Årsrapport 30700228 Ernst & Young Godkendt Revisionspartnerselskab Osvald Helmuths Vej 4 Postboks 250, 2000 Frederiksberg 2017-01-01 2017-12-31 2016-01-01 2016-12-31 2018-07-03 14538372 Affitech A/S Ole Maaløes Vej 3 2200 København N, Denmark 1990-10-01 Copenhagen www.affitech.com Danske Bank Ernst & Young Godkendt Revisionspartnerselskab 30700228 Osvald Helmuths Vej 4 2000 Frederiksberg, Denmark Danmark +45 73 23 30 00 2018-07-03 Aleksander Shuster Regnskabsklasse B Revisionspåtegning true 2018-07-03 2018-07-03 Copenhagen Michael Braunagel Stig Jarle Pettersen Aleksander Shuster Chairman Daniil Talyanskiy Alexander Andryushechkin Copenhagen Christian Schwenn Johansen Rasmus Bloch Jespersen State Authorised Public Accountant mne33234 State Authorised Public Accountant mne35503 691275 1333882 25175138 0 45349 346901 24438514 -1680783 75931 148249 501225 460311 24013220 -1992845 0 0 24013220 -1992845 24013220 -1992845 7350000 7350000 40577 40577 7390577 7390577 7390577 7390577 58037 55942 58037 55942 72723 39672 130760 95614 7521337 7486191 4877215 4877215 82912662 82912662 -96845114 -120858334 -9055237 -33068457 0 25175138 0 25175138 12858073 12491023 12858073 12491023 54337 254561 3566977 2582909 97187 51017 3718501 2888487 16576574 15379510 7521337 7486191 4877215 82912662 -120858334 0 24013220 4877215 82912662 -96845114 75931 148249 75931 148249 391271 365857 109954 94454 501225 460311 147000000 40577 147000000 40577 -139650000 0 0 7350000 40577 Affitech Research AS Oslo, Norge 100 0 Actigen Limited UK 100 0 A- 4877215 4877215 Today, the Board of Directors and the Executive Board have discussed and approved the annual report of Affitech A/S for the financial year 1 January - 31 December 2017. The annual report is prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the financial position of the Company at 31 December 2017 and of the results of the Company's operations for the financial year 1 January - 31 December 2017. Further, in our opinion, the Management's review gives a fair review of the matters discussed in the Management's review. We recommend that the annual report be approved at the annual general meeting. To the shareholders of Affitech A/S We have audited the financial statements of Affitech A/S for the financial year 1 January - 31 December 2017, which comprise income statement, balance sheet, statement of changes in equity and notes, including accounting policies. The financial statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the financial position of the Company at 31 December 2017 and of the results of the Company's operations for the financial year 1 January - 31 December 2017 in accordance with the Danish Financial Statements Act. We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the financial statements" section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these rules and requirements. We draw attention to note 2 in the financial statements, which describes that the Company’s operations and negative shareholder's equity are financed via non-current loan with the Company’s shareholder and current payables to the fully owned subsidiary. The Company's future operations can be financed through loan or share redemption and receipt of dividend from fully owned subsidiaries. We have not modified our opinion in respect of this matter. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the financial statements, including the note disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Management is responsible for the Management's review. Our opinion on the financial statements does not cover the Management's review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement of the Management's review. Affitech A/S is a biopharmaceutical company dedicated to the discovery and development of fully human antibody therapeutics against cancer and other serious diseases. Going concern The Company has lost its share capital, and the shareholder's equity is negative by DKK 9,055 thousand. It is expected that in 2018, the Company will have liquidity needs that require funding for the purpose of going concern. Previous year’s accumulated losses as well as the current operations of the Company are financed through non-current loan with the Parent Company, Trans Nova Investment Limited, and current payables to the fully owned subsidiary, Affitech Research AS. The Company's future operations can be financed through loan, share redemption and receipt of dividend from fully owned subsidiaries. Although additional financial resources had not been transferred to the Company at the balance sheet date, the Board of Directors believes that adequate funding will be provided to the Company through loan, share redemption and dividend from fully owned subsidiaries, and that, consequently, the Company will have sufficient liquidity to fund the Company's activities for at least the next 12 months from the balance sheet date. On this basis, the Board of Directors presents the financial statements for 2017 on a going concern assumption. The income statement for 2017 shows a profit of DKK 24,013,220 against a loss of DKK 1,992,845 last year, and the balance sheet at 31 December 2017 shows a negative equity of DKK 9,055,237. No significant events have occurred subsequent to the financial year-end. The annual report of Affitech A/S for 2017 has been prepared in accordance with the provisions in the Danish Financial Statements Act applying to reporting class B entities and elective choice of certain provisions applying to reporting class C entities. In accordance with section 110 of the Danish Financial Statements Act, the Company has not prepared consolidated financial statements. Administrative expenses include expenses incurred during the year in relation to the management and administration of the Company, including expenses related to salaries and premises as well as other expenses such as external services, IT expenses and depreciation relating to administration. Research costs include salaries, expenses related to patents and premises as well as other expenses such as external services, IT expenses and depreciation and amortization attributable to the Company’s research activities. The Company expenses all research costs in the year they are incurred. Other operating income comprises items of a secondary nature relative to the Company's core activities, including gains or losses on the sale of fixed assets. The item comprises amortisation/depreciation and impairment of intangible assets and property, plant and equipment. The basis of amortisation/depreciation, which is calculated as cost less any residual value, is amortised/depreciated on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Acquired intangible assets 5-10 years Financial income and expenses are recognised in the income statement at the amounts that relate to the reporting period. Net financials include interest income and expenses, financial expenses related to realised and unrealised capital and exchange gains and losses on foreign currency transactions, and surcharges and allowances under the advance-payment-of-tax scheme, etc. Tax for the year includes current tax on the year's expected taxable income and the year's deferred tax adjustments. The portion of the tax for the year that relates to the profit/loss for the year is recognised in the income statement, whereas the portion that relates to transactions taken to equity is recognised in equity. Other intangible assets comprise acquired intangible rights. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Gains and losses on the sale of intangible assets are recognised in the income statement under "Other operating income" or "Other operating expenses", respectively. Gains and losses are calculated as the difference between the selling price less selling expenses and the carrying amount at the time of sale. Investments in subsidiaries and associates are measured at cost. Dividends received that exceed the accumulated earnings in the subsidiary or the associate during the period of ownership are treated as a reduction in the cost of acquisition. Intangible assets and investments in subsidiaries are subject to an assessment for indications of impairment other than the decrease in value reflected by depreciation or amortisation. Impairment tests are conducted in respect of individual assets or groups of assets generating separate cash flows when there is indications of impairment. The assets are written down to the higher of the value in use and net realisable value (recoverable amount) of the asset or group of assets if this is lower than the carrying amount. As for groups of assets, impairment losses are first recognised in respect of goodwill and thereafter proportionately in respect of the other assets. Impairment tests are conducted on assets or groups of assets when there is evidence of impairment. The carrying amount of impaired assets is reduced to the higher of the net selling price and the value in use (recoverable amount). The recoverable amount is the higher of the net selling price of an asset and its value in use. The value in use is calculated as the present value of the expected net cash flows from the use of the asset or the group of assets and the expected net cash flows from the disposal of the asset or the group of assets after the end of the useful life. Previously recognised impairment losses are reversed when the reason for recognition no longer exists. Impairment losses on goodwill are not reversed. An assessment is made annually to determine whether there is an indication that previously recognised impairment losses no longer exists or have decreased. If such indications exist, the Company estimates the asset's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the assets does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciations, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement. Receivables are measured at amortised cost. An impairment loss is recognised if there is objective evidence that a receivable or a group of receivables is impaired. If there is objective evidence that an individual receivable has been impaired, an impairment loss is recognised on an individual basis. Impairment losses are calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flows, including the realisable value of any collateral received. The effective interest rate for the individual receivable or portfolio is used as discount rate. Prepayments recorded as assets comprise expenses relating to subsequent reporting years such as prepaid expenses regarding rent, licenses, insurance premiums, subscription fees and interest. Cash comprises cash in banks. Provisions comprise expected expenses relating to commitments, etc. Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event at the balance sheet date and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are measured at net realisable value or at fair value if the obligation is expected to be settled far into the future. Current tax payables and receivables are recognised in the balance sheet as the estimated income tax charge for the year, adjusted for prior-year taxes and tax paid on account. Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax value of assets and liabilities. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Deferred tax assets are recognised at the expected value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Changes in deferred tax due to changes in the tax rate are recognised in the income statement. As management company for all the entities in the joint taxation arrangement, the parent company is liable for payment of the subsidiaries' income taxes vis à vis the tax authorities as the subsidiaries pay their joint taxation contributions. Joint taxation contributions payable or receivable are recognised in the balance sheet as income tax receivables or payables. Other payables Other payables are measured at net realisable value. The Company has lost its share capital, and the shareholder's equity is negative by DKK 9,055 thousand. It is expected that in 2018, the Company will have liquidity needs that require funding for the purpose of going concern. Previous year’s accumulated losses as well as the current operations of the Company are financed through non-current loan with the Parent Company, Trans Nova Investment Limited, and current payables to the fully owned subsidiary, Affitech Research AS. The Company's future operations can be financed through loan, share redemption and receipt of dividend from fully owned subsidiaries. Although additional financial resources had not been transferred to the Company at the balance sheet date, the Board of Directors believes that adequate funding will be provided to the Company through loan, share redemption and dividend from fully owned subsidiaries, and that, consequently, the Company will have sufficient liquidity to fund the Company's activities for at least the next 12 months from the balance sheet date. On this basis, the Board of Directors presents the financial statements for 2017 on a going concern assumption. No significant events have occurred subsequent to the financial year-end. The Company's share capital has remained DKK 4,877,215 in the past year. Of the long-term liabilities, DKK 0 (2016: DKK 0) falls due for payment after more than 5 years after the balance sheet date. Contingent liabilities Other contingent liabilities DKK 2017 2016 Other contingent liabilities 4,300 4,217 4,300 4,217 The Company has a deferred tax asset amounting to DKK 220 million (2016: DKK 225 million) at a tax rate of 22% (2016: 22%), primarily regarding tax loss carry-forwards, which is not recognised in the balance sheet as Management believes that the deferred tax asset does not meet the recognition criteria. 14538372 2017-01-01 2017-12-31 14538372 2016-01-01 2016-12-31 14538372 2016-12-31 14538372 2017-12-31 14538372 2017-01-01 2017-12-31 1 14538372 2017-01-01 2017-12-31 2 14538372 2017-01-01 2017-12-31 3 14538372 2017-12-31 1 14538372 2017-01-01 2017-12-31 1 14538372 2017-01-01 2017-12-31 2 14538372 2017-01-01 2017-12-31 2 14538372 2017-01-01 2017-12-31 1 14538372 2017-12-31 e:CompletedDevelopmentProjectsMember 14538372 2017-01-01 2017-12-31 e:RetainedEarningsMember 14538372 2016-01-01 2016-12-31 e:RetainedEarningsMember 14538372 2017-12-31 e:ReceivablesFromOwnersAndManagementMember 14538372 2017-01-01 e:InvestmentsInGroupEnterprisesMember 14538372 2017-12-31 e:InvestmentsInGroupEnterprisesMember 14538372 2017-01-01 e:ContributedCapitalMember 14538372 2017-12-31 e:ContributedCapitalMember 14538372 2017-01-01 e:RetainedEarningsMember 14538372 2017-01-01 2017-12-31 e:RetainedEarningsMember 14538372 2017-12-31 e:RetainedEarningsMember 14538372 2017-01-01 e:ReserveAccordingToArticlesOfAssociationMember 14538372 2017-01-01 2017-12-31 e:ReserveAccordingToArticlesOfAssociationMember 14538372 2017-12-31 e:ReserveAccordingToArticlesOfAssociationMember 14538372 2017-01-01 2017-12-31 e:SubsidiaryMember 1 14538372 2017-01-01 2017-12-31 e:SubsidiaryMember 2 14538372 2017-12-31 e:SubsidiaryMember 1 14538372 2017-12-31 e:SubsidiaryMember 2 14538372 2016-12-31 1 14538372 2017-01-01 e:DepositsLongtermInvestmentsAndReceivablesMember 14538372 2017-12-31 e:DepositsLongtermInvestmentsAndReceivablesMember iso4217:DKK xbrli:pure