Genera Inc - Annual Report 2009

Annual Report 2009
Genera Inc. and subsidiaries

Consolidated and Standalone Financial Statements as at 31 December 2009 together with Independent Auditor's Report
Genera d.d.
31 December 2009
CONTENT
Management Report Report of the Supervisory Board Responsibility of the Management for the Financial Statements Independent Auditor's Report Financial Statements: Consolidated Balance sheet as at 31 December 2009 Balance sheet as at 31 December 2009 Consolidated Income Statement for the period from 1 January to 31 December 2009 Income Statement for the period from 1 January to 31 December 2009 Consolidated Cash Flow Statement for the period from 1 January to 31 December 2009 Cash Flow Statement for the period from 1 January to 31 December 2009 Consolidated Statement of Changes in Equity for the period from 1 January to 31 December 2009 Statement of Changes in Equity for the period from 1 January to 31 December 2009
1-5 6-7 8 9
10 11 12 13 14 15 16 17 18-62
Notes to the Financial Statements
Statement of the persons responsible for the preparation of the report
63
Genera d.d.
31 December 2009
Report of the Management Board The total consolidated sales income for 2009 grew for 6% in relation to last year and amount to HRK 163.9 million. The consolidated gross profit recorded an increase of even 54.43% in relation to 2008. The gross income in 2009 amounted to HRK 75.54 million, while in the same period last year it amounted to HRK 34.22 million. In relation to the preceding year when the company operated with a loss of HRK 37.76 million, the achieved operational profit in 2009 of HRK 2.1 million was a significant indicator of a trend of more and more successful business operations. Therefore the consolidated loss prior to taxation in 2009 amounts to only HRK 0.35 million while in 2008 it amounted to HRK 37.3 million.
The significant decrease of losses in 2009 are the result of the abovementioned increase of income as well as of a more efficient management of expenses (decrease of material and energy costs of 13.3% and personnel costs of 8.6% in relation to 2008). During 2009 Genera Inc. acquired its own shares on several occasions. On 31/12/2009 Genera Inc. held 50.412 shares, constituting 2.73% of the share capital of the Company.
The complete audited individual and consolidated financial statement for 2009, including notes, contains, to the best knowledge of the Management Board, a true overview of the development and results of the business operations and the Company's position as well as that of the companies included in the consolidation, which statement is an integral part of this report of the management.
Significant events in 2009
Change of the Company's name
The year 2009 was also marked by the proposal of the Management Board of the then Veterina Inc. to change the company name from Veterina Inc. to Genera Inc., which was the result of the newly defined strategic goals and the need to adapt to the new organisational structure of the Group.
It was establish that there was a realistic basis to expand the business operations of the Group in the future also to human pharmaceutics, either through acquisitions or through the establishment of new companies, therefore the Company's Management Board considered the company name Genera Inc. more appropriate. Apart form this, as an umbrella company, Veterina Inc. was the owner of different companies of different business activities some of which were not related to veterinarian activities. Apart from the strategic orientation to human pharmaceutics, this was an additional argument to pass the decision on the change of the company name. In accordance with the best practice of corporate management, the Management Board of Veterina Inc. proposed to the Company's General Assembly the change of the company name, which was confirmed at the session of the General Assembly held on 16 June 2009. Therewith the full company name became Genera dioniko drutvo za razvoj i proizvodnju farmaceutskih proizvoda (Genera Incorporated for development and production of pharmaceuticals), and the abbreviated company name Genera Inc.
Genera d.d.
31 December 2009
New limited liability companies commence operations
Genera Inc. is an umbrella company having the role of strategic and financial management of limited liability companies constituting the Genera group. Already at the end of 2008 five limited liability companies were established which commenced with their operational business operations in January 2009, having the following activities: VETERINA Ltd. production, development and sale of vaccines and veterinarian drugs, VETERINA NUTRICIUS Ltd. production, development and sale of animal feed additives, VITAMEDERA Ltd. - production, development and sale of disinfectants, VETERINA KALINOVA Ltd. - production, development and sale of agrochemicals, and VETERINA USLUGE Ltd. - support to the operative business activities by providing information, accounting, energy, personnel and similar services.
Significant events in Veterini Ltd., the largest member of the Group
In January 2009, Veterina Ltd. was approved the Good Manufacturing Practice Certificate (hr. DPP, eng. GMP) for the production of dry drugs on the territory of the European Union. The GMP Certificate is a confirmation that Veterina Ltd. has adjusted the manufacturing process and the quality management system to the EU Standards (requirements of good manufacturing practice of the European Union), which is a prerequisite for the sale of veterinarian-medical products in the countries of the European Union. The inspection included the dry drugs production machinery, quality control laboratories (chemicalchromatographic laboratory, instrumental laboratory and part of the microbiological laboratory), logistics as well as the entire quality assurance system. The positive findings of the inspection and conformity of all dry drugs production processes with the strictest European regulations and quality standards enables Veterina the registration, sale and distribution of products in countries of the European Union which is a prerequisite for the survival and future growth in these markets. In December 2009, another GMP inspection was successfully conducted in Veterina Inc. which resulted in the approval of a GMP Certificate in February 2010. This certificate refers to the production of lyophilised vaccines and is a prerequisite for their sale on the European and other foreign markets. Apart form this certificate being proof of the conformity with the strictest European regulations, it also constitutes a significant step towards the most important goal in 2010 the growth of production and increase of export on foreign markets. The intention of Genera Group is to confirm the entire pharmaceutical production process with a good manufacturing practice as soon as possible and thus increase its competitiveness in all segments of its business operations. As the company already has a large share in the Croatian market, it is focused on the increase of export which the company defined as the key factor of the growth and the main definition of business operations in 2009 and the following years. The year 2009 was marked by the beginning of the realisation of the expansion strategy through the increase of export and the first shipments of vaccines were delivered to the
Genera d.d.
31 December 2009
new markets of Northern Africa (Algeria and Egypt). Also, the cooperation with the distributor in Iran was intensified to whom an expanded range of products was offered and negotiations and preliminary activities for the launching of products on the Russian market were initiated.
At the end of 2009 Veterina Ltd. also signed the agreement for the development of six strains of vaccines with the laboratory Gezondheidsdienst voor Dieren BV, one of the leading verification-research laboratories in Europe having their seat in the Netherlands. The development of six strains of vaccines will result in the obtaining of European registration files for ten internationally competitive products. The signing of this agreement constitutes a new phase in the development of Veterina Ltd. in which significant financial assets are being invested for the development of vaccines.
Significant events in other members of the Group
In other affiliated companies: Veterina Kalinova Ltd., Veterina Nutricius Ltd., Vitamedera Ltd. , Veterina usluge Ltd., Veterina Plus Ltd. and Genera Analitika Ltd. there were no important events which would significantly affect the financial status of these companies. For the purpose of more successful business operations in 2009, a number of smaller investments were initiated, such as investments into equipment, reorganisation of the existing machinery and the renewal o ISO (9001:2000, 14001:2004, 13485:2003) and HACCP (Codex Alimentarius) certificates. The continuance of stable and efficient business operations is expected in the following period.
In July 2009 the Supervisory Board unanimously passed the decision by which it gave its consent to the Management Board of the Company to proceed with the co-establishment of the company Genera Lijekovi Ltd. and the establishment of the company Genera Analitika Ltd. These decisions were passed in accordance with the announcements of the Management Board on the strategy of expanding the business operations also to human pharmaceutics.
The basic business activity of the company Genera Lijekovi shall be the development, production and sale of generic drugs. The business shares of Genera Inc. in the company Genera Lijekovi Ltd. amount to 10%.
Genera as the sole founder, also established the company Genera Analitika. The basic business activity of this company shall be the rendering of services of laboratory analyses and quality control testing of raw materials, intermediate goods and finished pharmaceutical products for human and veterinarian use.
Genera Analitika shall apply the quality system ISO 17025, as well as GMP and GLP standards. The decision on the establishment of General Analitika results from the increased necessity for such analyses within the Genera Group and the entire region. Genera Inc. recognised this trend on the market and its goal is for Genera Analitika to position itself as an independent GLP centre for quality control and testing of pharmaceutical products (Contract Analytical Laboratory) which would render laboratory testing services also outside the group. With Croatia's accession to the EU, analyses which the centre would perform would be acknowledged in the member states of the EU. A significant element of the increase in the number of such analyses within the Group refer to the expansion of business operations also to human pharmaceutics
Genera d.d.
31 December 2009
as well as the planned increase of the production of interactive and live vaccines for poultry within the affiliated company Veterina Ltd.
Within the restructuring, the decision on the liquidation of the company Veterina Polska was passed due to the multiannual losses in business operations. Despite the negative effect on the consolidated results of the Group in 2009 these are positive and important strategic moves of which a positive result is expected in the following period. During 2010 the procedure of closing the company should be completed.
Business events after the completion of the business year
All important events which occurred after the completion of the business year are described in the notes of the reports and constitute an integral part of the management's reports.
Description of the most important 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 rate risks.
The risks of foreign exchange rate changes is a risk of the change of the value of financial instruments due to exchange rate changes. The Company and the Group are mostly exposed to risks of EUR exchange rate changes.
The interest risk presumes the risk that the interest costs for financial instruments will be changeable during the period. The Company and the Group have long-term and short-term liabilities under loans to which changeable interests are calculated which expose the Company and the Group to a price and cash flow risk.
The credit risk is the risk that one party of a contractual relationship will not meet its obligations and therewith cause financial losses to the other party. The Company and the Group accepted the business policy of conducting business only with credit worthy companies and companies ensured with guarantees wherewith the possibility of financial losses occurring due to non-fulfilment of obligations is decreased. The Company and the Group are not exposed to large credit risks in relation to their partners or client groups of similar characteristics.
The Company and the Group manage the liquidity risk in the manner that they secure bank loans and monitor the foreseen and actual cash flow comparing it with the maturity of the financial assets and liabilities.
The entire business operations of Genera are adjusted to the securing and management of risks in the field of health protection, security and environment. All activities in the implementation of safety at work are directed at the removal, or decrease of risks in accordance with national laws and regulations. The financial statement for 2009 will be available at Genera and at the Zagreb Stock-Exchange, as well as published through HINA.
Genera d.d.
31 December 2009
As Genera is a joint-stock company the shares of which have been traded on an organised securities market since 2008 also the Codex on corporate management is applied which is published on the pages of the Zagreb Stock Exchange and the website of the Company, and in case of its non-application it has to state the reason for the no-application. The main reason for the non-application of certain provisions of the codex result from the specificity of the shareholder structure in which one shareholder holds almost 70% of votes in the Company as well as in the effort for an efficient functioning of the Supervisory Board. Upon the publishing of the questionnaire on the application of the Codex of corporate management it becomes an integral part of this report.
Genera Inc. Svetonedjeljska 2, Kalinovica 10436 Rakov Potok Croatia
For and on behalf of Genera Inc.:
Ivan Drpi Kalinovica, 31 March 2010 Chairman of the Management Board
Ana Hanekovi orak Member of the Management Board
Genera d.d.
31 December 2009
Report of the Supervisory Board During 2009 the members of the Supervisory Board of Genera Inc. ("the Company") were: Ivan Majdak, Ph.D., as the Chairman and Mrs. Zrinka Vukovi, BEc, Marcel Majsec, Ph.D., Franjo Greguri, Ph.D. and Mladen Vedri, Ph.D. as members of the Supervisory Board. Activities of the Supervisory Board During 2009 the Supervisory Board in the abovementioned composition held four sessions at which the following issues: - the initiation of investments into facilities for the production of live and inactivated vaccines for poultry farming. The Supervisory Board gave its consent to the implementation of a partial reconstruction of the existing vaccine production facilty. -Co-establishment of the company Genera Lijekovi Ltd. and the establishment of the company Genera Analitika Ltd. and the said decisions were passed in accordance with the announcements of the Management Board on the strategy on expanding the business operations to human pharmaceutics. -The initiation of the liquidation procedure of the company Veterina Polska due to multiannual losses in the business operations. -The potential activities of the Management Board on the acquisition of the company Genera Istraivanje Ltd. Apart from the abovementioned issues, the Supervisory Board discussed the current business operations of the Company, the financial results as well as the preliminary income and expenditure plan for 2010. Activities of the Audit Committee In 2009 the composition of the Audit Committee remained unchanged in relation to 2008, and it was composed of the following members: Ivan Majdak, Ph.D., Vinja Uzelac, BEc and Mrs. Zrinka Vukovi, BEc, During 2009 the Audit Committee met two times. The main issue of the first meeting was the potential credit arrangement by Zagrebaka banka and in reference to that, the possibility of acquiring the ownership share of Genera Inc. in Genera Istraivanje Ltd. as well as the issue of the conformity of the security instruments for the said credit with the Companies Act, the Capital Market Act and the protection of rights of all shareholders of the Genera Group. At the second meeting of the Audit Committee the potential increase of the ownership share of Genera Inc. in the company Genera Lijekovi Ltd. was discussed as the most transparent manner of financing the development of that company.
Financial statements The Supervisory Board considered and approved the audited consolidated and non-consolidated financial statements.
Genera d.d.
31 December 2009
The Management Board ensures the preparation of the financial statements in accordance with the International Standards of Financial Reporting. Pursuant to the best knowledge of the Supervisory Board, the annual financial statements were prepared in accordance with the state in the business books of the Company and show the accurate assets and business status of the Company. The statements are prepared in HRK the reference currency of the Company. The Supervisory Board also reviewed the report of the Management Board on the status of the Company to which it had no objections. The Supervisory Board accepted the proposal of the Management Board to use the realised profit of the Company in 2009 in the amount of HRK 1,750,437.11 for the coverage of the transferred loss from the preceding period. The copies of all financial statements as well as of the report of the Management Board on the status of the company are available for insight at the Company as well as at the website of the Zagreb Stock Exchange and Genera Inc. Audit report The Supervisory Board reviewed and accepted the report of the authorised auditor of the Company, Nexia Revizija d.o.o., on the consolidated and non-consolidated financial statements of the Company. Conclusion Pursuant to the performed supervision of the business operations of the company, the Supervisory Board unanimously determined that the Company acts in accordance with the decisions of the general Assembly, the Company deeds and the positive regulations of the Republic of Croatia.
Ivan Majdak Chairman of the Supervisory Board
Genera d.d.
31 December 2009
Responsibility of the Management for the Financial Statements Pursuant to the Croatian Accounting Law (Official Gazette 109/07), the Board is responsible for ensuring that financial statements are prepared for each financial year in accordance with statutory requirements on financial reporting applicable in the Republic of Croatia for large companies and companies whose shares or debt instruments are listed, or are in the process of being listed on the organized market for trading securities which, until the date when Croatia becomes a member of the European Union, are based on International Financial Reporting Standards, their amendments, and related interpretations that are defined by the Croatian Committee for the Standards on Financial Reporting (further: the Committee) and which are published in the Official Gazette. The Board has a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Board continues to adopt the going concern basis in preparing the financial statements. In preparing those financial statements, the responsibilities of the Board include ensuring that: appropriate accounting policies are selected and then applied consistently; judgements and estimates are reasonable and prudent; applicable accounting standards are followed, subject to any material departures disclosed and explained in the financial statements; and financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and Group and must also, ensure that the financial statements comply with the Croatian Accounting Law (Official Gazette 109/07). The Board is also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Genera Inc. Svetonedjeljska 2, Kalinovica 10436 Rakov Potok, Croatia Ivan Drpi Kalinovica, 31 March 2010 Chairman of the Management Board Ana Hanekovi orak Member of the Management Board
Independent Auditors Report To the Management Board and Shareholders of Genera Inc.: We have audited the accompanying consolidated and standalone financial statements of Genera Inc. (herein below: the Group/Company), which comprise of the Balance Sheet as at 31 December 2009, the Income Statement, Statement of Changes in Equity and Cash Flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes as presented on pages 8 to 59. Managements Responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with statutory requirements on financial reporting applicable in the Republic of Croatia for large companies and companies whose shares or debt instruments are listed, or are in the process of being listed on the organized market for trading securities (further referred as statutory requirements on financial reporting for large companies). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give true and fair view of the Company and the Group as of 31 December 2009 and the results of its operations, cash flows and changes in equity for the year then ended in accordance with statutory requirements on financial reporting applicable in the Republic of Croatia for large companies and companies whose shares or debt instruments are listed, or are in the process of being listed on the organized market for trading securities. Nexia revizija d.o.o. Zagreb, 31 March 2010 Sinia Dui certified auditor
Consolidated Balance Sheet As at 31 December 2009
Notes ASSETS Long term assets Intangible assets Property, plant and equipment Financial assets Deferred tax asset Current assets Inventory Trade receivables Other receivables Financial assets Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Legal reserves Reserves for treasury shares Treasury shares Retained earnings Exchange differences on translation of a foreign operation Profit or loss for the current period Long term liabilities Long term loans Long term provisions Current liabilities Trade payables Short term provisions Short term loans Other current liabilites Accrued expenses TOTAL EQUITY AND LIABILITIES 12
31/12/2009 HRK '000
31/12/2008 HRK '000
4 5 6
98,051 1,834 95,825 181 211 151,505 53,047 72,124 9,353 1,702 15,279 249,556
103,147 1,510 101,048 589 141,346 53,258 68,747 6,408 21 12,912 244,493
7 8 9 10 11
166,598 184,486 8,430 (3,946) (21,770) 4 (606) 32,092 31,410 682 50,360 26,593 164 18,580 5,023 506 249,556
169,001 184,486 1,000 8,430 (1,430) 14,366 (82) (37,769) 15,814 14,936 878 59,462 20,761 4,845 10,076 23,780 216 244,493
14 13
15 17 14 16
Notes are an integral part of Consolidated Balance Sheet
Genera group
10
Balance sheet As at 31 December 2009
Notes ASSETS Long term assets Intangible assets Property, plant and equipment Investment property Investments in subsidiaries Financial assets Deferred tax asset Current assets Inventory Trade receivables Receivables from related parties Other receivables Financial assets Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Legal reserves Reserves for treasury shares Treasury shares Retained earnings/losses carried foward Profit or loss for the current period Long term liabilities Long term loans Long term provisions Current liabilities Trade payables Liabilities toward related parties Short term provisions Short term loans Other current liabilites Accrued expenses TOTAL EQUITY AND LIABILITIES 12 4 5 5 6 6
31/12/2009 HRK '000
31/12/2008 HRK '000
195,631 1,206 45,918 45,481 102,842 181 3 25,317 12 350 21,711 1,977 302 965 220,948
104,059 1,510 100,876 1,084 589 139,822 52,275 67,943 766 6,176 21 12,641 243,881
7 8 30 9 10 11
169,754 184,486
-
8,430 (3,946) (20,967) 1,751 31,422 31,410 12 19,278 1,365 9 164 16,754 986 494 220,948
170,519 184,486 1,000 8,430 (1,430) 14,657 (36,624) 15,814 14,936 878 57,332 18,550 207 4,845 10,076 23,654 216 243,881
14 13
15 30 17 14 16
Notes are an integral part of Balance sheet
Genera d.d.
11
Consolidated Income Statement For the year ended 31 December 2009
Notes
2009 HRK '000
2008 HRK '000 164,423 154,611 9,812 173,643 (3,021) 70,570 10,241 16,238 51,220 12,839 15,556 (9,220) 57 837 (780) (350) 27,348 (37,348) (421) (37,769)
Operating revenues Sales Other operating income Operating expenses Change in work in progress and finished goods Cost of material and energy Cost of goods sold Cost of services Personnel costs Depreciation and amortization Other operating expenses Operating result Financial revenues Financial expenses Net financial result Restructuring costs Loss before tax Corporate income tax Net loss for the period
19 20
167,103 163,849 3,254 165,025 3,215 61,159 8,062 17,841 46,832 13,352 14,564 2,078
21 22 23 24 25
26 26
163 2,591 (2,428)
27
28
(256) (606)
Notes are an integral part of Consolidated Income Statement
Genera Group
12
Income Statement For the year ended 31 December 2009
Notes
2009 HRK '000
2008 HRK '000 161,502 151,690 9,812 170,050 (3,021) 70,456 7,945 17,842 49,371 12,780 14,677 (8,548) 442 800 (358) 27,348 (36,254) (370) (36,624)
Operating revenues Sales Other operating income Operating expenses Change in work in progress and finished goods Cost of material and energy Cost of goods sold Cost of services Personnel costs Depreciation and amortization Other operating expenses Operating result Financial revenues Financial expenses Net financial result Restructuring costs Profit before tax Corporate income tax Net profit for the period
19 20
38,445 35,005 3,440 33,443

-
21 22 23 24 25
3,785 2,417 2,441 8,395 13,289 3,116 5,002
26 26
141 3,395 (3,254)
27
1,748 28 3 1,751
Notes are an integral part of Income Statement
Genera d.d.
13
Cash Flow Statement For the year ended 31 December 2009
2009 HRK '000 Cash flow from operating activities Profit/loss before tax Adjustments: Depreciation and amortization Effect of remeasurement of loans at fair value Exchange differences Write-off of receivables Write-off of non-current assets Collection of written-off receivables Value adjustment of inventories Gains on sale of assets Deferred tax assets Interest income Interest expense Movement of provisions (long and short-term) Result from operations before changes in working capital Decrease/increase in current assets: Decrease (increase) in inventories Decrease (increase) in trade receivables Decrease (increase) in other receivables Increase (decrease) of current liabilities: Increase (decrease) in trade payables Increase (decrease) of other current liabilities Increase (decrease) of accrued expenses Net cash flow from operating activities before interests and taxes Interests received Interests paid Net cash flow from operating activities Cash flow from financing activities Increase (decrease) in long term loan liabilities Increase (decrease) in short term loan liabilities Net cash used in financing activities Cash flows from investing activities Decrease (increase) od long term assets Proceeds on sale of assets Purchase of treasury shares Proceeds from loans
Decrease due to disposals of subsidiaries, net from cash
2008 HRK '000 (37,348) 12,839 (20) 64 446 71 51 (84) (57) 814 3,874 17,998 (19,350)
(350) 13,352 56 297 371 (15) (211) (163) 2,522 (4,877) 11,332 10,982
(1,143) (4,478) (3,165)
(604) 10,634 (2,634)
8,733 (19,063) 290 (7,844) 163 (2,522) (10,203)
(3,406) 19,428 (114) 3,954 57 (814) 3,197
16,474 8,504 24,978
6,498 8,670 15,168
(8,538) 15 (2,516) (1,273) (96) (12,408) 2,367 12,912 15,279
(25,469) 600 7 (48) 261 (24,649) (6,284) 19,196 12,912
Payment of treasury shares Dividend payment from foreign subsidiary Net cash used in investing activities Net increase/decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
Notes are integral part of Consolidated Cash Flow Statement Genera d.d. 14
Cash Flow Statement For the year ended 31 December 2009
2 009 H RK '00 0 C as h flow from oper ating a ctivitie s Profit/lo ss b efore tax Ad justmen ts: Deprecia tio n an d amo rtization Effect o f reme asureme nt o f loan s a t fa ir va lue W rite -o ff o f receivab les W rite -o ff o f n on -curren t a sse ts Colle ctio n of writte n-off rece iva ble s Valu e ad justmen t of in ve ntories Ga ins on sal e of assets Interest in come Interest e xpen se Moveme nt of provisions (lo ng a nd sh ort-te rm) 1 3,28 9 (250 ) 91 0 (16 ) (96 ) 2,41 2 (5 ,547 ) 1 0,70 2 R esult fro m o pe ra tio ns be fo re ch ang es in workin g capi ta l D ecre ase (incre ase) of cu rrent re ce ivable s: Decre ase (in crea se) in invento ries Decre ase (in crea se) in trade rece iva ble s Decre ase (in crea se) in rece iva ble s fro m rela te d p artie s Decre ase (in crea se) in o the r rece iva ble s Decre ase (in crea se) o f a ccrue d re ve nue s Increase (de crea se ) of curren t lia bilitie s: Incre ase (d ecrease ) in trad e p ayable s Incre ase (d ecrease ) of liab ilities to wa rd rela te d pa rties Incre ase (d ecrease ) of othe r curren t lia bilitie s Incre ase (d ecrease ) of accru ed e xp en se s N et c as h flow from oper ating a ctivitie s before inte re sts and ta xe s Interests re ceived Interests p aid Net c ash flo w fr om o pera ting ac tivities C as h flow from financ ing activities Increase (de crea se ) in lo ng term loan liab ilitie s Increase (de crea se ) in sho rt te rm loa n lia bilities N et c as h use d in fina ncing ac tivities C as h flow s fro m inve sting a ctivitie s D ecre ase (incre ase) od lo ng term a sse ts Procee ds on sale of assets Investmen t in treasu ry sh are s Procee ds from in ve stmen t in su bsidia rie s Procee ds from lo ans Investmen ts in sub sidia ries Pa yme nt of trea su ry sh ares N et c as h use d in inve sting ac tivitie s N et inc rea se /d ecrea se in ca sh and c as h e quiva le nts C ash a nd cash e qu iva len ts at the b egin nin g of the p eriod C as h and ca sh e quivalen ts a t the e nd of the period (3 ,508 ) 16 (2 ,516 ) 12 7 (20 ) (5 ,901 ) (11 ,676 ) 1 2,64 1 96 5 1 6,47 4 6,67 8 2 3,15 2 (8 ,548 ) (198 ) (22 ,668 ) 27 8 (26 ,611 ) 96 (2 ,412 ) (28 ,927 ) 35 8,53 6 (20 ,695 ) 4,19 9 0 12 ,450 1,74 8
2 00 8 H RK '00 0
(3 6,25 4)
12,7 80 (2 0) (44 6) 71 51 (8 4) (5 7) 8 00 3,8 74 16,9 69 (19 ,2 85 )
(43 7) 10,9 99 2 02 (2,57 3) -
(3,28 9) (5 6) 19,4 96 (11 1) 4,9 46 57 (80 0) 4,2 03
6,4 98 8,6 70 15,1 68
(2 5,44 7) 6 00 2 61 7 (10 0) (4 8) (2 4,72 7) (5,35 6) 17,9 97 12,6 41
Notes are an integral part of Cash Flow Statement Genera d.d. 15
Consolidated Statement of Changes in Equity For the year ended 31 December 2009
Share capital HRK'000 As at 1 January 2008 Loss for the period Exchange rate differences Recognized revenues and expenses in 2008 Creation of reserves for treasury shares Creation of legal reserves Purchase of treasury shares Allocation of 2007 result Dividends declared As at 31 December 2008 Loss for the period Recognized revenues and expenses in 2009 Purchase of treasury shares Allocation of 2008 result Exclusion of Veterina Polska from the group As at 31 December 2009 184,486 184,486 184,486
Reserves for treasury shares HRK'000 1,740 7,000 (310) 8,430 8,430
Treasury shares HRK'000 (1,740) 310 (1,430) (2,516) (3,946)
Legal reserves HRK'000 1,000 1,000 (1,000) -
Retained Earnings/ Loss carried forward HRK'000 18,064 (7,000) (1,000) 248 3,793 261 14,366 (36,769) 633 (21,770)
Exchange differences HRK'000 64 (146) (146)
Profit/loss for the period HRK'000 3,793 (37,769) (37,769) Total HRK'000 206,407 (37,769) (146) (37,915)
(82) 86 4
(3,793) (37,769) (606) (606) 37,769 (606)
248 261 169,001 (606) (606) (2,516) 719 166,598
Notes are an integral part of Consolidated Statement of Changes in Equity
Genera d.d.
16
Statement of changes in equity For the period from 1 January to 31 December 2009
Share capital HRK'000 As at 1 January 2008 Profit for the period Recognized revenues and expenses in 2008 Creation of reserves for treasury shares Creation of legal reserves Purchase of treasury shares Decrease in reserves for treasury shares Allocation of 2007 profit Dividends declared As at 31 December 2008 Profit for the period Recognized revenues and expenses in 2009 Purchase of treasury shares Allocation of 2008 profit As at 31 December 2009 184,486 184,486 184,486
Reserves for treasury shares HRK'000 1,740 7,000 (310) 8,430 8,430
Treasury shares HRK'000 (1,740) 310 (1,430) (2,516) (3,946)
Legal reserves HRK'000 1,000 1,000 (1,000) -
Retained earnings/ loss carried forward HRK'000 18,874 (7,000) (1,000) 248 3,535 14,657 (35,624) (20,967)
Profit/loss for the period HRK'000 3,535 (36,624) (36,624) (3,535) (36,624) 1,751 1,751 36,624 1,751
Total HRK'000 206,895 (36,624) (36,624) 248 170,519 1,751 1,751 (2,516) 169,754
Notes are an integral part of Statement of Changes in Equity
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Notes to the financial statements For the period from 1 January to 31 December 2009
Notes to the financial statements 1. General data on the Company - history and development of the Company and the Group
Genera Inc. ("the Company") was incorporated on 6 November 2000 in Croatia as a limited liability company, registered at the Commercial Court in Zagreb (number 080369519) under the name Veterina Inc. Following the decision of Companys General Assembly dated 16 June 2009, the Company changed its name from Veterina Inc. to Genera Inc. The Company is headquartered in Kalinovica, Svetonedjeljska 2, Rakov Potok, Republic of Croatia. By the Decision of Company's General Assembly dated 7 May 2007, the Company changed its legal form from limited liability company to a joint stock company. Company's principal activity comprises manufacture, development and sale of animal health products and chemicals, supplements to animal food, desinficiens and products for plants protection. As at 31 December 2009 the Group had 239 employees (the Company 9), while as at 31 December 2008 it had 333 employees (The Company 329). As at 31 December 2009 the Group is made of: - Genera Inc., Hrvatska parent company - Veterina Plus Ltd. , Slovenia - Veterina Ltd., Croatia - Veterina Kalinova Ltd., Croatia - Veterina Nutricius Ltd., Croatia - Vitamedera Ltd., Croatia - Veterina Usluge Ltd., Croatia - Genera analitika Ltd., Croatia The Company Veterina Polska Z.o.o., Poland has entered into a liquidation process in 2009 and is not part of the Group anymore. During the year 2008, the Management Board of Genera Inc. has carried out a project of restructuring and consolidation of business operations with the aim of optimal asset management of Genera Inc. The Companies that were formed in 2008 start with their entrepreneurship activities in year 2009. Genera Inc. transferred its business segments to newly formed companies according to the following overview:
Assets Investment in subsidiaries Inventory Receivables Total assets Veterina d.d. 102.648 (52.228) (59.057) (8.637) Veterina d.o.o. Veterina Kalinova d.o.o. 14.009 19.511 33.520 Veterina Kalinova d.o.o. 31.525 1.995 33.520 Veterina Nutricius d.o.o. 5.698 8.926 14.624 Veterina Nutricius d.o.o. 12.735 1.889 14.624 Vitamedera d.o.o. 1.785 1.875 3.660 Vitamedera d.o.o. 2.949 711 3.660
30.736 28.745 59.481
Equity and liabilities Capital reserves Current liabilities Total equity and liabilities
Veterina d.d. (8.637) (8.637)
Veterina d.o.o. 55.439 4.042 59.481
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Veterina Ltd. has continued its business operations in the production of vaccines and chemo pharmaceutical potions. Veterina Kalinova Ltd. in the production of pesticides and other agrochemicals, Veterina Nutricius Ltd. in the production of supplements to provender, and Vitamedera Ltd. in the production of desinficiens. Veterina Usluge Ltd. operates the business of providing support services (IT, accounting, human resource, etc). To accommodate the need for the treatment of redundant workers, the Company started using funds from the agreed upon loan with Zagrebaka banka d.d. (note 14). Supervisory and Management Board Members of Supervisory Board are: Ivan Majdak, President Zrinka Vukovi, Vice President Mladen Vedri, Member Franjo Greguri, Member Marcel Majsec, Member
Members of Management Board are: Ivan Drpi, President Ana Hanekovi orak, Member
During the year 2008 there were some changes in members of Supervisory and Management Board. Members of Supervisory Board until 28 July 2008 were as follows: Anne Marie Goebel-Krstelj, President Draana Kuli,Vice President Domagoj Radin, Member Lovorka Penavi, Member Damir Kutrak, Member
Members of Management Board until 28 July 2008 were as follows: Nenad tigli, President Biserka Furi, Member
After that date members of Supervisory and Management Board became the above named current members. Financial statements are presented in thousands of Croatian kuna (HRK).
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2.
a)
Basis of preparation
Statement of Compliance Financial statements of the Company have been made based on statutory requirements for financial reporting applicable in the Republic of Croatia for large and listed companies, or companies which are in process of listing into the organized stock market, and are based, until the Croatia's acceptance as an European Union member, on International Financial Reporting Standards including amendments and interpretations, as issued by Croatian Financial Reporting Standards Board (hereinafter: the Board) and published in Official Gazette. Accounting policies have not been changed during the reporting period compared to the previous year. The Company has not applied any new or amended IFRSs and their interpretations that would have effect on financial position or results, or would require additional disclosures in financial statements.
b)
Standards and Interpretations issued by IASB and adopted by the Croatian Board, but not yet effective At the date of authorisation of these financial statements the following standards and interpretations adopted by Republic of Croatia on 12 November 2009 were in issue but not effective for reporting periods ending on 31 December 2009: o IFRS 1 First-time Adoption of IFRS (revised) effective for annual periods beginning on or after 1 January 2010, o IFRS 2 Share based payment (revised) effective for annual periods beginning on or after 1 January 2010, o IFRS 7 Financial Instruments: Disclosures effective for annual periods beginning on or after 1 January 2010, o IAS 1 Presentation of Financial Statements (revised) effective for annual periods beginning on or after 1 January 2010, o IAS 16 Property, Plant and Equipment (revised) effective for annual periods beginning on or after 1 January 2010, o o IAS 18 Revenue effective for annual periods beginning on or after 1 January 2010, IAS 19 Employee Benefits (revised) effective for annual periods beginning on or after 1 January 2010, o IAS 20 Accounting for Government Grants and Disclosure of Government Assistance effective for annual periods beginning on or after 1 January 2010, o IAS 23 Borrowing costs (revised) effective for annual periods beginning on or after 1 January 2010, o IAS 27 Consolidated and Separate Financial Statements Cost of an investment at first application effective for annual periods beginning on or after 1 January 2010, o IAS 28 Investments in Associates (revised) effective for annual periods beginning on or after 1 January 2010,
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IAS 29 Financial Reporting in Hyperinflationary Economies (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 31 Interests in Joint Ventures (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 36 Impairment of Assets (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 38 Intangible Assets (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 39 Financial Instruments: Recognition and Measurements (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 40 Investment Property (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 41 Agriculture (revised) effective for annual periods beginning on or after 1 January 2010,
IFRIC 15 Agreements for the Construction of Real Estate effective for annual periods beginning on or after 1 January 2010,
IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective for annual periods beginning on or after 1 January 2010,
IFRIC 17 Distributions of Non-cash Assets to Owners effective for annual periods beginning on or after 1 January 2010,
IFRIC 18 Transfers of Assets from Customers effective for annual periods beginning on or after 1 January 2010,
IFRS 3 Business Combinations (revised) effective for annual periods beginning on or after 1 January 2010,
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (revised) effective for annual periods beginning on or after 1 January 2010,
IAS 27 Consolidated and Separate Financial Statements effective for annual periods beginning on or after 1 January 2010,
IAS 28 Investments in Associates (revised based on IFRS improvements) effective for annual periods beginning on or after 1 January 2010,
IAS 31 Interests in Joint Ventures (revised based on IFRS 3 amendment) effective for annual periods beginning on or after 1 January 2010,
IAS 39 Financial Instruments: Recognition and Measurement: Eligible Hedged items effective for annual periods beginning on or after 1 January 2010,
IFRS 9 Financial Instruments effective for annual periods beginning on or after 1 January 2013,
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments effective for annual periods beginning on or after 1 July 2010 21
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c)
Basis of preparation of Financial Statements Financial Statements of the Company and the Group have been prepared on the historical cost basis, except for derivative financial instruments, financial assets at fair value through Profit and Loss, financial instruments available for sale (except those which are not subject of active market trading and which are recognised at cost less impairment losses), which are valuated at fair value. Financial Statements of the Company and the Group are prepared on going concern basis.
d) Functional and reporting currency Financial Statements of the Company and the Group are presented in Croatian kuna which is Company's functional and reporting currency and rounded to the nearest thousand (HRK '000), unless stated otherwise. As at 31 December 2009 currency for 1 USD and 1 EUR amounted to 5.09 HRK and 7.31 HRK respectively (31 December 2008: 5.16 HRK and 7.33 HRK respectively). e) Estimates and assumptions The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies presented in Financial Statements and Notes. Although these estimates are based on all available information about current affairs, actual results may differ from these estimates. Key assumptions concerning the future on which significant estimates are based, and other key sources of estimation uncertainty, which involve a significant risk of causing a material adjustment to the carrying value of assets and liabilities within the next financial year, are disclosed as follows: Impairment of trade receivables Receivables are assessed for impairment on the basis of collectability assessment of individual trade receivables. Collectability assessments of trade receivables are made at least once a year. f) Basis of preparation of Consolidated financial statements The consolidated financial statements include parent company and subsidiaries after elimination of all material transactions between companies within the Group. Subsidiary is a legal entity under the control of parent Company, in which parent company directly or indirectly owns more than 50 percent of the voting rights or associate over which parent company has management control. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases (at the date of their sale or liquidation). Acquisitions of subsidiaries are recorded using the cost method. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made where they became the difference in the change in accounting policy that possibly exists.
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Minority interests in equity and results of the companies that control the parent company are presented separately in the consolidated financial statements. Basis of consolidation: a. Only companies in which the Company has control are consolidated on the basis of individual position of balance sheet or income statement. Investments in associates are expressed using the equity method. b. Companies that are purchased during the year are included in the consolidated financial statements from the date of acquisition or up to date of sales. c. The difference between the acquisition cost and capital on the same date, the Company distributed on the basis of assessment of the Board on the assets and liabilities included in the investment and the remaining amount is considered as goodwill d. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. General accounting policies used in the preparation of financial statements are explained below:
3. Summary of significant accounting policies

a) Intangible assets Where patents, licences and similar rights are acquired by the Company or the Group from third parties the costs of acquisition are capitalised to the extent that future economic benefits are probable and will flow to the Group. Licences are amortised over their estimated useful lives, but not exceeding 10 years. Estimated useful lives are reviewed annually and impairment reviews are undertaken if there are any indications of impairment. Changes in estimated useful lives or in estimated usage of future economic benefits is stated in the period of change and treated as change in accounting estimate. Subsequent expenditure is capitalised only if it is probable that it increases the future economic benefits embodied in the specific asset to which it relates and if the benefits will flow into the Company or the Group. All other expenditure is recognised in the income statement as an expense as incurred. Research and development costs Research costs are recognised in the income statement as incurred. Internal development costs are capitalised as intangible assets only when development costs can be reliably measured, the products or process are technically and commercially feasible, it is probable that future economic benefits will flow to the Company or the Group, and the Company or the Group has sufficient resources to complete the development and to use or sell the asset. The expenditure capitalized includes the costs of materials, direct labour, and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognized in the income statement when incurred. In-process research and development assets acquired either through in-licensing arrangements, business combinations or separate purchases are capitalised as intangible assets (in the amount of Genera group 23
payments made by Group companies to third parties and associates). Such intangible assets are stated at cost less accumulated amortisation and impairment losses. They are amortised on a straight-line basis over the period of the expected benefit, and are reviewed for impairment at each balance sheet date. b) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes all costs directly attributable to bringing the asset to a working condition for its intended use. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in an item of property, plant and equipment and those benefits will flow to the Group and if the cost of the item can be measured reliably. All other expenditure is recognised in the income statement as an expense as incurred. Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Assets in the course of construction are not depreciated. The estimated useful lives are as follows: 2009 Buildings Plant and equipment 10-40 years 4-20 years 2008 10-40 years 4-20 years
Depreciation is provided on a straight-line basis for each fixed asset item over their useful economic life. Net loss or gain from asset disposal is recognized under other operating income or expenses in the Income Statement of the Company or the Group. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Company or the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of the individual asset, the Company or the Group estimated the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Companys cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and when ever there is an indication that the asset may be impaired. Recoverable amount is higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
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that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revaluated amount, in which case the impairment loss is treated as a revaluation decrease. The Company and the Group determine the impairment of goodwill at least once a year. It requires a value estimate in use of the unit that generates cash to which the goodwill is intended for. The Company has estimated that the whole business is one unit that generates cash. The value estimate in use requires the estimation of future cash flows of the unit that generates cash and the selection of an appropriate discount rate for discounting future cash flows to their present value. c) Investment property Investment property is property held either to earn rental income or for capital appreciation or both. Investment property is initially measured at cost. After initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes purchase price and expenditure that is directly attributable to the acquisition of the asset. Investment property in progress is classified as property, plant and equipment, except land which is immediately recognised as investment property. Land is not amortised. After putting into use, investment property will be depreciated over the useful economic life. d) Investment in subsidiaries Subsidiaries are entities in which the Company has the power, directly or indirectly, to exercise control over their operations. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities. Financial statements of subsidiaries are included in consolidated financial statements from the date that the control commences until the date that control ceases. Investments in subsidiaries are stated at cost in standalone financial statements of the Company. Transactions eliminated during the consolidation All intra-group transactions, balances and unrealised gains on transactions between Group entities are eliminated in full on consolidation, unrealised losses are also eliminated but to the extent that there is no evidence of impairment. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group's interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
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e)
Inventory Inventories encompass raw materials and supplies, spare parts, finished goods and goods for sale. Inventories are measured at the lower of cost or net realizable value. Costs of inventories comprise all purchase costs, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories are valued by the weighted average cost method while finished goods and semi-finished products are valuated at standard cost. Small inventory is depreciated by 100% when put into use. Value adjustment of inventories is made upon estimation of the value decrease of inventories on itemby-item basis if those inventories are damaged, if they have become wholly or partially obsolete, or if their selling prices have declined.
f)
Receivables Receivables represent the right to collect determined amounts from customers or other debtors with regard to the company's operations. Receivables are reported in the total amount and decreased by the provisions for doubtful and bad debts. Bad debt provisions are made when collection of a part or a total of this receivable is uncertain based on the Managements estimation.
g) Cash and cash equivalents Cash and cash equivalents consist of deposits, cash at banks and similar institutions and cash on hand. This item includes cash immediately available and utilizable and is characterized by its absence of collection risk and collection accessory charges. h) Revenue recognition Sales, which are reported net of returns, discounts, bonuses and premiums, as well as net of taxes directly connected with the sale of products and services rendered, represent amounts invoiced to third parties. Revenue is recognized at the time when services are rendered, and the company dispatches goods, as this is the point at which significant risks and rewards of ownership of the goods are transferred to the customer. Sale of goods Revenue from the sale of goods is recognized when all the following conditions are satisfied: The company has transferred to the buyer the significant risks and rewards of ownership of the goods; The company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the entity; and The costs incurred in respect of the transaction can be measured reliably. Interests Interest income is recognized in the Income Statement in period in which incurred.
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Dividends Dividend income is recognized in the Income Statement in the period in which Companys right to receive the dividends is established. i) Borrowing costs Borrowing costs are recognized as an expense in the period in which they are incurred regardless of how the borrowings are applied. j) Foreign currencies Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated into the functional currency at the foreign exchange rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary assets and items that are not measured by historic cost in foreign currencies are not converted under the new exchange rates. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are converted into the functional currency at foreign exchange rates ruling at the dates the values were determined. Group entities Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). Income and expense items and cash flows of foreign operations that have a functional currency different from the presentation currency are translated into the Group presentation currency at the foreign exchange rates ruling at the dates of the transactions and their assets and liabilities are translated at the exchange rates ruling at the reporting date. All resulting exchange differences are recognised in a separate component of equity. Net investment in Group entities Exchange differences arising from the translation of the net investment in foreign operations are taken to equity. When a foreign operation is sold, such exchange differences are released in the income statement as part of the gain or loss on sale. k) Financial liabilities Financial liabilities are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. All differences between gains (net of transaction costs) and residual value are recognised on the Income statement throughout the duration of the liability using the effective interest rate method. l) Provisions Provisions are recognized when the Company or the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company or the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimated of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties
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surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably m) Employee benefits
a) Pension obligations and post-retirement benefits
Defined contribution plans

For defined contribution plans, the company pays contributions to publicly or privately administered pension insurance funds on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the company has no further payment obligations. The regular contributions constitute net periodic costs for the year in which they are due and as such are included in staff costs.
b) Retirement benefits and jubilee rewards
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur and they are recognised in income statement. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan.
c) Bonus plans
A liability for employee benefits is recognised in provisions based on the Companys formal plan and when past practice has created a valid expectation by the Management Board/key employees that they will receive a bonus and the amount can be determined before the time of issuing the financial statements. Liabilities for bonus plans are expected to be settled within 12 months of the balance sheet date and are measured at the amounts expected to be paid when they are settled n) Financial revenues and expenses Financial revenues and expenses comprise of interests on loans granted calculated by using the effective interest rate method, receivables for interests on investments, revenues from dividends, gains and losses from exchange rate differences, gains and losses from Financial assets at fair value though the Profit and Loss account. Interest revenues are recognized in the income statement on an accrual basis using the effective interest rate method. Dividends are recognized in the income statement at the date when the shareholders right to receive payment is established.
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Financial cost is the sum of the cost of calculated interest on loans, change in fair value of the financial assets recognised at fair value through profit and loss, loss from impairment of financial assets and loss from the exchange rate differences. Borrowing costs are recognized in the income statement using the effective interest rate method. o) Dividends Dividends are recognized in the Statement of changes in equity and disclosed as liability in the period in which were approved by Groups shareholders. p) Taxes The Company provides for taxation liabilities in accordance with Croatian law. Corporate tax for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date. Deferred tax reflects the net tax effect of the temporary differentials between the book values of the assets and the liabilities for the purpose of the financial reporting and the values used for the purpose of establishing profit tax. A deferred tax asset for the carry-forward of unused tax losses and unused tax credits is recognized to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are calculated using the tax rate applicable to the taxable profit in the years in which these assets and liabilities are expected to be collected or paid. Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity. q) Earnings per share The Company and the Group disclose data on basic earnings per share. The basic earnings per share are calculated by dividing net profit or loss for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. r) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligations so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss. Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
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s)
Financial assets and financial liabilities Financial assets Investments are recognized and derecognized on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: At fair value through profit or loss (FVTPL)
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if: 1. 2. 3. it has been acquired principally for the purpose of selling in the near future; or it is a part of identified portfolio of financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest method less any impairment, with revenue recognized on an effective yield basis. Held-to-maturity
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost using the effective interest method less any impairment, with revenue recognized on an effective yield basis. Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows or the investment have been impacted. For all other financial assets, including redeemable notes classifies as AFS and finance lease receivables, objective evidence of impairment could include:
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Significant financial difficulty of the issuer or counterparty; or Default or delinquency in interest or principal payments; or It becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Companys past experience of collecting payments, an increase in number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flow, discounted at the financial assets original effective interest rate. The carrying amount of the financial assets is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of AFS equity instruments, if in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed trough profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised through profit or loss are not reversed trough profit or loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity. De-recognition of financial assets The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and reward ownership of a transferred financial asset, the Company continues for recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments issued by the Company
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Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instruments is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Financial guarantee contract liabilities Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the higher of: the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies (dividend and interest revenue).
Financial liabilities at FVTPL Financial liabilities are classified as at FVTLP where the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: it has bees incurred principally for the purpose of repurchasing in the near future: or it is a part of an identified portfolio of financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or it is derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companys documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
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32
Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction cost. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. De-recognition of financial liabilities The Company derecognise financial liabilities when, and only when, the Companys obligations are discharged, cancelled or they expire. t) Contingent liabilities Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. u) Subsequent events Post-year-end events that provide additional information about the Companys position at the balance sheet date (adjusting events) are reflected in the financial statements. Post-year-end events that are not adjusting events are disclosed in the notes when material. v) Comparatives Comparative figures have been adjusted to conform to presentation in the current year, where necessary. w) Segment information Segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment) or in providing products or services in a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments. The Groups primary format for segment reporting is business segments and the secondary format is geographical segments. The risks and returns of the Groups operations are strongly affected by both differences in the products it produces and by differences in the geographical areas in which it operates. This is reflected by the Groups divisional management and organisational structure and the Groups internal financial reporting systems.
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33
4. Intangible assets
Movements in intangible assets of the Group during the year 2009 and 2008 were as follows:
Software HRK '000 __________ Cost As at 1 January 2008 Additions Transfer from assets under construction As at 31 December 2008 Additions Transfer from assets under construction As at 31 December 2009 Accumulated amortization As at 1 January 2008 Amortization for the period As at 31 December 2008 Amortization for the period As at 31 December 2009 Net book value As at 31 December 2008 As at 31 December 2009 2,072 __________ 33 __________ 2,105 __________ 692 __________ 2,797 Assets under construction HRK '000 __________ __________ 697 (33) __________ 664 __________ 656 (692) __________ 628 Total HRK '000 __________ 2,072 __________ 697 __________ 2,769 __________ 656 __________ 3,425
861 __________ 398 __________ 1,259 __________ 332 __________ 1,591 __________
__________ __________ __________ __________ __________
861 __________ 398 __________ 1,259 __________ 332 __________ 1,591 __________
846 __________ 1,206 __________
664 __________ 628 __________
1,510 __________ 1,834 __________
Movements in intangible assets of the Company during the year 2009 and 2008 were as follows:
Software HRK '000 __________ Cost As at 1 January 2008 Additions Transfer from assets under construction As at 31 December 2008 Additions Transfer from assets under construction As at 31 December 2009 Accumulated amortization As at 1 January 2008 Amortization for the period As at 31 December 2008 Amortization for the period As at 31 December 2009 Net book value As at 31 December 2008 As at 31 December 2009 2,072 __________ 33 __________ 2,105 __________ 692 __________ 2,797 Assets under construction HRK '000 __________ __________ 697 (33) __________ 664 __________ 28 (692) __________ Total HRK '000 __________ 2,072 __________ 697 __________ 2,769 __________ 28 __________ 2,797
861 __________ 398 __________ 1,259 __________ 332 __________ 1,591 __________
__________ __________ __________ __________ __________
861 __________ 398 __________ 1,259 __________ 332 __________ 1,591 __________
846 __________ 1,206 __________
664 __________ __________
1,510 __________ 1,206 __________
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34
5. Property, plant and equipment

a) Property, plant and equipment Movements in property, plant and equipment of the Group during the year 2009 and 2008 were as follows:
Land Buildings Plant & equipment HRK '000 _______ 140,001 _______ 7,453 (1,458) _______ 145,996 _______ 2,652 (22) _______ 148,626 _______ Tools and furniture HRK '000 _______ 5,797 _______ 22 1,218 (723) _______ 6,314 _______ 81 (703) (101) _______ 5,591 _______ Other assets HRK '000 _______ 27 _______ _______ 27 _______ _______ 27 _______ Assets under construction HRK '000 _______ 1,986 _______ 24,750 (25,118) (68) _______ 1,550 _______ 7,915 (3,308) _______ 6,157 _______ Total
HRK '000 _______ Cost As at 1 January 2008 Additions Transfer from asssets under construction Disposals As at 31 December 2008 Additions Transfer from asssets under construction Decrease due to disposals of subsidiaries Disposals As at 31 December 2009 Accumulated depreciation As at 1 January 2008 Depreciation for the period Disposals As at 31 December 2008 Depreciation for the period Decrease due to disposals of subsidiaries Disposals As at 31 December 2009 Carrying value 31 December 2008 31 December 2009 11,300 _______ _______ 11,300 _______ _______ 11,300 _______
HRK '000 _______ 148,316 _______ 16,447 _______ 164,763 _______ 575 _______ 165,338 _______
HRK '000 _______ 307,427 _______ 24,772 (2,249) _______ 329,950 _______ 7,915 (725) (101) _______ 337,039 _______
_______ _______ _______ _______ _______ _______ 11,300 _______ 11,300 _______
101,417 _______ 5,156 _______ 106,573 _______ 5,682 _______ 112,255 _______ _______ 58,190 _______ 53,083 _______
112,288 _______ 7,003 (1,455) _______ 117,836 _______ 7,032 (88) _______ 124,780 _______ _______ 28,160 _______ 23,846 _______
4,418 _______ 282 (207) _______ 4,493 _______ 306 (519) (101) _______ 4,179 _______ _______ 1,821 _______ 1,412 _______
_______ _______ _______ _______ _______ _______ 27 _______ 27 _______
_______ _______ _______ _______ _______ _______ 1,550 _______ 6,157 _______
218,123 _______ 12,441 (1,662) _______ 228,902 _______ 13,020 (607) (101) _______ 241,214 _______ _______ 101,048 _______ 95,825 _______
Genera group
35
Movements in property, plant and equipment of the Company during the year 2009 and 2008 were as follows:
Plant & equipment HRK '000 Tools and furniture HRK '000 Other assets HRK '000 Assets under construction HRK '000
Land HRK '000 Cost As at 1 January 2008 Additions Transfer from asssets under construction Disposals As at 31 December 2008 Transfer to investment property Additions Transfer from asssets under construction Disposals As at 31 December 2009 Accumulated depreciation As at 1 January 2008 Depreciation for the period Disposals As at 31 December 2008 Transfer to investment property Depreciation for the period Disposals As at 31 December 2009 Net book value As at 31 December 2008 As at 31 December 2009
Buildings HRK '000
Total HRK '000
11,300 _______ _______ 11,300 _______ _______ 11,300 _______ _______ _______ _______ _______ _______ _______ 11,300 _______ 11,300 _______
148,316 _______ 16,447 _______ 164,763 _______ (131,235) 116 _______ 33,644 _______ 101,415 _______ 5,156 _______ 106,571 _______ (81,289) 1,213 _______ 26,495 _______ _______ 58,192 _______ 7,149 _______
139,955 _______ 7,453 (1,458) _______ 145,950 _______ 1,814 _______ 147,764 _______ 112,288 _______ 6,944 (1,455) _______ 117,777 _______ 6,974 _______ 124,751 _______ _______ 28,173 _______ 23,013 _______
5,116 _______ 1,218 (723) _______ 5,611 _______ (101) _______ 5,510 _______ 3,902 _______ 282 (207) _______ 3,977 _______ 305 (101) _______ 4,181 _______ _______ 1,634 _______ 1,329 _______
27 ______ ______ 27 ______ ______ 27 ______ ______ ______ ______ ______ ______ ______ 27 ______ 27 ______
1,986 _______ 24,750 (25,118) (68) _______ 1,550 _______ 3,480 (1,930) _______ 3,100 _______ _______ _______ _______ _______ _______ _______ 1,550 _______ 3,100 _______
306,700 ________ 24,750 (2,249) ________ 329,201 ________ (131,235) 3,480 (101) ________ 201,345 ________ 217,605 ________ 12,382 (1,662) ________ 228,325 ________ (81,289) 8,492 (101) ________ 155,427 ________ ________ 100,876 ________ 45,918 ________
As at 31 December 2009 the Company used fully written off assets whose cost amounted to HRK 133,779 thousand (as at 31 December 2008: HRK 122,544 thousand).
The Company and the Group Rented property The total surface of the buildings is 37,750 m2, which includes 36,439 m2 of the area that is rented to related companies. Significant part of the buildings has been rented to subsidiaries. In accordance with this, buildings in the amount of HRK 45,481 thousand had been reclassified to investment property in the standalone financial statements of the Company (note b). Buildings and investment property in the amount of HRK 52,630 thousand, and the land in the amount of HRK 11,300 thousand are under mortgage for a loan received from the Croatian Bank for Reconstruction and Development and Zagrebaka banka d.d. (note 14).
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36
b) Investment property - Company Buildings that are rented to subsidiaries in the amount of HRK 45,481 thousand are reclassified to investment property.
Buildings HRK '000 Cost As at 1 January 2009 Transfer from assets under construction (conversion) Disposals As at 31 December 2009 Accumulated depreciation As at 1 January 2009 Transfer from assets under construction (conversion) Depreciation for the period As at 31 December 2009 Net book value As at 31 December 2009 __________ __________ 131,235 __________ 131,235 __________ __________ __________ 81,289 4,465 __________ 85,754 __________ __________ 45,481 __________ Total HRK '000 __________ __________ 131,235 __________ 131,235 __________ __________ __________ 81,289 4,465 __________ 85,754 __________ __________ 45,481 __________
6. Long term financial assets

Group Group Company Company
31 December 31 December 31 December 31 December 2009 Financial assets Operating lease guarantees Long term loans for apartment (transfer to short term loans) Other HRK000 ________ 179 302 (302) 2 ________ 181 ________ Investment in subsidiaries VETERINA Polska Sp.z.o.o., Krakow GENERA Plus Ltd., Ljubljana Veterina Ltd., Kalinovica Veterina Kalinova Ltd., Kalinovica Veterina Nutricius Ltd., Kalinovica Vitamedera Ltd., Kalinovica Veterina usluge Ltd., Kalinovica Genera Analitika Ltd., Kalinovica ________ ________ ________ ________ 74 55,459 31,546 12,754 2,969 20 20 ________ 102,842 ________ 910 74 20 20 20 20 20 ________ 1,084 ________ 2008 HRK000 ________ 292 297 ________ 589 ________ 2009 HRK000 ________ 179 302 (302) 2 ________ 181 ________ 2008 HRK000 ________ 292 297 ________ 589 ________
Long term loans approved to employees for apartments were originally granted for 30 years with interest at preferential rate. In January 2006, the repayment term has been revised and interest rate was changed to 4% per annum. In 2010 the loan was paid in full.
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37
In May 2009 on a general Assembly meeting of Veterina Polska Sp.z.o.o., Supervisory Board reached the decision to start liquidation process of the company due to bankruptcy of that company. Following that decision, the company recorded total impairment allowance of their investments.
7. Inventory
31 December 31 December 31 December 31 December 2009 HRK000 ________ 2008 HRK000 ________ 2009 HRK000 ________ 2008 HRK000 ________
Raw materials Finished goods Work in progress Goods for sale Advances given Impairment allowance
15,764 25,887 7,836 3,506 425 (371) ________ 53,047 ________
13,424 29,370 6,327 4,130 7 ________ 53,258 ________
12 ________ 12 ________
13,424 29,370 6,327 3,147 7 ________ 52,275 ________
Movements in impairment allowance for inventories were as follows: Group Group Company Company
31 December 31 December 31 December 31 December 2009 HRK000 ________ 1 January Increase during the period Decrease during the period 371 ________ 31 December 371 ________ 2008 HRK000 ________ 282 (282) ________ ________ 2009 HRK000 ________ ________ ________ 2008 HRK000 ________ 282 (282) ________ ________
8. Trade receivables
31 December 31 December 31 December 31 December 2009 HRK000 ________ Domestic trade receivables Foreign trade receivables Impairment allowance 65,765 16,771 (10,412) ________ 72,124 ________ 2008 HRK000 ________ 61,271 17,592 (10,116) ________ 68,747 ________ 2009 HRK000 ________ 10,101 365 (10,116) ________ 350 ________ 2008 HRK000 ________ 61,271 16,788 (10,116) ________ 67,943 ________
Genera group
38
As at 31 December 2009 ageing structure of trade receivables of the Group was as follows: Total Not yet due < 90 days HRK'00 0 ______ __ Due, but collectible 91-120 121271days 270 360 days days HRK'00 HRK'00 HRK' 0 0 000 ______ ______ ____ __ __ ___ > 360 days HRK'0 00 _____ ___
HRK'00 0 ______ __
HRK'000 _______ _
200 9 200 8
72,124
53,559
13,611
786
2,198
614
1,356
68,747
47,441
18,499
1,181
1,378
16
232
As at 31 December 2009 ageing structure of trade receivables of the Company was as follows: Total Not due yet < 90 days HRK'000 ________ 91-120 days HRK'000 ________ Due, but collectible 121-270 271-360 days days HRK'000 HRK'000 ________ ________
HRK'000 ________
HRK'000 ________
> 360 days HRK'000 ________
2 0 0 9 2 0 0 8 Movements in impairment allowance for trade receivables were as follows: Group Group Company Company 67,943 47,265 18,288 1,150 1,193 16 31 350 176 174
31 December 31 December 31 December 31 December 2009 HRK000 ________ 1 January Impairment allowance recognized during the period Amounts collected Bad debt written-off 31 December ________ 10,412 (1,012) ________ 10,116 ________ 10,116 (1,012) ________ 10,116 10,116 296 2008 HRK000 ________ 10,562 566 2009 HRK000 ________ 10,116 2008 HRK000 ________ 10,562 566
Genera group
39
________
________
________
________
9. Other receivables
31 December 31 December 31 December 31 December 2009 HRK000 ________ Value added tax Corporate income tax Receivables from employees Other receivables 3,986 1,748 25 3,594 ________ 9,353 ________ 2008 HRK000 ________ 3,973 1,745 50 640 ________ 6,408 ________ 2009 HRK000 ________ 48 1,748 28 153 ________ 1,977 ________ 2008 HRK000 ________ 3,973 1,745 8 450 ________ 6,176 ________
10. Short term financial assets

Group 2009 HRK000 ________ Loan Genera lijekovi Ltd. Loans for apartment (note 6) 1,400 302 ________ 1,702 ________ Group 2008 HRK000 ________ 21 ________ 21 ________ Company 2009 HRK000 ________ 302 ________ 302 ________ Company 2008 HRK000 ________ 21 ________ 21 ________
31 December 31 December 31 December 31 December
The Company Genera Inc. has approved short term loan to the company Genera lijekovi Ltd. with the interest rate of 6% and date of repayment at 31 March 2010, which has been prolonged to 30 June 2010 with an annex (note 30).
11. Cash and cash equivalents

Group 2009 HRK000 ________ Current account balances Foreign account balances 6,898 8,381 ________ 15,279 ________ Group 2008 HRK000 ________ 9,621 3,291 ________ 12,912 ________ Company 2009 HRK000 ________ 728 237 ________ 965 ________ Company 2008 HRK000 ________ 9,621 3,020 ________ 12,641 ________
12. Equity and reserves

The structure of the Company's shareholders as at 31 December 2009 was as follows:
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40
31 December 2009
No. of shares %
31 December 2008
No. of shares %
Zagrebaka banka d.d./joint account Auctor Zagrebaka banka d.d./Drpi Ivan PBZ d.d./I-joint account Genera Inc. HOK-OSIGURANJE d.d. Other
1,289,718 41,995 19,957 50,412 26,913 415,865 ________ 1,844,860 ________
72.19 2.28 1.08 2.73 1.45 22.55 ________ 100.00 ________
1,331,713 42,555 25,132 14,295 431,165 ________ 1,844,860 ________
72.19 2.31 1.36 0.77 23.37 ________ 100.00 ________
As at 31 December 2009, the subscribed and paid-in capital amounted to HRK 184,486 thousand (2008: HRK 184,486 thousand).
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41
Earnings per share As a result of change in legal form, the share capital consists of 1,844,860 ordinary shares which is the base for determining earnings per share. Change in the ownership structure Until 15 October 2007, the parent company was Pliva d.d., Zagreb, and the ultimate parent was Barr Pharmaceuticals Inc, Woodcliff Lake, New Jersey, USA. Since 16 October, following the public offering of the Company's shares, the Company has been owned by several shareholders, with respective individual holdings below 10 % at 31 December 2007. Takeover offer was published as at 5 May 2008. After the takeover process, since 10 June 2008 Mr. Marijan Hanekovi owns 1,331,713 shares, which represents 72.18% of Company's share capital. Own (treasury) shares As at 31 December 2009 the Company holds 50,412 of own shares (2008: 14,295).
13. Long term provisions

As at 31 December 2008 the Company stated long term provision for jubilee rewards and retirement. Movement in long term provisions during 2009 was as follows: Group 2009 HRK000 ________ 1 January Changes during period 31 December 878 (196) ________ 682 ________ Group 2008 HRK000 ________ 1.849 (971) ________ 878 ________ Company 2009 HRK000 ________ 878 (866) ________ 12 ________ Company 2008 HRK000 ________ 1.849 (971) ________ 878 ________
14. Liabilities to credit institutions

14.1. Long term loans Group 2009 HRK000 ________ Croatian Bank for Reconstruction and Development 2003 Croatian Bank for Reconstruction and Development 2007 Zagrebaka Banka d.d. Current portion of long term loans 23.015 (6.520) ________ 31.410 ________ (1.406) ________ 14.936 ________ 23.015 (6.520) ________ 31.410 ________ (1.406) ________ 14.936 ________ 7.884 7.904 7.884 7.904 7.031 Group 2008 HRK000 ________ 8.438 Company 2009 HRK000 ________ 7.031 Company 2008 HRK000 ________ 8.438
Payment terms for the Group and the Company were as follows:
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42
Group 2009 HRK000 ________ Less than 1 year Between 2 and 5 years More than 5 years 6.520 27.468 3.942 ________ 37.930 ________
Group 2008 HRK000 ________ 1.406 8.588 6.348 ________ 16.342 ________
Company 2009 HRK000 ________ 6.520 27.468 3.942 ________ 37.930 ________
Company 2008 HRK000 ________ 1.406 8.588 6.348 ________ 16.342 ________
Loans in the amount of HRK 7,031 thousand and 7,884 thousand are based on an interbank arrangement between Raiffeisen Bank Austria d.d. and the Croatian Bank for Reconstruction and Development. The loan is repayable in 8 years, with an interest rate of 4 percent annually. Loans are secured by mortgage on the freehold land and buildings of the Company (note 5) and in the form of bills of exchange. At the end of 2008, the Company had contracted a loan in the amount of EUR 3,5 million for the
settlement of liabilities toward employees for severances in accordance with the Programme for taking care of surplus employees. The loan is repayable in 5 years. Interest rate is calculated as a sum of 3mEURIBOR plus 4.1% margin per annum. The loan is secured with the mortgage over the land and buildings in Company's ownership (note 5), and with debentures and bills of exchange and the insurance policy is vinculated for the building under the mortgage. 14.2. Short term loans As at 31 December 2009 the Company has liabilities for short term loans based on contracts with Raiffeisen Bank Austria d.d. and Zagrebaka bank d.d. Group 2009 HRK000 ________ Raiffeisen bank Austria d.d. Raiffeisen bank Austria d.d. Zagrebaka bank d.d. Raiffeisen bank Austria d.d. Current portion of long term loans 8,773 3,287 6,520 ________ 18,580 ________ 1,406 ________ 10,076 ________ Group 2008 HRK000 ________ 5,099 3,571 Company 2009 HRK000 ________ 8,773 1,461 6,520 ________ 16,754 ________ 1,406 ________ 10,076 ________ Company 2008 HRK000 ________ 5,099 3,571
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15. Trade payables

Group 2009 HRK000 ________ Domestic trade payables Foreign trade payables Liabilities for non-invoiced goods 15,953 8,451 2,189 ________ 26,593 Group 2008 HRK000 ________ 11,309 8,641 811 ________ 20,761 Company 2009 HRK000 ________ 1,080 285 ________ 1,365 Company 2008 HRK000 ________ 11,309 6,430 811 ________ 18,550
16. Other current liabilities

Group 2009 HRK000 ________ Liabilities toward employees for severance pay and salaries (note 25) Liabilities for taxes and contributions Other liabilities 1,802 2,461 760 _______ 5,023 ________ 19,069 4,145 566 ________ 23,780 ________ 237 742 7 ________ 986 ________ 19,003 4,085 566 ________ 23,654 ________ Group 2008 HRK000 ________ Company 2009 HRK000 ________ Company 2008 HRK000 ________
17. Short term provisions

Provision amount of HRK 164 thousand is the remaining liability for severance pay, on the basis of continuing restructuring of the Company from fiscal year 2008 (note 26).
18. Operating lease commitments

Operating leases: The Group and the Company have several contracts for operating lease of vehicles. Leases are granted with appropriate guarantee. Lease is contracted on the period from 36 to 48 months with the possibility of extension. Group 2009 HRK000 ________ Due in first year Due between 2 and 5 years More than 5 years 1,078 1,401 ________ 2,479 ________ Group 2008 HRK000 ________ 757 1,183 ________ 1,940 ________ Company 2009 HRK000 ________ 688 867 ________ 1,555 ________ Company 31 December 2008 HRK000 ________ 757 1,183 ________ 1,940 ________
31 December 31 December 31 December
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44
During the year that ends 31 December 2009, operating lease cost in the amount of HRK 1,653 thousand has been recognized through the Profit and Loss Statement (2008: HRK 683 thousand). The amount of HRK 292 thousand, which refers to deposit for operating lease, is recognized as long term receivable (note 6).
19. Sales
Main business segments of the Group in year 2009 were Vete (animal health products) and Agro (agrochemicals). In 2009, based on new restructuring model, main business segments are divided in accordance with newly-developed companies: o o o o o Production of vaccines and chemo pharmaceuticals (Veterina Ltd.) Production of pesticides and other agrochemical products (Veterina Kalinova Ltd.) Production of supplements to provender (Veterina Nutricius Ltd.) Production of decontaminators (Vitamedera Ltd.) Other (Genera Inc. (holding company) and Veterina Usluge Ltd. (support services)
The segments are managed separately due to the differences in marketing strategies and in production technologies. Segment information is based on internal management accounts. Geographical reporting segments are secondary to business segments. Geographical revenue information is based on the geographical location of customers. 2009
Vaccines and chemo pharmaceutical HRK '000 Gross segment sales Intersegment sales Total sales Other revenue Cost of goods sold Operating expenses Net financial result Result before taxation Corporate income tax Net profit/loss for the year Other segment information Depreciation Amortization 80,819 80,819 3,782 (6,725) (82,572) (27) (4,723) (143) (4,580) 11 Pesticides HRK '000 35,935 406 36,341 130 (3,545) (32,093) 40 873 199 674 2 Supplements HRK '000 34,565 3,209 37,774 539 (1,539) (36,000) (24) 750 161 589 11 Decontaminators HRK '000 12,567 26 12,593 357 (12,633) (20) 297 59 238 6 Other HRK '000 (37) (37) 56,101 (2,438) (48,775) (3,307) 1,544 (19) 1,563 13,322 Consol. eliminations HRK '000 (3,641) (3,641) (57,655) 6,185 55,111 910 910 910 Group HRK '000 163,849 163,849 3,254 (8,062) (156,962) (2,428) (349) 257 (606) 13,352 -
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45
2008
Vete
HRK '000
Agro
HRK '000 35,223 35,223 (18,768) 16,455 16,455
Nonallocated
HRK '000 9,812 (70,741) (780) (61,709) (421) (62,130)
Group
HRK '000 154,611 154,611 9,812 (130,250) (70,741) (780) (37,348) (421) (37,769)
Gross segment sales Intersegment sales Total sales Other revenues Cost of goods sold Operating expenses Net financing expenses Profit before tax Corporate income tax Net profit/loss for the year Other segment information Depreciation Amortization
119,388 119,388 (111,482) 7,906 7,906
11,727 398
714 -
12,441 398
a)
By markets
Group
2009 HRK000 ________ Croatia Bonuses in Croatia Bosnia and Herzegovina Slovenia Serbia Macedonia Germany Iran Russia Belarus Other countries Bonuses abroad 115,532 (11,568) 18,877 8,925 3,515 4,491 11,496 4,538 2,074 1,811 5,967 (1,809) ________
Group
2008 HRK000 ________ 107,058 (11,398) 15,808 10,532 11,913 22,145 (1,447) ________
Company
2009. HRK000 ________ 35,005 ________
Company
2008 HRK000 ________ 107,058 (11,398) 15,808 10,532 11,913 19,224 (1,447) ________
________
163,849
________
154,611
________
35,005
________
151,690
Genera group
46
b) Assets and liabilities by segments Segments of the Group in 2009:

Vaccines and chemo pharmaceutical HRK '000 Total segment assets Total assets Total segment liabilities Total liabilities 82,013 82,013 31,133 31,133 Pesticides HRK '000 44,051 44,051 11,832 11,832 Supplements HRK '000 20,988 20,988 7,645 7,645 Decontaminators HRK '000 9,391 9,391 5,853 5,853 Other HRK '000 227,046 227,046 57,569 57,569 Consol. eliminations HRK '000 (133,933) (133,933) (31,074) (31,074) Group HRK '000 249,556 249,556 82,958 82,958
Segments of the Group in 2008:
Vote HRK000 ________ Total segment assets Non-segment assets Total assets Total segment liabilities Non-segment liabilities Total liabilities 180,004 180,004 ________ 18,569 18,569 ________
Agro HRK000 ________ 44,538 44,538 ________ 2,287 2,287 ________
Non-allocated HRK000 ________ 19,951 19,951 ________ 54,636 54,636 ________
Group HRK000 ________ 224,542 19,951 244,493 ________ 20,856 54,636 75,492 ________
20. Other operating income

Group 2009 HRK'000 ________ Release of provision Income from services in domestic market Income from services in foreign market Net gain from asset disposal Other income 866 1,262 740 16 370 ________ 3,254 ________ Group 2008 HRK000 ________ 971 970 7,368 84 419 ________ 9,812 ________ Company 2009 HRK000 ________ 866 15 2,559 ________ 3,440 ________ Company 2008 HRK000 ________ 971 970 7,368 84 419 ________ 9,812 ________
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21. Cost of material and energy

Group 2009 HRK'000 ________ Raw material Energy Spare parts and small inventory 53,604 7,041 514 ________ 61,159 ________ Group 2008 HRK'000 ________ 60,631 9,256 683 ________ 70,570 ________ Company 2009. HRK000 ________ 46 3,702 37 ________ 3,785 ________ Company 2008. HRK000 ________ 60,517 9,256 683 ________ 70,456 ________
22. Cost of services

Group 2009 HRK000 ________ Telecommunication services Transportation Maintenance Rent Advertising Protection at work Intellectual services IT services Cleaning services Other services 1,060 2,641 3,418 1,653 2,265 126 2,603 375 1,306 2,394 ________ 17,841 ________ Group 2008 HRK000 ________ 1,012 3,704 3,575 909 1,817 128 897 326 1,636 2,234 ________ 16,238 ________ Company 2009 HRK000 ________ 193 75 146 717 74 1,234 2 ________ 2,441 ________ Company 2008 HRK000 ________ 988 3,585 3,568 730 1,962 128 855 326 1,636 4,064 ________ 17,842 ________
23. Personnel costs

Group 2009 HRK000 ________ Gross salary Contribution on salary Treasury shares Provision for jubilee rewards Severance pay, jubilee rewards and similar costs 38,768 6,483 669 912 ________ 46,832 ________ Group 2008 HRK000 ________ 42,589 7,016 296 1,319 ________ 51,220 ________ Company 2009 HRK000 ________ 7,012 1,215 168 ________ 8,395 ________ Company 2008 HRK000 ________ 40,740 7,016 296 1,319 ________ 49,371 ________
Genera group
48
24. Amortization
Group 2009 HRK000 ________ Intangible assets Tangible assets Investment property 332 13,020 ________ 13,352 Group 2008 HRK000 ________ 398 12,441 ________ 12,839 Company 2009 HRK000 ________ 332 8,492 4,465 ________ 13,289 Company 2008 HRK000 ________ 398 12,382 ________ 12,780
25. Other operating expenses

Group 2009 HRK000 ________ Business trips Compensation to employees Cost of contracts on deed Non-production services Entertainment Insurance premiums Environmental costs Banking services Cost of professional education Other taxes and contribution Intermediate commissions Other expenses 1,024 777 454 2,708 1,506 754 505 820 919 616 2,650 1,831 ________ 14,564 ________ Group 2008 HRK000 ________ 827 1,058 630 4,016 1,015 760 641 660 594 719 3,041 1,595 ________ 15,556 ________ Company 2009 HRK000 ________ 861 96 347 335 120 528 372 456 1 ________ 3,116 ________ Company 2008 HRK000 ________ 611 1,058 630 3,498 936 760 641 678 594 719 3,041 1,511 ________ 14,677 ________
26. Net financial result

Group 2009 HRK000 ________ Financial income Interest Other financial income 163 ________ 163 ________ 57 ________ 57 ________ 96 45 ________ 141 ________ 57 385 ________ 442 ________ Group 2008 HRK000 ________ Company 2009 HRK000 ________ Company 2008. HRK000 ________
Genera group
49
Financial expenses Reconciliation of the stake in company Veterinary Polka Interest Net losses from foreign exchange differences
2.522 69 ________ 2,591 ________
814 23 ________ 837 ________ (780) ________
910 2.412 73 ________ 3,395 ________ (3,254) ________
800 ________ 800 ________ (358) ________
Net financial result
(2,428) ________
27. Restructuring costs

Restructuring costs in year 2008, in the total amount of HRK 27,348 thousand refer to costs of severance pays and salaries in the amount of HRK 27,262 thousand and other restructuring expenses in the amount of HRK 86 thousand. In accordance with the Decision of General Assembly, the Programme for taking care of surplus employees has been made which included 125 employees. Financial funds needed for the enforcement of this Programme have been ensured by the loan amounting to EUR 3,5 mil which was agreed with Zagrebaka bank (note 14).
28. Corporate income tax

Corporate income tax is calculated in accordance with Croatian Corporate Income Tax Act at 20%. Recognized in Income Statement Group 2009 HRK000 ________ Current tax Deferred tax Tax in Income Statement 468 (211) ________ 257 ________ Group 2008. HRK000 ________ 51 370 ________ 421 ________ Company 2009 HRK000 ________ (3) ________ (3) ________ Company 2008 HRK000 ________ 370 ________ 370 ________
The following table presents the calculation of income tax consisted of current and deferred tax:
Genera group
50
Group 2009 HRK000 ________ Profit/loss before tax Non-deductible expenses Non-taxable income Incentives Total Tax base parent Transferred tax loss - parent Total transferable tax losses -parent Tax base subsidiaries: Tax base domestic companies Tax base foreign subsidiaries Current tax (20%) Provisions for severance pay and jubilee rewards temporary differences Inventory write-off temporary differences Recognized income from deferred tax Release of deferred tax assets Tax base Deferred tax (20%) Corporate income tax (371) (1,053) ________ (211) ________ 257 ________ (682) 2,340 ________ 468 (350) 1,502 (1,094) (624) (565) 707 (37,370) (36,663)
Group 2008 HRK000 ________ (37,348) 3,216 (1,534) (2,798) (38,464) (37,370) 255 ________ 51
Company 2009 HRK000 ________ 1,748 256 (1,094) (203) 707 707 (37,370) (36,663) ________ -
Company 2008 HRK000 ________ (36,254) 3,216 (1,534) (2,798) (37,370) (37,370) ________ -
(12)
971 879 1,850 ________ 370 ________ 421 ________
(12) ________ (3) ________ (3) ________
971 879 1,850 ________ 370 ________ 370 ________
29. Earnings per share

31 December 31 December 31 December 31 December 2009 HRK000 ________ Net income / loss of the current period in HRK000 Weighted average number of ordinary shares during the period Earnings per share (kn) ________ ________ 0.96 ________ ________ 1,844,860 1,844,860 1,844,860 1,844,860 (606) 2008 HRK000 ________ (37,508) 2009 HRK000 ________ 1,751 2008 HRK000 ________ (36,624)
Genera group
51
30. Transactions with the related parties

Receivables Liabilities
31 December 2009 HRK000 ________ Operating activities: Veterina usluge Ltd. Veterina Ltd. Veterina Nutricius Ltd. Veterina Kalinova Ltd. Vitamedera Ltd. Veterina Polska Spo. z.o.o., Poland Veterina Plus Ltd., Slovenia Financial activities: Veterina usluge Ltd. loan Genera lijekovi Ltd. loan 1,500 1,400 ________ 21,711 ________ 1,752 10,436 2,367 3,320 936 -
31 December 31 December 2008 HRK000 ________ 2009 HRK000 ________
31 December 2008 HRK000 ________
766 ________ 766 ________
9 ________ 9 ________
127 80 ________ 207 ________
Veterina usluge Ltd. returned loan amounting to HRK 1.5 million as at 11 January 2010. By the contract signed on 28 January 2010 the Company granted loan to Veterina Plus in the amount of EUR 50 thousand with the due date on 31 December 2010. List of business transactions which the Company had with related parties in the year 2009 (2008 from the date of acquiring the controlling interest): 2009 HRK000 ________ Sale/purchase of goods and services Veterina Ltd. Veterina usluge Ltd. Veterina Nutricius Ltd. Veterina Kalinova Ltd. Vitamedera Ltd. Veterina Plus Ltd., Slovenia Veterina Polska Spo. z.o.o., Poland 18,581 1,652 7,393 8,374 1,417 ________ 37,417 ________ Financial income/expenses (interest) Veterina usluge Ltd. Veterina Polska Spo. z.o.o., Poland 54 ________ 54 ________ ________ ________ ________ ________ ________ ________ 399 ________ 399 ________ 7 92 ________ 99 ________ 2,412 127 ________ 2,539 ________ Income 2008 HRK000 ________ 2009 HRK000 ________ Expenses 2008 HRK000 ________
Genera group
52
Notes to the financial statements For the year ended 31 December 2009
31. Key personnel compensations

Total amount of compensations to key personnel amounted to HRK 9,440 thousand (2008.: HRK 6,553 thousand). Compensations to key personnel refer to short-term employee benefits. Key personnel include members of Management Board and executive directors, who are employed by the Group.
32. Financial instruments

Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity of another company. Financial assets and financial liabilities include cash and cash equivalents, marketable securities, trade and other receivables, trade and other payables, long term receivables, received and given loans and investments. Main purpose of those financial instruments is to enable financing the business of the Company and the Group. Recognition and measurement of these items is described in appropriate accounting policies. Financial instruments are recognized as assets and liabilities of equity in accordance with the substance of the contractual arrangement. Interests, dividends, gains and losses which refer to financial instruments recognized as a liability are recognized as profit or loss when incurred. A financial asset and a financial liability is offset only when the Company has a legally enforceable right to set off recognized amounts or intends either to settle on a net basis or to release the asset and settle the liability simultaneously. Financial assets and financial liabilities are recognized in Company Balance Sheet when the Company become one contractual party in the financial instrument arrangement. Nor Company or the Group do not use derivative financial instruments. The Management Board reviews and establishes risk management policy for each category of the risks mentioned. The risk management policy regarding risks linked to short-term and long-term financing of buyers, management of the funds, credits and liabilities can be summarised as follows: a) Capital risk management The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to shareholders through the optimalisation of the debt and equity balance. The capital structure of the Company consist of debt, cash and cash equivalents and equity attributable to shareholders of the Company, comprising issued capital, reserves and retained earnings. The Company and the Group manage capital and for the purpose of proper capital structure, in accordance with the economic conditions present on the market, decides if the retained earnings should be distributed to shareholders, if the capital needs increase or decrease, etc. Goals, policies and processes have not been changed during the period ending 31 December 2009 nor for the period ending 31 December 2008.
Genera group
53
Group
Group
Company
Company
31 December 31 December 31 December 31 December 2009 HRK000 ________ Loans Trade payables, liabilities toward related parties and other liabilities Provisions Decrease for cash and cash equivalents (deposits) Net debt Equity Equity and net debt Gearing 49,990 32,122 846 (15,279) 67,679 166,598 234,277 28.89% 2008 HRK000 ________ 25,012 44,757 5,723 (12,912) 62,580 169,001 231,581 27.02% 2009 HRK000 ________ 48,164 2,854 12 (965) 50,229 169,754 219,983 22.83% 2008 HRK000 ________ 25,012 42,627 5,723 (12,641) 60,721 170,519 231,240 26.26%
b) Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements. Accounting policies for financial instruments are applied on the following Balance Sheet items: Group 2009
Loans and receivables Assets At fair value through P&L HRK'000 Assets available for sale Investments held to maturity Total
HRK'000 Long term financial assets Short term financial assets Trade receivables, receivables from related parties Other receivables Cash 9,353 15,279 72,124 1,702
HRK'000 -
HRK'000 181 -
HRK'000
181 1,702
72,124
9,353 15,279 98,639
98,458
181
Genera group
54
Group 2008
Loans and receivables Assets At fair value through P&L HRK'000 Assets available for sale Investments held to maturity Total
HRK'000 Long term financial assets Short term financial assets Trade receivables, receivables from related parties Other receivables Cash 589 21 68,747 6,408 12,912
HRK'000 -
HRK'000 -
HRK'000 589 21 68,747 6,408 12,912
88,677
88,677
Company 2009
Loans and receivables Assets At fair value through P&L HRK'000 Assets available for sale HRK'000 Investments held to maturity HRK'000 Total
HRK'000
HRK'000
31 December 2009
Long term financial assets Short term financial assets Trade receivables, receivables from related parties Other receivables Cash 302 22,061 1,977 965 181 -
181 302 22,061 1,977 965 25,486
25,305
181
Company 2008
Loans and receivables Assets At fair value through P&L HRK'000 Assets available for sale HRK'000 Investments held to maturity HRK'000 Total
HRK'000
HRK'000
31 December 2008
Long term financial assets Short term financial assets Trade receivables, receivables from related parties Other receivables Cash 589 21 68,709 6,176 12,641 589 21 68,709 6,176 12,641
88,136
88,136
Genera group
55
All of the Company and Groups liabilities have been classified as Other financial liabilities. The Company or the Group does not have liabilities which are classified as Liabilities at Fair value through Profit and Loss. Fair value of financial instruments The fair values of financial assets and financial liabilities are determined as follows: the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quote market price; the fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices for observable current market transactions and dealer quotes for similar instruments; the fair value of derivative instruments is calculated using quoted prices. Where such prices are not available, use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives; and the fair value of financial guarantee contracts is determined using option pricing models where the main assumptions are the probability of default by the specified counterparty extrapolated from market-based credit information and the amount of loss, given the default. The Company and the Group applied the following methods and assumptions during the estimation of fair value of financial instruments: Receivables and deposits at banks For assets who mature within 3 months, carrying value is similar to fair value due to shortness of these instruments. For longer-term assets, contracted interest rates do not significantly defer from current market interest rates, and due to that their fair value is similar to its carrying value. Other financial instruments Financial instruments of the Company which are not valuated at fair value are trade accounts receivable, other receivables, trade accounts payable and other payables. Historic carrying value of assets and liabilities, including the provisions, which are in accordance with the usual business conditions, is similar to its fair value. c) Financial risk
This risk includes market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
Genera group
56
A) Market risk The Company and the Group activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. B) Foreign currency risk management Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company mostly operates in Croatian kunas; no within the Group are foreign subsidiaries whose receivables and liabilities are determined in their reporting currency. Overview at 31 December of the Companys cash and liabilities denominated in foreign currencies: Group Assets 2009 HRK000 ________ USD EUR GBP Company Assets 2009 HRK000 ________ USD EUR GBP 602 ________ 2008 HRK000 ________ 639 19,561 ________ Liabilities 2009 HRK000 ________ 41,268 18 ________ 2008 HRK000 ________ 345 30,576 ________ 2 21,983 ________ 2008 HRK000 ________ 639 19,795 ________ Liabilities 2009 HRK000 ________ 54,767 18 ________ 2008 HRK000 ________ 345 30,774 ________
The following table shows effect of potential changes in foreign currency of EUR on the Balance Sheet items, assuming that all other variables are constant, on the income before tax. The Company and the Group are exposed mainly to the risk of fluctuation in the exchange rate for EUR. The following table details the Companys sensitivity to a 10% increase and decrease in the exchange rate. The sensitivity analysis includes cash and cash equivalents and outstanding long term liabilities denominated in EUR at 31 December, and adjust their translation at the period end for a 10% change in HRK. Group 31 December 2009 Assets Liabilities
Exchange 000' EUR 000' HRK rate >10% Difference 000'HRK 000' EUR 000' HRK Exchange rate <10% Difference 000'HRK
2,903 7,498
21,209 54,785
23,330 60,263
2,121 (5,478) (3,357)
2,903 8,430
21,209 54,785
19,088 49,307
(2,121) 5,478 3,357
Genera group
57
Group 31 December 2008 Assets Liabilities

2,827 3,377
20,708 24,735
22,777 27,207
2,069 (2,473) (404)
2,827 3,377
20,708 24,735
18,639 22,262
(2,069) 2,473 404
Company 31 December 2009 Assets Liabilities

82 5,650
602 41,286
662 45,414
60 (4,128) (4,068)
82 5,650
602 41,286
542 37,157
(60) 4,128 4,068
Company 31 December 2008 Assets Liabilities

2,704 3,075
19,806 22,521
21,786 24,775
1,980 (2,254) (274)
2,704 3,075
19,806 22,521
17,826 20,267
(1,980) 2,254 274
C) Interest rate risk Interest rate risk is a risk that the value of a financial instrument will fluctuate due to changes in market interest rates relative to the financial instruments interest rates. The Company and the Group have significant long and short term loan liabilities, on which floating interest rates are calculated and which expose the Company and the Group to price risk and cash flow risk, and due to that the interest rate risk is significant. The following table shows sensitivity analysis in relation to loan of the Company and the Group as at 31 December 2009 (note 14), under the assumption that outstanding debt of long term loans bearing the floating interest rates was outstanding for the whole year. Average interest rates effective during 2009 and 2008 were increased or reduced by 50 basis points (bp).
Genera group
58
Group and the Company 2009

Interest + HRK' 000 50 b.p. Difference HRK' 000 Interest 50 b.p. Difference
Interest on long term bank loans Net effect
2,522
2,633
(111) (111)
2,522
2,411
111 111
Group and the Company 2008

Interest + HRK' 000 50 b.p. Difference HRK' 000 Interest 50 b.p. Difference
Interest on bank loans Net effect
572
613
(41) (41)
572
531
41 41
The effect of changing the interest rate by 50 bp is not material. If interest rates had been 50 bp higher or lower, this would not have a significant impact on the Companys profit. The Company ad the Group are not significantly exposed to other risks. E) Credit risk management Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company or the Group. The Company and the Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss form defaults. The Company only transacts with entities with good credibility. The Company and the Group uses other publicly available financial information and its own trading records to rate its major customers. The Company and the Groups exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transaction concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are review and approved by the Company and the Groups management. Trade receivables consist of a smaller number of customers. Most significant customers are related parties. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Company defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk did not exceed 5% of gross monetary assets at any time during the year. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with credit-ratings assigned by international credit-rating agencies.
Genera group
59
F) Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of directors, which has built an appropriate liquidity risk management framework for the management of the Company and Groups short, medium and long-term funding and liquidity management requirements. The Company and the Group manages liquidity risk by maintaining adequate funds, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table shows the maturity profile of the Company and the Groups financial liabilities at 31 December 2009 based on contractual undiscounted payments. Group
Year ended 31 December 2009 On demand HRK'000 <3 months HRK'000 3 do 12 months HRK'000 2 do 5 years HRK'000 > 5 years HRK'000 Total HRK'000
Loan liabilities Other liabilities Trade payables
10,228
-
8,352 5,023 13,375
27,468 27,468
3,942 3,942
49,990 5,023 26,593 81,606
26,593 36,821
Group
9,022 28,841 20,638 58,501
1,055 123 1,178
8,589 8,589
6,346 878 7,224
25,012 29,719 20,761 75,492
Company
10,228 1,374 11,602
6,526 986 17,740
27,468 27,468
3,942 3,942
48,164 986 1,374 50,524
Genera group
60
Company
9,022 28,715 18,634 56,371
1,055 123 1,178
8,589 8,589
6,346 878 7,224
25,012 29,593 18,757 73,362
Genera group
61
33. Approval of the financial statements
Consolidated and standalone financial statements were approved by the Management Board and authorized for issue on the 31sh of March, 2010. Signed on behalf of the Company
Ivan Drpi, Chairman of the Management Board
Ana Hanekovi orak, Member of the Management Board
Genera group
62
Genera d.d.
31 December 2009
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 no-audited 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.
Genera group
63

Genera Inc - Annual Report 2009

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Genera Inc - Annual Report 2009

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Annual Report 2009

Genera Inc. and subsidiaries

Notes to the Financial Statements

Statement of the persons responsible for the preparation of the report

Significant events in 2009

Change of the Company's name

New limited liability companies commence operations

Significant events in Veterini Ltd., the largest member of the Group

Significant events in other members of the Group

Business events after the completion of the business year

Description of the most important risks and uncertainties

Genera Inc. Svetonedjeljska 2, Kalinovica 10436 Rakov Potok Croatia

For and on behalf of Genera Inc.:

Ivan Drpi Kalinovica, 31 March 2010 Chairman of the Management Board

Ana Hanekovi orak Member of the Management Board

Ivan Majdak Chairman of the Supervisory Board

Consolidated Balance Sheet As at 31 December 2009

31/12/2009 HRK '000

31/12/2008 HRK '000

Notes are an integral part of Consolidated Balance Sheet

Balance sheet As at 31 December 2009

31/12/2009 HRK '000

31/12/2008 HRK '000

Notes are an integral part of Balance sheet

Consolidated Income Statement For the year ended 31 December 2009

2009 HRK '000

163 2,591 (2,428)

Notes are an integral part of Consolidated Income Statement

Income Statement For the year ended 31 December 2009

2009 HRK '000

38,445 35,005 3,440 33,443

3,785 2,417 2,441 8,395 13,289 3,116 5,002

141 3,395 (3,254)

Notes are an integral part of Income Statement

Cash Flow Statement For the year ended 31 December 2009

(1,143) (4,478) (3,165)

(604) 10,634 (2,634)

8,733 (19,063) 290 (7,844) 163 (2,522) (10,203)

(3,406) 19,428 (114) 3,954 57 (814) 3,197

16,474 8,504 24,978

6,498 8,670 15,168

(8,538) 15 (2,516) (1,273) (96) (12,408) 2,367 12,912 15,279

(25,469) 600 7 (48) 261 (24,649) (6,284) 19,196 12,912

Cash Flow Statement For the year ended 31 December 2009

12,7 80 (2 0) (44 6) 71 51 (8 4) (5 7) 8 00 3,8 74 16,9 69 (19 ,2 85 )

(43 7) 10,9 99 2 02 (2,57 3) -

(3,28 9) (5 6) 19,4 96 (11 1) 4,9 46 57 (80 0) 4,2 03

6,4 98 8,6 70 15,1 68

(2 5,44 7) 6 00 2 61 7 (10 0) (4 8) (2 4,72 7) (5,35 6) 17,9 97 12,6 41

Notes are an integral part of Cash Flow Statement Genera d.d. 15

Treasury shares HRK'000 (1,740) 310 (1,430) (2,516) (3,946)

Legal reserves HRK'000 1,000 1,000 (1,000) -

Exchange differences HRK'000 64 (146) (146)

(3,793) (37,769) (606) (606) 37,769 (606)

248 261 169,001 (606) (606) (2,516) 719 166,598

Notes are an integral part of Consolidated Statement of Changes in Equity

Treasury shares HRK'000 (1,740) 310 (1,430) (2,516) (3,946)

Legal reserves HRK'000 1,000 1,000 (1,000) -

Notes are an integral part of Statement of Changes in Equity

30.736 28.745 59.481

Veterina d.d. (8.637) (8.637)

Veterina d.o.o. 55.439 4.042 59.481

3. Summary of significant accounting policies

__

846 1,206

664 628

1,510 1,834

__

846 1,206

664

1,510 1,206

___ _ _ _ _ _ 27 _ 27 ___

15,764 25,887 7,836 3,506 425 (371) 53,047

13,424 29,370 6,327 4,130 7 53,258

13,424 29,370 6,327 3,147 7 52,275

1,289,718 41,995 19,957 50,412 26,913 415,865 1,844,860

72.19 2.28 1.08 2.73 1.45 22.55 100.00

1,331,713 42,555 25,132 14,295 431,165 1,844,860

72.19 2.31 1.36 0.77 23.37 100.00

Agro HRK000 44,538 44,538 2,287 2,287

Non-allocated HRK000 19,951 19,951 54,636 54,636

2.522 69 2,591

814 23 837 (780)

910 2.412 73 3,395 (3,254)

800 800 (358)

971 879 1,850 370 421

(12) (3) (3)

971 879 1,850 370 370

31 December 31 December 2008 HRK000 2009 HRK000

766 766

127 80 207