAL ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2007 (In euros) 1. Activities Laboratorios Farmacéuticos Rovi, S.A. was incorporated in Madrid on 21 December The company primarily engages in the production and sale of pharmaceuticals products in the Spanish market. Its main production facilities, together with its registered office for mercantile and tax purposes, are located at Julian Camarillo, 35, Madrid. The company mainly engages in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with the same. The annual accounts for the year 2007 include the financial statements of the permanent office of Laboratorios Farmacéuticos Rovi, S.A. in Portugal. The aforementioned permanent office was incorporated on 23 October Its corporate purpose is the import, marketing and sale of any pharmaceutical or chemical product. Its registered office is located at Jardins da Parede, Rua do Phnhal, Lote 16 in Parede, (Portugal). Rovi has replaced Phivor Pharmaceutical Research, S.L. (Phivor) as the parent of the business group, as a result of the spin off of Phivor, through which all assets and liabilities of Phivor were contributed to Rovi, except for La Parra del Soberal, S.A. (La Parra). The deed relating to the spin off was filed with the Mercantile Registry on 1 August 2007, and it was finally registered 5 October The spin off deed states that all the operations of the spun off companies are considered to have been realized by Rovi from January 1, 2007 for accounting purposes. As a consequence the statement of income for the year ended December 31, 2007 includes the operation from the spun off company as from that date. The companies contributed by Phivor to Rovi through the partial split are: Gineladius S.L., Rovi Contract Manufacturing S.L., Bemipharma Manufacturing, S.L., Pan Química Farmacéutica, S.A. and Rovi Imaging, S.L. 11 The assets and liabilities which were spun-off on 1st January and contributed to Rovi by Phivor are the following: Phivor Pharmaceutical Research, S.L Non current assets ,27 Financial assets ,27 (*) Current assets ,45 Debtors ,04 Cash and banks ,41 TOTAL ASSETS ,72 Capital and reserves ,93 Deferred income ,00 Provision for liabilities ,77 Long term creditors ,62 Short term creditors ,40 TOTAL LIABILITIES ,72 (*) Includes , 84 euros, book value of the stake of Phivor in Rovi. Simultaneously to the spin off the shares of Phivor in Rovi were contributed to the shareholders (Note 11). 12 The 2007 income statement up to the spin-off date of Phivor Pharmaceutical Research, S.L. (Phivor) is as follows: EXPENSES Phivor Pharmaceutical Research, S.L Employee benefit expense ,51 Other operating expenses ,26 OPERATING PROFIT Financial expense ,24 NET FINANCE INCOME ,70 PROFIT FROM OPERATING ACTIVITIES ,26) Extraordinary expenses 271,75 NET EXTRAORDINARY PROFIT ,20 PROFIT BEFORE TAXES ,46) Corporate income tax - PROFIT FOR THE YEAR ,46 (*) INCOME Net turnover Sales ,33 OPERATING LOSS ,44 Financial income ,94 (*) NET FINANCE COST - LOSS FROM OPERATING ACTIVITIES - Extraordinary income ,95 NET EXTRAORDINARY LOSS - (*) Includes euros relating dividends distributed by Rovi to Phivor. After the elimination of this transaction, the profit for Phivor incorporated into Rovi s profit for the year amounted ,46 euros. 13 2. Basis of presentation a) True and fair view The annual accounts have been prepared on the basis of the Company's accounting records and are presented in compliance with current Spanish Company Law and the Spanish General Accounting Plan so as to provide a true and fair view of the Company's net worth, its financial situation and the results of its operations. Amounts in the annual accounts are presented in. b) Consolidated accounts Laboratorios Farmacéuticos Rovi, S.A. is the parent company of a consolidated group which 2007 annual accounts will be prepared according to the International Financial Reporting Standards (IFRS), as adopted by the European Union. According to the Royal Decree 1.815/1991 of December 20, the Company draws up annual consolidated accounts for its group of subsidiaries. On March 28, 2008, the Board of Directors prepared the consolidated annual accounts of Laboratorios Farmacéuticos Rovi, S.A. and its subsidiaries as at December 31, 2007, showing a profit for the year of thousand euros and a total equity, including the net profit for the year, of thousand euros. c) Comparability As a consequence of the total spin off of Phivor Pharmaceutical Research, S.L. performed at January 1, 2007 and mentioned in the Note 1, the annual accounts as of 31 December 2007 are not comparable with the corresponding prior year annual accounts. 3. Distribution of profits The distribution of profit that will be proposed to the Annual General Meeting for its approval is set out below: Amount Available for distribution Profit for the year ,54 Distribution Retained earnings ,42 Legal reserve , ,54 14 4. Accounting policies The main accounting policies applied in the preparation of these annual accounts are set out below: a) Intangible fixed assets Intangible fixed assets are recorded at their purchase or production cost. Trademarks and licenses include costs incurred with third parties for their official filing. Amortization is calculated using the straight-line method in a maximum period of five years. Research and development expenses relating to the design and testing of new products are recognized as expenses when incurred. Assets being acquired under leases are valued at cost when the economical terms of the lease imply that the assets are being purchased, and recorded under intangible assets in a different separated category until the date of exercise of the purchase option, at this moment, those assets are transferred to tangible fixed assets. Related financial expenses are recorded as deferred expenses and expensed using a financial method. Amortization and other related provisions are calculated at the same rates as those set for similar tangible fixed assets. b) Tangible fixed assets Tangible fixed assets are stated at acquisition cost and adjusted according to the Law 9/1983, dated July 13, issued by the Public Administration. In addition, the Company opted for the revaluation of tangible fixed assets for the year 2006 as permitted by the Royal Decree 7/1996 from June 7. The costs of renewals, enlargements or improvements which extend the useful life, productivity or capacity of the assets are capitalized as far as it is possible to know or estimate the net book value of the derecognized assets from inventories as a consequence of its replacement. Tangible fixed assets are depreciated on a straight line basis over their estimated useful lives taking into consideration the actual depreciation derived from its use. Impairment provisions are recorded when obsolescence is identified. Annual depreciation rates are as follows: Percentage % Buildings 2,5 Plant and machinery 7,15 to 12,5 Fixtures, fittings, tools and equipment 5 Other fixed assets 7,15 to 25 c) Investments Short and long term investments, and securities and fixed income investments are stated at the lower of cost or market value. Holdings in the share capital of non listed associated companies are stated on these annual accounts at their acquisition cost. When necessary, provision is made to reflect changes in the capital and reserves of the investee company that will never be lower than the associate s losses allocated based on the holdings percentage. 15 d) Inventories Inventories are stated at the lower of acquisition or p
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