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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
PHARMAMAR GROUP
(Pharma Mar, S.A. and subsidiaries)
Consolidated Financial Statements and
Consolidated Directors' Report
As of 31 December 2024
Auditor's Report on Pharma Mar, S.A. and Subsidiaries
(Together with the consolidated annual accounts and consolidated directors' report of Pharma Mar, S.A. and subsidiaries for the year ended 31 December 2024)
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
KPMG Auditores, S.L.
Pº de la Castellana, 259 C 28046 Madrid
Independent Auditor's Report on the Consolidated Annual
Accounts
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
To the shareholders of Pharma Mar, S.A.
REPORT ON THE CONSOLIDATED ANNUAL ACCOUNTS
Opinion __________________________________________________________________
We have audited the consolidated annual accounts of Pharma Mar, S.A. (the "Parent") and subsidiaries (together the "Group"), which comprise the consolidated balance sheet at 31 December 2024, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and consolidated notes.
In our opinion, the accompanying consolidated annual accounts give a true and fair view, in all material respects, of the consolidated equity and consolidated financial position of the Group at 31 December 2024 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other provisions of the financial reporting framework applicable in Spain.
Basis for Opinion _________________________________________________________
We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Annual Accounts section of our report.
We are independent of the Group in accordance with the ethical requirements, including those regarding independence, that are relevant to our audit of the consolidated annual accounts pursuant to the legislation regulating the audit of accounts in Spain. We have not provided any non-audit services, nor have any situations or circumstances arisen which, under the aforementioned regulations, have affected the required independence such that this has been compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KPMG Auditores S.L., a limited liability Spanish company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Paseo de la Castellana, 259C 28046 Madrid
On the Spanish Official Register of Auditors ("ROAC") with No. S0702, and the Spanish Institute of Registered Auditors' list of companies with No. 10.
Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9 N.I.F. B-78510153
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Key Audit Matters ________________________________________________________
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated annual accounts of the current period. These matters were addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Recognition and recoverability of deferred tax assets
See notes 2.20, 4 and 22.2 to the consolidated annual accounts
Key audit matter
How the matter was addressed in our audit
As indicated in note 22.2 to the accompanying consolidated annual accounts, at 31 December 2024 the Group has recognised deferred tax assets for a total of Euros 36,012 thousand, which primarily correspond to available deductions generated for research and development and unused tax loss carryforwards to be applied to corporate income tax by the Spanish tax group.
The recognition and recoverability of these deferred tax assets is analysed on an annual basis by the Group's management and Directors in line with the best estimate of taxable profits for the next five years, which is deemed to be the reasonably foreseeable horizon. As part of their assessment, the Group's management and Directors analyse whether the deductions could be converted into a receivable from the taxation authorities (monetisation) in the future, for the purposes of considering it in assessing their recoverability.
The analysis of the initial recognition and recoverability of deferred tax assets is considered a key audit matter due to the significance of the amount of deferred tax assets recognised and because estimating future taxable profits requires a significant degree of judgement.
Our audit procedures included the following:
- Assessing the design and implementation of certain key controls linked to the process of recognising and measuring deferred tax assets.
- Assessing the reasonableness of the criteria and the main assumptions considered by the Spanish tax group in estimating the future taxable profits necessary for offset.
- Assessing the reasonableness of the amounts to be offset in the estimated period of time, in accordance with applicable tax legislation.
- Analysing the consistency of forecast results which served as a basis for analysing the recoverability of the deferred tax assets with the business plan approved by the Group's management and Directors.
- We also assessed whether the disclosures in the consolidated annual accounts meet the requirements of the financial reporting framework applicable to the Group.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Recognition of customer contracts revenues
See notes 2.23, 4 and 23 to the consolidated annual accounts
Key audit matter
How the matter was addressed in our audit
The Group's activity, as indicated in note 1 to the accompanying consolidated annual accounts, consists mainly of the research, development, production and marketing of marine-derived bioactive products for use in oncology.
As indicated in note 2.23 to the accompanying consolidated annual accounts, the Group recognises revenue when control of the goods or services is transferred to customers. At that point, revenue is recognised as the amount of the consideration to which the Group expects to be entitled in exchange for the transfer of the goods and services promised under contracts with customers. Specifically:
- Revenue from the sale of products is recognised at the time control of the asset is transferred to the customer, which generally occurs when the goods are delivered to the end customer.
- Revenues from licensing, development and similar agreements are recognised on an accruals basis for the various performance obligations identified, which have been previously priced in the contract analysis process, as well as for the achievement of milestones.
- Royalty revenues are recognised in accordance with the agreed percentage of sales achieved by the counterparty to the arrangement at a given point in time.
Due to the significance of the amount of revenues from customer contracts and the possibility of revenue being recognised in an incorrect period, we have considered this a key audit matter.
Our audit procedures included the following:
- Obtaining an understanding of the revenue recognition process and assessing the design and implementation of key controls related to the process for recognising revenues near the reporting date.
- Testing using computer-assisted audit techniques enabling us to assess the existence and accuracy of a large volume of revenue transactions during the year, individually matching the revenue to the accounts receivable and cash received in the audited period.
- Tests of detail on revenues from licensing, development and other similar transactions, checking, based on the analysis of revenues according to the performance obligations identified and the price associated with each of them, whether the revenues recognised in 2024 correspond to the obligations satisfied in the period and to the achievement of possible milestones included in the licensing contracts.
- Tests of detail on revenues from royalties, checking whether the revenues recognised in 2024 reflect the percentage agreed between the parties of the amount of sales that the counterparty to the agreement has made in the licensed territory.
- External confirmation for a sample of outstanding invoices, performing alternative procedures, where applicable, based on delivery notes, contracts or evidence of subsequent collection.
- Tests of detail on a selection of revenue transactions either shortly before or shortly after the reporting date, reviewing delivery notes or contracts to check whether the transactions were recognised in the appropriate period.
- We also assessed whether the disclosures in the consolidated annual accounts meet the requirements of the financial reporting framework applicable to the Group.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Other Matter _____________________________________________________________
On 28 February 2024 other auditors issued their unqualified auditor's report on the consolidated annual accounts for 2023.
Other Information: Consolidated Directors' Report__________________________
Other information solely comprises the 2024 consolidated directors' report, the preparation of which is the responsibility of the Parent's Directors and which does not form an integral part of the consolidated annual accounts.
Our audit opinion on the consolidated annual accounts does not encompass the consolidated directors' report. Our responsibility regarding the information contained in the consolidated directors' report is defined in the legislation regulating the audit of accounts, as follows:
- Determine, solely, whether the consolidated non-financial information statement and certain information included in the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration, as specified in the Spanish Audit Law, have been provided in the manner stipulated in the applicable legislation, and if not, to report on this matter.
- Assess and report on the consistency of the rest of the information included in the consolidated directors' report with the consolidated annual accounts, based on knowledge of the Group obtained during the audit of the aforementioned consolidated annual accounts. Also, assess and report on whether the content and presentation of this part of the consolidated directors' report are in accordance with applicable legislation. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report them.
Based on the work carried out, as described above, we have observed that the information mentioned in section a) above has been provided in the manner stipulated in the applicable legislation, that the rest of the information contained in the consolidated directors' report is consistent with that disclosed in the consolidated annual accounts for 2024, and that the content and presentation of the report are in accordance with applicable legislation.
Directors' and Audit Committee's Responsibility for the Consolidated Annual Accounts_________________________________________________________________
The Parent's Directors are responsible for the preparation of the accompanying consolidated annual accounts in such a way that they give a true and fair view of the consolidated equity, consolidated financial position and consolidated financial performance of the Group in accordance with IFRS-EU and other provisions of the financial reporting framework applicable to the Group in Spain, and for such internal control as they determine is necessary to enable the preparation of consolidated annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated annual accounts, the Parent's Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Parent's audit committee is responsible for overseeing the preparation and presentation of the consolidated annual accounts.
Auditor's Responsibilities for the Audit of the Consolidated Annual Accounts_
Our objectives are to obtain reasonable assurance about whether the consolidated annual accounts 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 prevailing legislation regulating the audit of accounts in Spain 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 these consolidated annual accounts.
As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated annual accounts, 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 Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent's Directors.
- Conclude on the appropriateness of the Parent's Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group'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 consolidated annual accounts 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 Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated annual accounts, including the disclosures, and whether the consolidated annual accounts represent the underlying transactions and events in a manner that achieves a true and fair view.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
- Plan and execute the audit of the Group to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units of the Group as the basis to form an opinion on the consolidated annual accounts. We are responsible for the direction, supervision and review of the work performed for the Group audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee of the Parent 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.
We also provide the Parent's audit committee with a statement that we have complied with the ethical requirements regarding independence, and to communicate with them all matters that may reasonably be thought to bear on our independence, and where applicable, safeguarding measures adopted to eliminate or reduce the threat.
From the matters communicated to the audit committee of the Parent, we determine those that were of most significance in the audit of the consolidated annual accounts of the current period and which are therefore the key audit matters.
We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
European Single Electronic Format ________________________________________
We have examined the digital files of Pharma Mar, S.A. and its subsidiaries for 2024 in European Single Electronic Format (ESEF), which comprise the XHTML file that includes the consolidated annual accounts for the aforementioned year and the XBRL files tagged by the Company, which will form part of the annual financial report.
The Directors of Pharma Mar, S.A. are responsible for the presentation of the 2024 annual financial report in accordance with the format and mark-up requirements stipulated in Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (hereinafter the "ESEF Regulation"). In this regard, they have incorporated the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration by means of a reference thereto in the consolidated directors' report.
Our responsibility consists of examining the digital files prepared by the Directors of the Parent, in accordance with prevailing legislation regulating the audit of accounts in Spain. This legislation requires that we plan and perform our audit procedures to determine whether the content of the consolidated annual accounts included in the aforementioned digital files fully corresponds to the consolidated annual accounts we have audited, and whether the consolidated annual accounts and the aforementioned files have been formatted and marked up, in all material respects, in accordance with the requirements of the ESEF Regulation.
In our opinion, the digital files examined fully correspond to the audited consolidated annual accounts, and these are presented and marked up, in all material respects, in accordance with the requirements of the ESEF Regulation.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Additional Report to the Audit Committee of the Parent ____________________
The opinion expressed in this report is consistent with our additional report to the Parent's audit committee dated 27 February 2025.
Contract Period __________________________________________________________
We were appointed as auditor of the Group by the shareholders at the ordinary general meeting on 29 May 2024 for a period of three years, from the year ended 31 December 2024. This year, 2024, is the first year audited.
KPMG Auditores, S.L.
On the Spanish Official Register of
Auditors ("ROAC") with No. S0702
(Signed on original in Spanish)
José Ignacio Rodríguez Prado
On the Spanish Official Register of Auditors ("ROAC") with No. 15825
27 February 2025
CONSOLIDATED BALANCE SHEET AS OF 2024 YEAR-END
CONSOLIDATED BALANCE SHEET | Note | 31/12/24 | 31/12/23 | |||||
(thousand euro) | ||||||||
ASSETS | ||||||||
Non-current assets | ||||||||
Property, plant and equipment | 6 | 55,909 | 43,874 | |||||
Investment property | 7 | 845 | 845 | |||||
Intangible assets | 8 | 1,000 | 1,935 | |||||
Right-of-use assets | 9 | 3,171 | 3,733 | |||||
Financial assets | 10 | 2,459 | 6,062 | |||||
Deferred tax assets | 22 | 36,012 | 31,469 | |||||
99,396 | 87,918 |
Current assets | |||
Inventories | 14 | 51,966 | 39,289 |
Trade receivables | 13 | 34,677 | 27,554 |
Financial assets | 10 | 91,288 | 102,538 |
Balances with public authorities | 22 | 7,334 | 20,280 |
Prepaid expenses | 1,744 | 2,917 | |
Cash and cash equivalents | 15 | 63,239 | 60,024 |
250,248 | 252,602 | ||
TOTAL ASSETS | 349,644 | 340,520 |
CONSOLIDATED BALANCE SHEET | Note | 31/12/24 | 31/12/23 | ||||||||
(thousand euro) | |||||||||||
EQUITY | |||||||||||
Share capital | 16 | 10,933 | 11,013 | ||||||||
Share premium account | 16 | 59,858 | 71,278 | ||||||||
Own shares | 16 | (30,827) | (31,091) | ||||||||
Revaluation reserves and other reserves | 16 | 15 | |||||||||
Retained earnings and other reserves | 168,379 | 142,223 | |||||||||
Total capital and reserves attributable to | 208,359 | 193,438 | |||||||||
equity-holders of the controlling company | |||||||||||
TOTAL EQUITY | 208,359 | 193,438 | |||||||||
LIABILITIES | |||||||||||
Non-current liabilities | |||||||||||
Interest-bearing debt | 21 | 39,865 | 27,036 | ||||||||
Lease liabilities | 21 | 1,363 | 1,828 | ||||||||
Contractual liabilities | 19 | 15,893 | 19,866 | ||||||||
Subsidies | 1,276 | 2,271 | |||||||||
Other non-current liabilities | 194 | 193 | |||||||||
58,591 | 51,194 | ||||||||||
Current liabilities | |||||||||||
Supplier and other accounts payable | 18 | 51,578 | 40,297 | ||||||||
Balances with public authorities | 22 | 3,353 | 3,402 | ||||||||
Interest-bearing debt | 21 | 7,966 | 12,825 | ||||||||
Lease liabilities | 21 | 1,881 | 1,980 | ||||||||
Contractual liabilities | 19 | 3,973 | 24,927 | ||||||||
Other current liabilities | 20 | 13,943 | 12,457 | ||||||||
82,694 | 95,888 | ||||||||||
TOTAL LIABILITIES | 141,285 | 147,082 | |||||||||
TOTAL EQUITY AND LIABILITIES | 349,644 | 340,520 |
The accompanying notes are an integral part of these consolidated financial statements
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