Årsrapport 30700228 EY Godkendt Revisionspartnerselskab Dirch Passers Allé 36 Postboks 250, 2000 Frederiksberg 2022-10-01 2023-09-30 2021-10-01 2022-09-30 10013267 Symphogen A/S Pederstrupvej 93 2750 Ballerup 2000-01-01 Ballerup 45265050 EY Godkendt Revisionspartnerselskab 30700228 Dirch Passers Allé 36 2000 Frederiksberg 2024-02-15 Gyrithe Falck Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning Grundlag for konklusion Konklusion 2024-02-15 2024-02-15 CaseWare Working Papers Ballerup Christophe Thurieau Chief Executive Officer Claude Philippe Bertrand Chairman Christophe Thurieau Benoit Alain Antoine Chéron Pascal Lemaire Copenhagen Rasmus Bloch Jespersen State Authorised Public Accountant mne35503 458964000 112600000 168282000 94496000 -188755000 -206615000 -6858000 1857000 -4644000 -24044000 -112289000 86877000 -204707000 -313704000 285011000 315470000 408333000 38523000 18237000 9737000 100939000 352722000 -28459000 -115336000 -468430000 2442000 -309711000 -352722000 -9737000 100939000 128729000 -11244000 219679000 187633000 -40026000 -28855000 -18539000 10907000 -36360000 Total cash flows Total cash flows Total cash flows Total cash flows Total cash flows 50.6 45.3 -10 -36.6 -114.7 30.3 304.6 -120.8 70.1 67 8.2 280.4 20.6 -167.6 -122.8 Operating margin Operating margin Operating margin Operating margin Operating margin 471468000 70019000 0 532688000 265536000 270551000 205932000 332156000 139397000 111110000 27828000 24744000 38707000 196302000 993000 5581000 7851000 3724000 31849000 198159000 -17264000 32425000 49113000 165734000 38937000 27165000 5174000 3819000 4275000 4017000 83436000 85665000 131822000 120666000 12820000 16542000 4401000 7514000 19081000 0 36302000 24056000 168124000 144722000 152707000 68290000 18453000 16337000 14989000 19735000 186149000 104362000 13929000 54168000 200078000 158530000 368202000 303252000 11292000 11292000 1006541000 1006541000 -831445000 -880558000 186388000 137275000 78278000 74726000 22400000 20000000 100678000 94726000 8094000 11402000 26878000 18373000 13171000 0 32993000 41476000 81136000 71251000 368202000 303252000 11292000 1006541000 -1046292000 165734000 11292000 1006541000 -880558000 49113000 11292000 1006541000 -831445000 49113000 165734000 30962000 62122000 -74929000 -229456000 5146000 -1600000 14000 188000 2240000 2794000 0 -7792000 2920000 3586000 27170000 18237000 -27170000 -18237000 15776000 14204000 -15776000 -14204000 -40026000 -28855000 54168000 83007000 -213000 16000 13929000 54168000 112594000 90448000 18184000 14585000 1325000 1177000 7294000 4900000 139397000 111110000 144 119 14000 188000 979000 5393000 2225000 0 2415000 618000 1196000 929000 2015000 2177000 1817000 32425000 -19081000 0 49113000 165734000 125898000 24296000 25142000 131020000 21046000 3451000 2673000 11815000 146944000 27747000 27815000 142835000 98733000 20477000 21125000 45355000 9274000 2096000 2415000 14044000 108007000 22573000 23540000 59399000 38937000 5174000 4275000 83436000 16542000 7514000 3722000 3113000 12820000 4401000 12820000 4401000 35571000 13171000 22400000 0 0 0 0 Today, the Board of Directors and the Executive Board have discussed and approved the annual report of Symphogen A/S for the financial year 1 October 2022 - 30 September 2023. 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 30 September 2023 and of the results of the Company's operations and cash flows for the financial year 1 October 2022 - 30 September 2023. 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 shareholder of Symphogen A/S We have audited the financial statements of Symphogen A/S for the financial year 1 October 2022 - 30 September 2023, which comprise income statement, balance sheet, statement of changes in equity, cash flow statement 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 30 September 2023 and of the results of the Company's operations as well as the cash flows for the financial year 1 October 2022 - 30 September 2023 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' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. 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. The financial ratios stated under "Financial highlights" have been calculated as follows: Operating profit/loss Profit/loss before net financials +/- Other operating income and other operating expenses Equity ratio Equity, year-end x 100 Total equity and liabilities, year-end Return on equity Profit/loss after tax x 100 Average equity Operating margin Operating profit/loss x 100 Revenue Symphogens main activities relates to working as a research and development service provider under a Les Laboratoires Servier service agreement to provide new antibody discoveries, improved research technologies and new therapeutic modalities. Symphogen is the Antibody Center of Excellence in the Servier Group. We apply our highly efficient antibody platform and capabilities in the discovery and early development of differentiated antibody therapeutics. We were founded in 2000 and became part of the Servier Group in June 2020 to support Servier’s commitment to improve patient’s health and the R&D strategy within oncology and immune oncology. We work with antibodies, the human body’s natural defense system designed to resist and fight disease. Every day, we work with innovative scientific approaches to antibody therapies to overcome the biological mechanisms leading to cancer or immuno-inflammatory diseases. We are passionate about making discoveries that can have a major impact on the lives of patients and their families. Symphogen is subject to income taxes regulation in Denmark. Considering the complexity, by nature, associated with transactions implying the transfer of intellectual property rights and the various estimates and judgements made in relation to such transactions, Symphogen has recognized a provision for uncertain tax positions of DKK 22 million as of September 30, 2023. Due to the uncertainties, the provision for uncertain tax positions may deviate from the actual obligation. Refer to note 17 in the financial statements. Revenue increased from DKK 70 million in 2021/2022 to DKK 471 million in 2022/2023. In 2021/2022 were Other operating income reported of DKK 533 million, related to income from sale of IP rights. No other operating income was reported in 2022/2023. Net result for the year ended 30th September 2023, amounted to a profit of DKK 49 million compared to profit of DKK 166 million for the year ended 30th September 2022. On 30th September 2023, total equity amounted DKK 186 million and total assets amounted DKK 368 million. Development in 2022/2023 compared to prior years expressed expectations In the financial statement for 2021/22 our outlook for 2022/23 expressed expected revenue for 2022/2023 within the range of DKK 600-700 million and net result within the range of DKK 0-110 million. Actual revenue and net result for 2022/23 deviated from those expressed expectations, primarily to close down of certain R&D projects and as a result reduction in activity level of service activities rendered under the reseach and collaboration agreement with Servier. Investments Investments amounted to DKK 38 million in 2022/2023 against DKK 18 million in 2021/2022. The increase, of which DKK 11 million related to rigth of use lease assets, was mainly driven by investments in laboratory equipment and capacities. Change in financial reporting framework from IFRS to the Danish Financial Statements Act In previous years and through 30 September 2022, the Company prepared and presented its financial statements in accordance with International Reporting Standards (IFRS) as adopted by the EU. Due to a change in the nature and direction of the business, the Company has elected to change its accounting framework and prepare and present the financial statements for 2022/23 in accordance with the Danish Financial Statements Act. Refer to note 1 for further details and description of the change in accounting policies. Change in share capital At September 30, 2022, the share capital consisted of DKK 0 class D shares (common shares), DKK 7,434,726 class J shares (preferred shares) and DKK 3,857,643 class L shares (preferred shares). Class J shares and class L shares were convertible into common shares in certain situations and subject to certain terms and conditions. In March 2023, the Company changed its share capital structure and closed and merged the share classes D, J, L into one single share class. Following the change and on September 30, 2023, Symphogen's share capital amounts to DKK 11,292,369 divided into shares of DKK 1. Symphogen is a knowledge-based organization with a highly science-focused workforce, whereof approximately 85% of the employees are involved in rendering R&D service activities. Symphogen is taking part in the overall Servier CSR initiatives and especially focusing on environment, health for employees, diversity and inclusion. Symphogen is a fully owned subsidiary of Servier, and renders R&D services to Servier performing mainly discovery and early and late stage research activities, involving lead identification, selection and developability activities. Further, Symphogen is involved in phase I-II clinical studies in collaboration with Servier R&D. Symphogen is at the current time involved approximately 15 active therapeutic projects owned by Servier. Symphogen, is working under a Les Laboratoires Servier service agreement and will continue its work to provide new antibody discoveries, improved research technologies and new therapeutic modalities. Furthermore, under this agreement, Symphogen will continue to optimize the late research and early development capabilities, to conduct IND enabling activities and participate in both early and later stage projects. In 2023/2024, Symphogen will continue to provide new antibodies with unique functionalities both within the oncology and immune inflammatory space, aiming to be best or first in class, thereby leveraging opportunities to develop innovative therapeutics. Symphogen will also continue conducting cross-national clinical programs in collaboration with global R&D, participating in partnered programs at different stages (e.g. CMC development) and further develop and strengthen its discovery and pre-clinical capabilities. It is foreseen that the company will take on additional early research-stage projects during this period. Revenue for 2023/24 is expected to be within the range of DKK 505-525 million and the net result for 2023/24 is expected to be within the range of DKK 30-35 million. The annual report of Symphogen A/S for 2022/23 has been prepared in accordance with the provisions in the Danish Financial Statements Act applying to medium-sized reporting class C entities. In previous years and through 30 September 2022, the Company prepared and presented its financial statements in accordance with International Reporting Standards (IFRS) as adopted by the EU. Due to a change in the nature and direction of the business, following the transfer and sale of IP to its parent company, Servier, in 2022, the Company has elected to change its accounting framework and prepare and present the financial statements for 2022/23 in accordance with the Danish Financial Statements Act. Management believes that the financial statements prepared in accordance with the Danish Financial Statements act continues to provide relevant information and present a fair view of the financial position of the Company and of the results of the Company's operations and cash-flows. As such, the Company has prepared its financial statements for 2022/23 in accordance with the Danish Financial Statements Act and “Bekendgørelse om overgang til regnskabsaflæggelse efter årsregnskabsloven” with an opening balance at 1 October 2021. The Company continues to apply the IFRS principles for recognition and measurement of expected credited losses (IFRS 9 - Financial Instruments), revenue (IFRS 15 Revenue from Contracts with Customers), leases (IFRS 16 - Leases) in is application of the Danish Financial Statements Act. The Company’s applied accounting policies under the Danish Financial Statements Act is described in further details in the sections below. The change in accounting framework from IFRS as adopted by the EU to the Danish Financial Statements Act has not impacted the principles for recognition and measuring historically applied by the Company. In the financial statements for 2022/23, the comparable amounts have been revised to confirm with the Danish Financial Statements Act in respect of the following: - Presentation of income statement and balance sheet based on the “skema-krav” of the Danish Financial Statements Act. The revision of the comparative amounts did not impact the opening equity at 1 October 2021 and 2022, respectively. The Company has not utilized the exemptions otherwise available in section 4-9 of “Bekendgørelse om overgang til regnskabsaflæggelse efter årsregnskabsloven". Reporting currency The financial statements are presented in Danish kroner (DKK'000). On initial recognition, transactions denominated in foreign currencies are translated at the exchange rate at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and the date of payment are recognised in the income statement as financial income or financial expenses. Receivables and payables and other monetary items denominated in foreign currencies are translated at the exchange rate at the balance sheet date. The difference between the exchange rates at the balance sheet date and the date at which the receivable or payable arose or was recognised in the most recent financial statements is recognised in the income statement as financial income or financial expenses. The Company has chosen IFRS 15 as interpretation for revenue recognition. Symphogen generates revenue under a service agreement entered with Servier, under which Symphogen renders research and development services concerning intellectual property and projects owned by Servier. Under the terms of the service agreement, Symphogen receive remuneration corresponding to the actual operating expenses incurred for the performance of the research and development services with a mark-up. Revenue is measured at the fair value of the consideration received or receivable, considering contractually defined terms of payment and excluding taxes or duty. Revenue is recognized when the customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements, the following five steps are performed: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The five-step model to contracts is only applied when it is probable that the consideration Symphogen is entitled to in exchange for the goods or services it transfers to the customer will be collected. At contract inception, Symphogen assesses the goods or services promised within each contract and identifies, as a performance obligation, and assesses whether each promised good or service is distinct. Revenue is recognized in the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Revenue from rendering of research and development services is recognized over the service period, over time, given that costumer simultaneously receives and consumes the benefits of the research and development services rendered. Revenue is measured at the fair value of the agreed consideration excluding VAT and taxes charged on behalf of third parties. All discounts and rebates granted are recognised in revenue. Other operating income comprise items secondary to the principal activities of the Company, including, gains on the disposal of intangible assets. The gain or loss arising from the derecognition of an intangible asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset. The gain is recognised in profit or loss when the asset is derecognised. Other external expenses include the year's expenses relating to the Company's core activities, including expenses relating to rendering of research and development services, administration, premises, bad debts, etc. Wages and salaries, bonuses, pensions, severance payments, social security expenses and other staff expenses are recognized in the year in which the associated services are rendered by employees of Symphogen. The item comprises depreciation of property, plant and equipment. The basis of depreciation, which is calculated as cost less any residual value, is depreciated on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Laboratory equipment 6 years Fixtures and fittings, other plant and equipment 3-6 years Leasehold Improvements Lifetime of lease contracts and up to 10 years Right of use assets The lifetime of lease contracts years Depreciation is based on the residual value of the asset and is reduced by impairment losses, if any. The depreciation period and the residual value are determined at the acquisition date and are reassessed annually. Where the residual value exceeds the carrying amount of the asset, no further depreciation charges are recognised. In the case of changes in the depreciation period or the residual value, the effect on the depreciation charges is recognised prospectively as a change in accounting estimates. Financial income and expenses are recognised in the income statements at the amounts that concern the financial year. Net financials include interest income and expenses, allowances and surcharges under the advance-payment-of-tax scheme, as well as realized and unrealized gains and losses on transactions denominated in foreign currencies 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. The entity is jointly taxed with other group entities. The total Danish income tax charge is allocated between profit/loss-making Danish entities in proportion to their taxable income (full absorption). Jointly taxed entities entitled to a tax refund are reimbursed by the management company based on the rates applicable to interest allowances, and jointly taxed entities which have paid too little tax pay a surcharge according to the rates applicable to interest surcharges to the management company. Property, plant and equipment Property, plant and equipment include leasehold improvements, laboratory equipment and other equipment. Property, plant, and equipment are measured at cost less accumulated depreciation and impairment. The cost includes the cost of acquisition and expenses directly related to the acquisition until such time when the asset is available for use. Right of use assets Right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The Company has chosen IFRS 16 as interpretation for classification and recognition of leases. On initial recognition, leases for assets that transfer substantially all the risks and rewards incident to the ownership to the Company (finance leases) are measured in the balance sheet at the lower of fair value and the present value of the future lease payments. In calculating the net present value, the interest rate implicit in the lease or the incremental borrowing rate is used as the discount factor. Assets held under finance leases are subsequently accounted for in the same way as the Company's other assets. The capitalised residual lease liability is recognised in the balance sheet as a liability, and the interest element of the lease payment is recognised in the income statement over the term of the lease. The carrying amount of non current assets, including property, plant and equipment and right of use lease assets is assessed for impairment on an annual basis. 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. The company has chosen IFRS 9 as interpretation for impairment write-down of financial receivables. Receivables from collaboration partners, group companies, and other receivables are designated as receivables and are initially measured at fair value or transaction price and subsequently measured in the balance sheet at amortized cost, which generally corresponds to nominal value less expected credit loss provision. Symphogen to record an allowance for expected credit losses for receivables and other receivables not held at fair value through profit and loss. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that Symphogen expects to receive. For receivables with collaboration partners, group companies, and other receivables, Symphogen has applied the standard’s simplified approach and has calculated expected credit losses based on lifetime expected credit losses. Prepayments include expenditures related to future financial periods and are measured at nominal value. Cash comprise cash in bank. The Symphogen is subject to the Danish rules on compulsory joint taxation with other Danish group companies. On payment of joint taxation contributions, the Danish corporation tax charge is allocated between the jointly taxed entities in proportion to their taxable income. Entities with tax losses receive joint taxation contributions from entities that have been able to use the tax losses to reduce their own taxable income. Tax for the year comprises current income tax, joint taxation contribution and changes in deferred tax for the year due to changes in the tax rate. The tax expense relating to the profit/loss for the year is recognized in the statement of profit or loss, except to the extent that it relates to items recognized in equity or in other comprehensive income. Current tax payables and receivables are recognized in the balance sheet as a receivable in the event of prepayments and amounts due. Deferred tax is measured according to the liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. Where the tax value can be determined according to alter-native tax rules, deferred tax is measured based on the planned use of the asset or the settlement of the obligation. Deferred tax assets are measured at the value at which they are expected to be utilized, either through elimination against tax on future earnings or through a set-off against deferred tax liabilities. Deferred tax assets are set of within the same legal tax entity and jurisdiction. Current tax assets for the current and prior periods shall be measured at the amount expected to be recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Uncerain tax position The Company carries out potentially complex transactions that require management to make judgments and estimates as to the tax impact of those transactions. The positions adopted by the Company in tax matters are based on its interpretation of tax laws and regulations. Some of those positions may be subject to uncertainty. In such cases, the Company assesses the amount of the tax liability on the basis of the following assumptions: that its position will be examined by one or more tax authorities on the basis of all relevant information, that a technical assessment is carried out with reference to legislation, case law, regulations, and established practice, and that each position is assessed individually (or collectively where appropriate), with no offset or aggregation between positions. Those assumptions are assessed on the basis of facts and circumstances existing at the end of the reporting period. When an uncertain tax liability is regarded as probable, it is measured on the basis of the Company’s best estimate and recognized as a liability uncertain tax assets are not recognised. Tax exposures relating to corporate income taxes are presented separately within non-current income tax liabilities. The Company has chosen IAS 39 as interpretation for liabilities. Other liabilities are initially measured at fair value adjusted for transaction costs. Subsequently, other liabilities are measured at amortized cost which generally corresponds to nominal value. Payables related to research and development clinical trials comprise professional fees, pass through costs and investigator fees related to the conduct of clinical trials. Employee cost liabilities comprise provision for holiday allowance, provision for salaries and other employee related provisions. Lease liabilities The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Symphogen’s incremental borrowing rate. Generally, Symphogen uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the following: - fixed payments, including in-substance fixed payments. - variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date. - amounts expected to be payable under a residual value guarantee; and - the exercise price under a purchase option that Symphogen is reasonably certain to exercise, lease payments in an optional renewal period if Symphofgen is reasonably certain to exerxise an extension option and penalties for early termination of a lease unless Symphogen is reasonably certain not to terminate early. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in Symphogen's estimate of the amount expected to be payable under a residual value guarantee, or if Symphogen changes its assessment of whether it will exercise a purchase, extension, or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Symphogen presents right of use assets that do not meet the definition of investment property in property plant and equipment and lease liabilities in loans and borrowings in teh statement of financial position. Short-term leases and leases of low-value assets Symphogen has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets. Symphogen recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Reassessment of the lease liability Symphogen remeasures the carrying amount of its lease liabilities to reflect reassessments or revised in-substance fixed payments by discounting the revised lease payments. When the change in lease payments results from a change in floating interest rates, Symphogen uses a revised discount rate that reflects changes in the interest rate. Symphogen recognizes the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. The cash flow statement shows the Company's net cash flows broken down according to operating, investing and financing activities, the year's changes in cash and cash equivalents as well as the cash and cash equivalents at the beginning and the end of the year. Cash flows from operating activities are calculated as the profit/loss for the year adjusted for non cash operating items, changes in working capital and paid corporate income tax. Cash flows from investing activities comprise payments in connection with acquisitions and disposals of entities and activities and of intangible assets, property, plant and equipment and investments. Cash flows from financing activities comprise changes in the size or composition of the Company's share capital and related expenses as well as raising of loans, repayment of interest bearing debt and payment of dividends to shareholders. Cash and cash equivalents comprise cash, short term bank loans and short term securities which are readily convertible into cash and which are subject only to insignificant risks of changes in value. Refer to note 17 for description of recognition and measurement uncertainties relating to uncertain tax positions. No events that could significantly affect the financial statements have occurred after the reporting period closing date. Refer to note 4. By reference to section 98b(3), (ii), of the Danish Financial Statements Act, remuneration to Management is not disclosed. Remuneration of the Board of Directors is paid by the parent Company. Prepayments include accrual of expenses relating to subsequent financial years, primarily prepayments for clinical trials. Refer to note 17. Prepayments include accrual of expenses relating to subsequent financial years, including prepayments relating to clinical trials of DKK 10,674 thousand and other prepaid costs, DKK 4,114 thousand. At September 30, 2022, the share capital consisted of DKK 0 class D shares (common shares), DKK 7,434,726 class J shares (preferred shares) and DKK 3,857,643 class L shares (preferred shares). Class J shares and class L shares were convertible into common shares in certain situations and subject to certain terms and conditions. In March 2023, the Company changed its share capital structure and closed and merged the share classes D, J, L into one single share class. Following the change and on September 30, 2023, Symphogen's share capital amounts to DKK 11,292,369 divided into shares of DKK 1. Uncertain tax positions Of corporation tax payable DKK 22 million and DKK 20 million relates to provisions for uncertain tax positions at 30 September 2023 and 2022, respectively. Symphogen is subject to income taxes regulation in Denmark. Considering the complexity, by nature, associated with transactions implying the transfer of intellectual property rights in 2021/22 and the various estimates and judgements made in relation to such transactions, Symphogen has recognized a provision for uncertain tax positions of DKK 22 million and DKK 20 million as of September 30, 2023 and 2022, respectively. Due to the uncertainties, the provision for uncertain tax positions may deviate from the actual obligation. In 2022/23 Symphogen has capitalized deffered tax assets of DKK 19,081 thousand. The capitalization of deferred tax assets from loss carry forward is based on expected and budgeted net taxable income for Symphogen for the next three income years, derived from research and developement service to be renderend under the R&D service contract with Servier. At 30 September 2023, Symphogen has additional tax loss carry forward of DKK 2,374 million (equivalent to a value of DKK 522 million at a tax rate of 22%), which not have been capitalized due to the uncertaincy as to future utilization. On June 3, 2020, Symphogen entered the jointly taxation with other Danish subsidiaries and Branches of Les Laboratoires Servier. Symphogen has unlimited joint and several liability for payment of Danish corporation taxes within the joint taxation. In accordance with IP sales agreement, the company may be entitled to future milestone payments. Refer to note 4. For contingent assets relating to tax loss carry forward refer to note 17. Parties exercising control Related party Domicile Basis for control Les Laboratoires Servier France Participating interest Information about consolidated financial statements Parent Domicile Requisitioning of the parent company's consolidated financial statements Les Laboratories Servier 50 Rue Carnot 92150 Suresnes France The financial statements are not made available to the public Related party transactions Symphogen A/S was engaged in the below related party transactions: DKK'000 2022/23 2021/22 Revenue from research and development services rendered to Les Laboratoires Servier 471,468 70,019 Sale of Symphogen IP to Servier 0 462,550 Revenue from rent and other facility services to group companies 363 295 Intercompany receivable 152,707 68,290 Symphogen’s related parties comprise the shareholder of Symphogen the Executive Management team and the Board of Directors. Symphogen A/S has not granted any loans, guarantees, or other commitments to or on behalf of any of the members in the Board of Directors or Executive Management. Other than the remuneration and other transactions relating to the Board of Directors and Executive Management described in note 5, no other significant transactions have taken place with the Board of Directors or the Executive Management during 2022/2023. 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