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Report for the second quarter and the first half of year 2010

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

CONTENTS

I.

MANAGEMENT REPORT ...................................................................................................................3

II. ABBREVIATED SET OF CONSOLIDATED AND INDIVIDUAL FINANCIAL STATEMENTS .................7 Consolidated Balance Sheet as of 30 June 2010 ......................................................................................7 Individual Balance Sheet as of 30 June 2010 ............................................................................................8 Consolidated Income Statement for the period from 1 January to 30 June 2010 .................................9 Individual Income Statement for the period from 1 January to 30 June 2010 .................................... 10 Consolidated Cash Flow Statement for the period from 1 January to 30 June 2010 ......................... 11 Individual Cash Flow Statement for the period from 1 January to 30 June 2010 ............................... 12 Consolidated Statement of Changes in Equity for the period from 1 January to 30 June 2010 ....... 13 Individual Statement of Changes in Equity for the period from 1 January to 30 June 2010 ............. 14 III. NOTES WITH UNAUDITED INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMETNS FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010 ................................................ 15 IV. STATEMENT OF THE PERSONS RESPONSIBLE FOR THE PREPARATION OF THE REPORT19

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

I. MANAGEMENT REPORT

In the period from I-VI 2010, the total profit from sales of Genera Group at the consolidated level amounts to 96,350 million Kuna, and the operative profit amounts to 8,638 million Kuna. The gross profit has exceeded the plan by 14% and amounts to 49,996 million Kuna, which is a clear indicator of an increasing effectiveness in production costs management and a positive influence due to a reduction in the costs of sold products. The net profit for the same period amounts to 5,460 million Kuna, and the net profit after the minority interest in Genera Lijekovi, which as of 1
st

May 2010

represents a constituent part of the consolidation of Genera Group, amounts to as much as 5,897 million Kuna. Rationalised consumption measures implemented in the Group members have made a positive impact on the general and administrative expenses, which have recorded a decrease by 6% in relation to the same period last year. Relatively poor results in the first half-year 2010 are an expected consequence of negative external influences on the operation of the Company. Difficulties in the collection of claims have slowed down the operation in this period. Besides the said cost saving measures, all activities within the past halfyear were directed to increasing the export to Russia, Iran and Egypt, modernising the production and preparing the registration files for Croatia's accession to the EU. Systematic adjustment of all segments of operation with the increasingly rigorous requirements of the European market, the increase of export and high product quality are recognised by the management board of Genera Group as key factors for the success in the upcoming period.

Significant events of the past period Veterina Ltd., the largest member of the Group, increased its export to foreign markets by as much as 25% in relation to the same period last year. Already in the first half-year of 2010, the production capacities for biological vaccines have been filled up until the end of the year, and orders have been contracted with reliable buyers. The production of biological products in the first half-year of 2010 has increased by 80% in relation to the last year. In the first six months, 30 files for product registration renewal have been prepared and submitted to drug agencies in the region (Croatia, Slovenia, Bosnia and Herzegovina, Macedonia), for the production part and the analytical part of the documentation. The documentation for the registration of seven new products has also been prepared, and nine variants on the existing products have been applied for. Also, for the purposes of renewal of registrations of four products in the European Union, the documentation for the preclinical and clinical part of the file has been adjusted and advanced in line with the guidelines of EU directives. In the field of pharmacovigilance, i.e. monitoring the side effects of drugs, 40 PSURs (Periodic Safety Update Reports) have been drawn up in this period, for products in Croatia and on external markets, and the

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

setup of the pharmacovigilance system in line with the Croatian and the EU regulations has been completed. At the beginning of April 2010, the Management Board of Genera Inc. gave their consent to Veterina Kalinova Ltd., a member of Genera Group, to initiate the procedure of preparation of registration files (EU files) for five products. This investment shall enable the said Company to be ready for Croatia's accession to the EU, and to increase its competitiveness on other markets. The planned investment shall be financed mostly from own funds, and partly through credit arrangements. In June 2010, at the fourth session of the Supervisory Board, the acquisition of business shares by Genera Inc. in Genera Istraivanja Ltd. was discussed, and the consent was granted to the Management Board of the Company for the acquisition of business shares in Genera Istraivanja. The consent was also granted to the Management Board to participate in the increase of share capital of the company, once the business share is acquired. The increased share capital shall amount to a total of four million Kuna, and all shareholders of Genera Istraivanja shall participate in the increase of share capital pro rata to the percentage of their business shares in the company. The portfolio of Genera Istraivanja has about 20 patents and patent applications, among which is the patent on which the Pfizer agreement is based. Since Genera Inc. holds 60 percent of Genera Lijekovi Ltd., as of May 2010, this company is a component part of the consolidation of the Group. The business strategy of Genera Lijekovi is based on a wide range of high-quality drugs that can be offered at competitive prices. The consumption of generic drugs in world health systems is increasing, and we estimate that this trend shall keep increasing in Croatia as well, which shall provide a firm ground for a successful realisation of this project. In the past period, Genera Lijekovi has obtained the production licence and started to submit registration files to HALMED, Croatian Agency for Medicinal Products and Medical Devices. Vitamedera Ltd. is planning to place new products on the Croatian market, although the disinfection agents still represent a relatively low share in the total profits of the Group. However, a significant increase of consumption of disinfection agents in Croatia, and a development of this segment in the future are expected. On 29 June 2010, the Shareholders' Meeting of Genera Inc. was held, and the proposed decisions were adopted without any amendment to their proposed content.
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Business events after the expiry of the first half-year After the Balance Sheet Day, no major business events occurred which could significantly materially affect business and position of the Company and the Group.

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Description of the most significant risks and uncertainties The Company and the Group are primarily exposed to financial risks, such as risks of foreign exchange rate changes, credit risks, liquidity risks and interest rates risks. The risk of foreign exchange rate changes is a risk of change in the value of financial instruments due to a change in foreign exchange rates. The Company and the Group are mostly exposed to risks EUR exchange rate changes. The exchange rate changes may have positive or negative effects on the operation of Genera Group. Since the Group is oriented to the increase of professional activities, and since export has an increasing share in the profit of the Group, an invariable Kuna exchange rate is not favourable for the operation and is also impairing the Group's international competitiveness. The interest rate risk implies the risk that the interest costs for financial instruments will change during the period. The Company and the Group have long-term and short-term liabilities under loans subject to variable interest rates, whereby the Company and the Group are exposed to a price and cash flow risk. The credit risk is a risk of default of a party to the agreement, whereby financial loss is incurred to the other party. The Company and the Group have accepted the policy of doing business exclusively with creditworthy companies secured by guarantees, which reduces the possibility of financial losses caused by default. The Company and the Group are not exposed to high credit risks in relation to their partners or client groups of similar characteristics. The Company and the Group manage the liquidity risk by providing bank loans and monitoring the anticipated and the actual cash flow, comparing it with the maturity of financial assets and liabilities. The entire operation of Genera has been harmonised with the management of risks in the field of health, safety and environmental protection. All activities undertaken in the field of safety at work are directed at removing or reducing the risk, in line with the national legislation. The Supervisory Board has approved the financial statements for the period of I-VI 2010. To the best knowledge of the Management Board, the abbreviated set of financial statements for the second quarter and the first half-year of 2010, including the notes, contains an accurate overview of the development, the operation results, and the status of the Company, and of all the companies involved in the consolidation, and represents a component part hereof. The financial statement for the period of I-VI 2010 shall be available at the Genera premises and at the Zagreb Stock Exchange, and shall be published to the general public through HINA. After the date of the balance sheet, no significant business events have arisen, such as might materially affect the business and the situation of the Company and the Group.

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Ivan Drpi Chairman of the Management Board

Ana Hanekovi orak Member of the Management Board

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

II. ABBREVIATED SET OF CONSOLIDATED AND INDIVIDUAL FINANCIAL STATEMENTS


Consolidated Balance Sheet as of 30 June 2010
CONSOLIDATED BALANCE SHEET
as of 30.6.2010 thousands HRK
Position
1

AOP
2

Previous period 3

Current period 4

ASSETS A) RECEIVABELS FOR SUBSCRIBED NOT PAID CAPITAL B) NON-CURRENT ASSETS I. INTANGIBLE ASSETS II. PROPERTY, PLANT AND EQUIPMENT III. NON-CURRENT FINANCIAL ASSETS IV. RECEIVABLES V. DEFERRED TAX ASSET C) CURRENT ASSETS I. INVENTORIES II. RECEIVABLES III. CURRENT FINANCIAL ASSETS IV. CASH AND CASH EQUIVALENTS D) PREPAYMENTS AND ACCRUED INCOME E) LOSS ABOVE SUBSCRIBED CAPITAL F) TOTAL ASSETS G) OFF BALANCE SHEET ITEMS EQUITY AND LIABILITIES A) ISSUED CAPITAL AND RESERVES I. SUBSCRIBED SHARE CAPITAL II. CAPITAL RESERVES III.LEGAL RESERVES IV. REVALUATION RESERVES V. RETAINED EARNINGS VI. LOSS CARRIED FORWARD VII. NET PROFIT FOR THE PERIOD VIII. LOSS FOR THE PERIOD IX. MINORITY INTEREST B) PROVISIONS C) NON-CURRENT LIABILITIES D) CURRENT LIABILITIES E) ACCRUED EXPENSES AND DEFERRED INCOME F) TOTAL EQUITY AND LIABILITIES G) OFF BALANCE SHEET ITEMS ADDITION TO BALANCE SHEET (only for consolidated financial statements) ISSUED CAPITAL AND RESERVES 1. Attributable to majority owners 2. Attributable to minority interest

001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 026 027 028 029 030 031 032

98.051 1.834 95.825 181 0 211 151.463 53.047 81.435 1.702 15.279 43 0 249.557

107.420 5.698 92.969 8.542 0 211 161.076 49.706 95.967 0 15.404 41 0 268.538

166.598 184.486 0 4.484 0 0 21.765 606 0 682 31.410 50.360 506 249.557

170.411 184.486 3.949 1.493 23.886 5.897 -1.527 682 35.320 61.357 767 268.538

033 034

166.598

171.938 -1.527

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Individual Balance Sheet as of 30 June 2010


BALANCE SHEET
as of 30.6.2010 thousands HRK
Position
1

AOP
2

Previous period 3

Current period 4

ASSETS A) RECEIVABELS FOR SUBSCRIBED NOT PAID CAPITAL B) NON-CURRENT ASSETS I. INTANGIBLE ASSETS II. PROPERTY, PLANT AND EQUIPMENT III. NON-CURRENT FINANCIAL ASSETS IV. RECEIVABLES V. DEFERRED TAX ASSET C) CURRENT ASSETS I. INVENTORIES II. RECEIVABLES III. CURRENT FINANCIAL ASSETS IV. CASH AND CASH EQUIVALENTS D) PREPAYMENTS AND ACCRUED INCOME E) LOSS ABOVE SUBSCRIBED CAPITAL F) TOTAL ASSETS G) OFF BALANCE SHEET ITEMS EQUITY AND LIABILITIES A) ISSUED CAPITAL AND RESERVES I. SUBSCRIBED SHARE CAPITAL II. CAPITAL RESERVES III.LEGAL RESERVES IV. REVALUATION RESERVES V. RETAINED EARNINGS VI. LOSS CARRIED FORWARD VII. NET PROFIT FOR THE PERIOD VIII. LOSS FOR THE PERIOD IX. MINORITY INTEREST B) PROVISIONS C) NON-CURRENT LIABILITIES D) CURRENT LIABILITIES E) ACCRUED EXPENSES AND DEFERRED INCOME F) TOTAL EQUITY AND LIABILITIES G) OFF BALANCE SHEET ITEMS ADDITION TO BALANCE SHEET (only for consolidated financial statements) ISSUED CAPITAL AND RESERVES 1. Attributable to majority owners 2. Attributable to minority interest

001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 026 027 028 029 030 031 032

195.630 1.206 91.399 103.023 0 2 25.317 12 21.139 3.202 965 0 0 220.948

198.945 1.024 86.522 111.396 0 2 23.633 5 20.805 1.400 1.424 37 0 222.615

169.753 184.486 4.484

169.595 184.486 3.949

20.967 1.750

19.217 377

12 31.410 19.114 658 220.948

12 34.233 18.077 697 222.615

033 034

169.753

169.595

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Consolidated Income Statement for the period from 1 January to 30 June 2010
CONSOLIDATED PROFIT AND LOSS STATEMENT
for peroid 1.1.2010 to 30.6.2010 thousands HRK
Position AOP
oznaka 2 3 105.669 103.337 2.332 93.764 3.305 49.526 24.035 6.726 3.662 47 6.463 2.350 2.350 Previous period Current period

Cummulative
1

Periodical
4 58.156 57.629 527 49.894 4.019

Cummulative
5 97.874 96.350 1.524 89.227 945

Periodical
6 56.944 56.119 825 48.451 4.001

I. OPERATING INCOME 1. Rendering of services 2. Income from usage of own products, merchandise and services 3. Other operating income II. OPERATING COSTS 1. Decrease of work in progress and merchandise 2. Increase of work in progress and merchandise 3. Material expenses 4. Employee benefits expenses 5. Depreciation and amortisation 6. Other expenses 7. Write down of assets 8. Provisions 9. Other operating costs III. FINANCIAL INCOME 1. Interest, foreign exchange differences, dividens and similar income from subsidiaries 2. Interest, foreign exchange differences, dividens and similar income from third parties 3. Income form investments in associates and joint ventures 4. Unrealised gains (income) 5. Other financial income IV. FINANCIAL EXPENSES 1. Interest, foreign exchange differences and similar expenses from subsidiaries 2. Interest, foreign exchange differences and similar expenses from third parties 3. Unrealised losses (expenses) from financial assets 4. Other financial expenses V. EXTRAORDINARY - OTHER INCOME VI. EXTRAORDINARY - OTHER EXPENSES VII. TOTAL INCOME VIII. TOTAL EXPENSES IX. PROFIT BEFORE TAXES X. LOSS BEFORE TAXES XI. TAXATION XII. NET PROFIT FOR THE PERIOD XIII. LOSS FOR THE PERIOD ADDITION TO PROFIT AND LOSS ACCOUNT (only for consolidated financial statements) XIV.* NET PROFIT ATTRIBUTABLE TO MAJORITY OWNERS XV.* NET PROFIT ATTRIBUTABLE TO MINORITY INTEREST XVI.* LOSS ATTRIBUTABLE TO MAJORITY OWNERS XVII.* LOSS ATTRIBUTABLE TO MINORITY INTEREST

035 036 037 038 039 040 041 042 043 044 045 046 047 048 049 050 051 052 053 054 055 056 057 058 059 060 061 062 063 064 065 066 067 068 069 070 071 072

26.992 11.583 3.364 659 47 3.230 1.051 1.051

38.214 24.963 6.517 12.170

18.173 12.935 3.312 5.467

8.308 1.048 1.048

4.563 659 659

3.628 3.628

1.622 1.622

2.314 2.314

1.264 1.264

108.019 97.392 10.627 2.472 8.155 0 8.155

59.207 51.516 7.691 1.591 6.100 0 6.100

98.922 91.541 7.381 1.922 5.459

57.603 49.715 7.888 1.290 6.598

5.897

7.035

437

437

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Individual Income Statement for the period from 1 January to 30 June 2010
PROFIT AND LOSS STATEMENT
for period 1.1.2010 to 30.6.2010 thousands HRK
Position AOP
oznaka 2 3 20.963 15.205 5.758 20.714 Previous period Current period

Cummulative
1

Periodical
4 8.901 7.435 1.466 8.637

Cummulative
5 16.925 16.915 10 16.029

Periodical
6 8.140 8.134 6 7.829

I. OPERATING INCOME 1. Rendering of services 2. Income from usage of own products, merchandise and services 3. Other operating income II. OPERATING COSTS 1. Decrease of work in progress and merchandise 2. Increase of work in progress and merchandise 3. Material expenses 4. Employee benefits expenses 5. Depreciation and amortisation 6. Other expenses 7. Write down of assets 8. Provisions 9. Other operating costs III. FINANCIAL INCOME 1. Interest, foreign exchange differences, dividens and similar income from subsidiaries 2. Interest, foreign exchange differences, dividens and similar income from third parties 3. Income form investments in associates and joint ventures 4. Unrealised gains (income) 5. Other financial income IV. FINANCIAL EXPENSES 1. Interest, foreign exchange differences and similar expenses from subsidiaries 2. Interest, foreign exchange differences and similar expenses from third parties 3. Unrealised losses (expenses) from financial assets 4. Other financial expenses V. EXTRAORDINARY - OTHER INCOME VI. EXTRAORDINARY - OTHER EXPENSES VII. TOTAL INCOME VIII. TOTAL EXPENSES IX. PROFIT BEFORE TAXES X. LOSS BEFORE TAXES XI. TAXATION XII. NET PROFIT FOR THE PERIOD XIII. LOSS FOR THE PERIOD ADDITION TO PROFIT AND LOSS ACCOUNT (only for consolidated financial statements) XIV.* NET PROFIT ATTRIBUTABLE TO MAJORITY OWNERS XV.* NET PROFIT ATTRIBUTABLE TO MINORITY INTEREST XVI.* LOSS ATTRIBUTABLE TO MAJORITY OWNERS XVII.* LOSS ATTRIBUTABLE TO MINORITY INTEREST

035 036 037 038 039 040 041 042 043 044 045 046 047 048 049 050 051 052 053 054 055 056 057 058 059 060 061 062 063 064 065 066 067 068 069 070 071 072

5.113 5.548 6.702 3.340

1.381 1.795 3.355 2.106

3.053 4.145 6.360 2.434

1.229 2.296 3.159 1.146

11 1.631 1.631 803 803

37 724 4 721 419 3 416

3.607 2.697 910

2.007 1.097 910

1.243 1 1.242

640 640

22.594 24.321 1.727 940

9.704 10.644

17.649 17.272 377

8.559 8.469 90

377 1.727 940 377 1.727 940

90

90

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Consolidated Cash Flow Statement for the period from 1 January to 30 June 2010

CONSOLIDATED CASH FLOW STATEMENT - Indirect method


period 1.1.2010 to 30.6.2010 thousands HRK
Position
1

AOP
oznaka 2

Previous period 3 10.627 6.726

Current period 4 7.381 6.515

CASH FLOWS FROM OPERATING ACTIVITIES 1. Profit before tax 2. Depreciation and amortisation 3. Increase of current liabilities 4. Decrease of current receivables 5.Decrease of inventories 6. Other cash flow increases I. Total increase of cash flow from operating activities 1. Decrease of current liabilities 2. Increase of current receivables 3. Increase of inventories 4. Other cash flow decreases II. Total decrease of cash flow from operating activities A1) NET INCREASE OF CASH FLOW FROM OPERATING ACTIVITIES A2) NET DECREASE OF CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES 1. Proceeds from sale of non-current assets 2. Proceeds from sale of non-current financial assets 3. Interest received 4. Dividend received 5. Other proceeds from investing activities III. Total cash inflows from investing activities 1. Purchase of non-current assets 2. Purchase of non-current financial assets 3. Other cash outflows from investing activities IV. Total cash outflows from investing activities B1) NET INCREASE OF CASH FLOW FROM INVESTING ACTIVITIES B2) NET DECREASE OF CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES 1. Proceeds from issue of equity securities and debt securities 2. Proceeds from loans and borrowings 3. Other proceeds from financing activities V. Total cash inflows from financing activities 1. Repayment of loans and bonds 2. Dividends paid 3. Repayment of finance lease 4. Purchase of treasury shares 5. Other cash outflows from financing activities VI. Total cash outflows from financing activities C1) NET INCREASE OF CASH FLOW FROM FINANCING ACTIVITIES C2) NET DECREASE OF CASH FLOW FROM FINANCING ACTIVITIES Total increases of cash flows Total decreases of cash flows Cash and cash equivalents at the beginning of period Increase of cash and cash equivalents Decrease of cash and cash equivalents Cash and cash equivalents at the end of period

073 074 075 076 077 078 079 080 081 082 083 084 085 086 087 088 089 090 091 092 093 094 095 096 097 098 099 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116

6.839 24.192 21.211 17.446

3.341 263 17.500 592 14.531

38.657 14.465

15.123 2.377

4 30 20 316 340 6.055 8.000 1.866 2.142 2.112 15.922 15.582

30 2.142

23.995 23.995 4.975

31.271 31.271 16.294

300 5.275 18.720 2.143 12.912 2.143 15.055

535 1.111 17.940 13.331 125 15.279 125 15.404

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Individual Cash Flow Statement for the period from 1 January to 30 June 2010

CASH FLOW STATEMENT - Indirect method


period 1.1.2010 to 30.6.2010 thousands HRK
Position
1

AOP
oznaka 2

Previous period 3 -1.727 6.702 58.162 52.251 115.388 42.546

Current period 4 377 6.360 334 7 2 7.079 1.219

CASH FLOWS FROM OPERATING ACTIVITIES 1. Profit before tax 2. Depreciation and amortisation 3. Increase of current liabilities 4. Decrease of current receivables 5.Decrease of inventories 6. Other cash flow increases I. Total increase of cash flow from operating activities 1. Decrease of current liabilities 2. Increase of current receivables 3. Increase of inventories 4. Other cash flow decreases II. Total decrease of cash flow from operating activities A1) NET INCREASE OF CASH FLOW FROM OPERATING ACTIVITIES A2) NET DECREASE OF CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES 1. Proceeds from sale of non-current assets 2. Proceeds from sale of non-current financial assets 3. Interest received 4. Dividend received 5. Other proceeds from investing activities III. Total cash inflows from investing activities 1. Purchase of non-current assets 2. Purchase of non-current financial assets 3. Other cash outflows from investing activities IV. Total cash outflows from investing activities B1) NET INCREASE OF CASH FLOW FROM INVESTING ACTIVITIES B2) NET DECREASE OF CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES 1. Proceeds from issue of equity securities and debt securities 2. Proceeds from loans and borrowings 3. Other proceeds from financing activities V. Total cash inflows from financing activities 1. Repayment of loans and bonds 2. Dividends paid 3. Repayment of finance lease 4. Purchase of treasury shares 5. Other cash outflows from financing activities VI. Total cash outflows from financing activities C1) NET INCREASE OF CASH FLOW FROM FINANCING ACTIVITIES C2) NET DECREASE OF CASH FLOW FROM FINANCING ACTIVITIES Total increases of cash flows Total decreases of cash flows Cash and cash equivalents at the beginning of period Increase of cash and cash equivalents Decrease of cash and cash equivalents Cash and cash equivalents at the end of period

073 074 075 076 077 078 079 080 081 082 083 084 085 086 087 088 089 090 091 092 093 094 095 096 097 098 099 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116

42.546 72.842

1.219 5.860

4 45 115 160 1.656 101.738 103.394 103.234 5 2.122 2.131 1.629 8.000 373 10.002 7.871

23.995 23.995 4.975

9.875 9.875 6.870

300 5.275 18.720

535 7.405 2.470 459

11.672 12.641 11.672 969 1.424 965 459

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Consolidated Statement of Changes in Equity for the period from 1 January to 30 June 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


from 1.1.2010 to 30.6.2010 thousands HRK
Position

AOP
2

Previous period 31.12. previous year 184.486 0 4.484 -21.769 -606

Increase

Decrease 3

Current period 4 184.486 0

1. Subscribed share capital 2. Capital reserves 3. Net income reserves 4. Retained earnings or loss carried forward 5.Net profit (loss) for the period 6. Revaluation of property, plant and equipment 7. Revaluation of intangible assets 8. Revaluation of available for sale financial assets 9. Other revaluation 10. Foreign exchange differences from investments abroad 11. Current and deferred taxes (part) 12. Hedging 13.Change of accounting policies 14.Change of prior period error 15.Other changes in equity 16.Total increase or decrease of equity 16a. Attributable to majority owners 16b. Attributable to minority interest

117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134

535 1.493 5.897 2.117 -606

3.949 -22.393 5.897 0 0 0 0

0 0 0 0 0

0 166.598

-1.527 5.863 2.050 2.050

-1.527 170.411 171.938 -1.527

166.598 0

7.390 -1.527

13

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

Individual Statement of Changes in Equity for the period from 1 January to 30 June 2010

STATEMENT OF CHANGES IN EQUITY


from 1.1.2010 to 30.6.2010 thousands HRK
Position

AOP
2

Previous period 31.12. previous year 184.486 4.484 -20.967 1.750

Increase

Decrease 3

Current period 4 184.486 0

1. Subscribed share capital 2. Capital reserves 3. Net income reserves 4. Retained earnings or loss carried forward 5.Net profit (loss) for the period 6. Revaluation of property, plant and equipment 7. Revaluation of intangible assets 8. Revaluation of available for sale financial assets 9. Other revaluation 10. Foreign exchange differences from investments abroad 11. Current and deferred taxes (part) 12. Hedging 13.Change of accounting policies 14.Change of prior period error 15.Other changes in equity 16.Total increase or decrease of equity 16a. Attributable to majority owners 16b. Attributable to minority interest

117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134

535 1.750 377 1.750

3.949 -19.217 377 0 0 0 0 0 0 0 0 0 0

169.753

2.127

2.285

169.595

169.753

2.127

2.285

169.595

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

III. NOTES WITH UNAUDITED INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMETNS FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

NOTE 1 Basic preparations

1.1. Statement of conformity

These abbreviated quarterly (second quarter) and half-year (first half-year) non-audited individual and consolidated financial statements for the period which ended on 30 June 2010 do not include all data which have to be disclosed in the annual financial statements, therefore they have to be reviewed together with the audited individual and consolidated financial statements of the Company and the Group as on and for the year which ended on 31 March 2010.
st th

1.2. Basis for the preparation of the statements

The accounting policies used by the Company and the Group when preparing these abbreviated non-audited individual and consolidated financial statements for the period of the second quarter which ended on 30
th

June 2010 are in compliance with the accounting policies used by the
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Company and the Group when preparing the audited individual and consolidated financial statements as on, and for the year which ended on, 31 December 2009. These financial

statements have been prepared under the assumption of an unlimited period of business operations.

1.3. Affiliated companies

On 30 June 2010, the affiliated companies are: Veterina Ltd., Croatia, Veterina Kalinova Ltd., Croatia, Veterina Nutricius Ltd., Croatia, Vitamedera Ltd., Croatia, Veterina Usluge Ltd., Croatia, Genera Lijekovi Ltd., Croatia, Genera Analitika Ltd., Croatia, Veterina Plus Ltd. , Slovenia,

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15

GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

NOTE 2 Fixed tangible and intangible assets

In the second quarter, investments into the fixed tangible and intangible assets for the Company amount to 615 thousand Kuna, and for the Group to 2,548 thousand Kuna.

NOTE 3 Fixed financial assets investments of the Company into affiliated companies

HRK'000 Investments companies into affiliated

31 December 2009

st

31 June 2010

st

Veterina Plus Ltd., Ljubljana Veterina Ltd., Kalinovica Veterina Kalinova Ltd., Kaliovica Veterina Nutricius Ltd., Kalinovica Vitamedera Ltd., Kalinovica Veterina usluge Ltd., Kalinovica Genera Analitika Ltd., Kalinovica Genera Lijekovi Ltd., Kalinovica Total

74 55,459 31,545 12,755 2,969 20 20 2 102,844

74 55,459 31,545 12,755 2,969 20 20 12 102,852

NOTE 4 Current assets and short-term liabilities

In the first half-year, the consolidated claims have increased by more than 17.8%, and at the end of the period they amount to 95,967 thousand Kuna. Additionally, the short-term liabilities at the consolidated level have increased by more than 20%, and at the end of the period they amount to 61,357 thousand Kuna. The collection of claims and the payment of liabilities have been performed within the planned dynamics.

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

NOTE 5 Capital and reserves

On 30

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June 2010, the registered and paid up capital amounts to 184,486 thousand Kuna

(2009: 184,486 thousand Kuna). The share capital consists of 1,844,860 ordinary shares. In the first half-year, the Company acquired 8,865 shares, constituting 0.48% of the Company's share capital. On 30 June 2010, the Company totally holds 59,277 own shares (2009: 18,121 shares). At the regular Shareholders' Meeting of the Company, held on 29/06/2010, the decision on the allocation of profits for 2009 was adopted. The Company's profit realised from operations in 2009, amounting to 1,750 thousand Kuna, is used for the coverage of the loss carried forward from the preceding period.
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NOTE 6 Long-term and short-term loans

On 30 June 2010, the Company had long-term liabilities under bank loans in the total amount of 34,233 thousand Kuna, of which the current maturity of long-term liabilities amounts to 3,221 thousand Kuna. On the same day, the Company had liabilities under short-term loans in the amount of 17,032 thousand Kuna. The amount of long-term loans for the Group amounts to 35,320 thousand Kuna. The short-term loans for the Group amount to 30,393 thousand Kuna.

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NOTE 7 Financial status of affiliated companies

The following overview contains the basic financial indicators realised in the second quarter and the first half-year of 2010, which show the financial position of the affiliated companies. We expect the continuance of stable business operations in the following period.

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

The financial status of the affiliated companies for the period from 01/04/2010 to 30/06/2010 HRK'00 Total income Costs of sold Veterina 28,804 16,234 Kalinova 16,558 6,766 Nutricius 11,110 8,055 Vitamedera 3,056 2,014 Plus 437 6 Usluge 3,564 1,289 Genera 2 465

products Gross profit Other business 12,570 9,885 9,791 4,186 3,054 2,177 1,042 1,003 430 425 2,275 2,252 -463 598

expenditures Operating profit 2,685 5,605 877 39 6 23 -1,061

The financial status of the affiliated companies for the period from 01/01/2010 to 30/06/2010 HRK'00 Total income Costs of sold Veterina 45,067 27,206 Kalinova 26,771 11,553 Nutricius 21,921 15,713 Vitamedera 6,224 4,060 Plus 639 6 Usluge 6,976 2,089 Genera 2 465

products Gross profit Other business 17,861 18,700 15,218 7,500 6,208 4,400 2,164 1,956 633 819 4,886 4,791 -463 598

expenditures Operating profit -840 7,718 1,808 208 -186 96 -1,061

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GENERA d.d. REPORT FOR THE SECOND QUARTER AND THE FIRST HALF OF YEAR 2010

IV. STATEMENT OF THE PERSONS RESPONSIBLE FOR THE PREPARATION OF THE REPORT
To the best of my knowledge, the management report as well as the abbreviated set of noaudited individual and consolidated financial statements for the first quarter of 2010 have been prepared by applying international standards for financial reporting, and gives a complete and accurate overview of assets and liabilities, losses and profits, the financial status and business operations of the Company and the companies included in the consolidation as a whole.

Janko tefanek Finance and Corporate Integrations Director Genera Inc.

Klaudija Krianec Head of Accounting Veterina Usluge Ltd.

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