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INFORMATION MEMORANDUM
WEIFA ASA
(A public limited liability company organised under the laws of Norway)
No shares or other securities are being offered or sold in any jurisdiction pursuant to the
Information Memorandum
The date of this Information Memorandum is 2 June 2015
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IMPORTANT INFORMATION
For the definition of certain capitalised terms used throughout this Information Memorandum (the
"Information Memorandum"), please see section 10 which also applies to the front page.
This Information Memorandum, dated 2 June 2015 has been prepared by Weifa ASA (the “Company”, and
together with its subsidiaries the “Group”) in connection with the sale of its business-to-business and tablet
production operations to Vistin Pharma AS (the "Sale"). This Information Memorandum has been prepared to
comply with Oslo Børs' Continuing Obligations section 3.5. The Information Memorandum has been submitted
to Oslo Børs for review and approval before publication. This document is not a prospectus and has neither
been reviewed nor approved by Oslo Børs in accordance with applicable rules that apply to prospectuses. This
Information Memorandum has been prepared solely in the English language.
No shares or other securities are being offered or sold in any jurisdiction pursuant to the
Information Memorandum.
The information contained herein is as of the date of this Information Memorandum and subject to change,
completion and amendment without notice. Publication of this Information Memorandum shall not create any
implication that there has been no change in the Company’s affairs or that the information herein is correct as
of any date subsequent to the date of this Information Memorandum.
The contents of this Information Memorandum are not to be construed as legal, financial or tax
advice. Each reader should consult his, her or its own legal adviser, independent financial adviser or
tax adviser for legal, financial or tax advice.
All inquiries relating to this Information Memorandum must be directed to the Company. No other person is
authorised to give information or to make any representation in connection with the Sale.
This Information Memorandum contains factors that can influence the Group's business, financial position,
results, liquidity and future expectations. The reader is advised to read all parts of this Information
Memorandum, and especially the risk factors section.
This Information Memorandum is subject to Norwegian law, unless otherwise indicated herein. Any dispute
arising in respect of this Information Memorandum is subject to the exclusive jurisdiction of the Norwegian
courts with Oslo District Court as legal venue in the first instance.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Information Memorandum includes “forward-looking” statements, including, without limitation, projections
and expectations regarding the Company’s future financial position, business strategy, plans and objectives. All
forward-looking statements included in this document are based on information available to the Company, and
views and assessment of the Company, as of the date of this Information Memorandum. The Company
expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking
statements contained herein to reflect any change in the Company’s expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is based, unless such update or
revision is prescribed by law.
When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “seek to”, “may”, “plan”
and similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to
identify forward-looking statements. The Company can give no assurance as to the correctness of such
forward-looking statements and investors are cautioned that any forward-looking statements are not
guarantees of future performance. Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance or achievements of the
Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results,
performance or achievements expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Company’s present and future business
strategies and the environment in which the Company and its subsidiaries are operating or will operate. Factors
that could cause the Company’s actual results, performance or achievements to materially differ from those in
the forward-looking statements include, but are not limited to, those described in section 1 “Risk Factors” and
elsewhere in this Information Memorandum.
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Given the aforementioned uncertainties, readers are cautioned not to place undue reliance on any of these
forward-looking statements.
INFORMATION SOURCED FROM THIRD PARTIES
The Company confirms that when information in this Information Memorandum has been sourced from a third
party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the
information published by that third party, no facts have been omitted which would render the reproduced
information inaccurate or misleading.
TABLE OF CONTENTS
1 RISK FACTORS ................................................................................................................................ 2 1.1 General .............................................................................................................................. 2 1.2 Risks related to Weifa and Vistin Pharma and the industry in which they operate ......................... 2 1.3 Risks related to the Weifa Shares and the Vistin Pharma Shares ................................................ 8
2 RESPONSIBILITY STATEMENT .......................................................................................................... 10
3 DESCRIPTION OF THE SALE ............................................................................................................ 11 3.1 Overview .......................................................................................................................... 11 3.2 Rationale for the Sale ......................................................................................................... 11 3.3 Transfer of the Acquired Interests to Vistin Pharma AS ........................................................... 12 3.4 The Offering ...................................................................................................................... 13 3.5 Application for admission to trading of the Vistin Pharma Shares ............................................. 13 3.6 Timetable ......................................................................................................................... 14 3.7 Weifa’s relationship with Vistin Pharma following the Sale ....................................................... 14
4 PRESENTATION OF WEIFA ............................................................................................................... 15 4.1 Corporate information ........................................................................................................ 15 4.2 Legal structure .................................................................................................................. 15 4.3 Company history ................................................................................................................ 15 4.4 Business description ........................................................................................................... 16 4.5 Strategy ........................................................................................................................... 20 4.6 Customers ........................................................................................................................ 20 4.7 Suppliers .......................................................................................................................... 20 4.8 Manufacturing ................................................................................................................... 20 4.9 Product development and innovation .................................................................................... 22 4.10 Patents, licenses and other material business agreements ...................................................... 23 4.11 Regulatory approvals .......................................................................................................... 24 4.12 Environmental issues .......................................................................................................... 25 4.13 Regulations and external factors .......................................................................................... 25 4.14 Material contracts outside the ordinary course of business ...................................................... 25 4.15 Significant changes in the financial or trading position of the Group since 31 March 2015 ........... 25 4.16 Trend information .............................................................................................................. 26 4.17 Board of Directors, Executive Management and Corporate Governance ..................................... 26 4.18 Corporate Information and Share Capital .............................................................................. 29
5 PRINCIPLE MARKETS ...................................................................................................................... 31
6 PRESENTATION OF VISTIN PHARMA ................................................................................................. 34 6.1 Business overview .............................................................................................................. 34 6.2 Patents, licenses and material business agreements ............................................................... 36 6.3 Environmental issues .......................................................................................................... 39 6.4 Significant changes in Vistin Pharma’s financial or trading position since 31 March 2015 ............. 39 6.5 Trend information .............................................................................................................. 39 6.6 Board of Directors, Executive Management and Employees ..................................................... 39 6.7 Corporate information and share capital ............................................................................... 41 6.8 Legal and arbitration proceedings ........................................................................................ 42 6.9 Carve-out financial information ............................................................................................ 42 6.10 Segment reporting ............................................................................................................. 47 6.11 Auditor ............................................................................................................................. 47 6.12 Capital resources ............................................................................................................... 47 6.13 Additional information ........................................................................................................ 48
7 SELECTED HISTORICAL FINANCIAL INFORMATION ............................................................................. 49 7.1 Historical financial information ............................................................................................. 49 7.2 Statement of comprehensive income .................................................................................... 50 7.3 Statement of financial position............................................................................................. 51 7.4 Statement of cash flow ....................................................................................................... 51
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7.5 Statement of changes in equity ........................................................................................... 54 7.6 Segment information .......................................................................................................... 55 7.7 Capital resources ............................................................................................................... 56 7.8 Auditor ............................................................................................................................. 57
8 UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION ........................................................ 58 8.1 Introduction ...................................................................................................................... 58 8.2 Basis for preparation .......................................................................................................... 59 8.3 Unaudited pro forma condensed financial information ............................................................. 60
9 ADDITIONAL INFORMATION ............................................................................................................ 65 9.1 Documents on display ........................................................................................................ 65 9.2 Cross-reference list ............................................................................................................ 65
10 DEFINITIONS AND GLOSSARY ......................................................................................................... 66
APPENDICES
APPENDIX A INDEPENDENT ASSURANCE REPORT ON UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2014 .....................................................
APPENDIX B UNAUDITED FINANCIAL STATEMENTS FOR WEIFA AS FOR THE PERIOD FROM 1
JANUARY 2014 TO 14 AUGUST 2014 ....................................................................................................
APPENDIX C AUDITED SPECIAL PURPOSE CARVE-OUT FINANCIAL STATEMENTS FOR THE ACQUIRED
INTERESTS FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 .........................................................
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1 RISK FACTORS
1.1 General
Investing in Weifa ASA involves inherent risk. Prospective investors should carefully consider, among other
things, the risk factors and all information contained in this Information Memorandum, including the financial
statements and related notes. The risks and uncertainties described in this section 1 are the principal known
risks and uncertainties faced by the Group as of the date hereof that the Company believes are the material
risks relevant to an investment in the Company. An investment in the Company is suitable only for investors
who understand the risks associated with this type of investment and who can afford to lose all or part of their
investment. The absence of negative past experience associated with a given risk factor does not mean that the
risks and uncertainties described herein should not be considered prior to making an investment decision in
respect of the Shares of the Company. If any of the following risks were to materialise, individually or together
with other circumstances, they could have a material and adverse effect on the Group and/or its business,
financial condition, results of operations, cash flows and/or prospects.
The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude
of their potential impact on the Group’s business, financial condition, results of operations, cash flows and/or
prospects. The risks mentioned herein could materialise individually or cumulatively. The information is
presented as of the date hereof and is subject to change, completion or amendment without notice.
1.2 Risks related to Weifa and Vistin Pharma and the industry in which they operate
1.2.1 Risk factors relevant for both Weifa and Vistin Pharma and the industry in which they
operate
New findings regarding adverse effects or other side-effects related to Weifa’s and Vistin Pharma’s
products may negatively impact their business, financial condition and results of operation
Potential adverse effects or side-effects of marketed drugs are continuously monitored by every regulatory
authority worldwide. Every pharmaceutical company with a marketing authorisation is required to monitor and
record adverse events throughout the lifetime of the product. As was the case with the anti-inflammatory drug
Vioxx, serious adverse effects were discovered long after the product was first launched. Although Weifa’s and
Vistin Pharma’s products are generally based on well-known active ingredients, new adverse effects may be
discovered in the future. Such adverse effects may temporarily or permanently influence the companies’
business, financial condition and results of operation.
The price and availability of raw materials may fluctuate over time and thus impact the profitability
of each product made from such raw materials
Weifa and Vistin Pharma purchase raw materials for its products from suppliers all around the world. Several of
the Consumer Health products are even purchased as finished products, manufactured and packaged by a
contract manufacturer using Weifa’s specifications and label. Weifa has a strong logistics and supply chain
organisation, which is specialised in optimising supply, reliability, quality and price. However, the price and
availability of raw materials may fluctuate over time, and this may temporarily or permanently influence the
companies’ business, financial condition and results of operation.
This is particularly true for Vistin Pharma in connection with the CMO Agreement, as it has entered into long-
term contract for the supply of certain products where the price in each year is determined at the end of the
prior year based on budgeted production costs and a fixed margin. Thus, Vistin Pharma takes all risk related to
cost overruns, with the exception of cost overruns related to certain predetermined input factors in which the
counterparty takes all risk. Vistin Pharma’s earnings from the CMO Agreement are therefore particularly
sensitive to fluctuations in the price of raw materials.
Regulatory approvals may affect Weifa’s and Vistin Pharma’s authorisation to manufacture, market
and sell APIs, semi-finished and finished products
The companies are dependent upon national and international regulatory approvals in order to manufacture,
market and sell APIs, semi-finished and finished products. Such approvals include amongst others so-called
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good manufacturing practice (GMP) certificates for the manufacturing plants and marketing authorisations for
finished products. The companies are regularly inspected by the relevant authorities to maintain such
approvals, certificates and authorisations. In line with industry standards for the pharmaceutical industry, Weifa
and Vistin Pharma have established a rigid quality system internally to ensure compliance with international
laws and regulations at all times for each product and manufacturing line/unit. Such systems include amongst
others standard operating procedures (SOPs) and batch manufacturing records as well as rigid quality controls
for the intermediates and finished products. If Weifa or Vistin Pharma fails to comply with regulations and fails
an inspection by a regulatory authority, this may temporarily or permanently influence the companies’
business, financial condition and results of operation.
Access to competent key personnel and resources
Weifa and Vistin Pharma are in many of its operations dependent upon competent personnel, and the human
capital is an important part of the companies’ assets. The companies’ access to and ability to attract competent
personnel and consultants may in the short and/or long term influence the companies’ business, financial
condition and results of operation.
Changes in the political environment, laws and regulations may affect the pricing and regulatory
status for the companies’ finished products
Weifa’s and Vistin Pharma’s finished products are subject to approvals and price regulations by the regulatory
authorities. Changes in political regimens may lay the ground for increased regulations or more liberal markets.
New laws and regulations will likely be the tool to implement such changes. In Norway, there has been a liberal
trend the last decade, initiated by the new pharmacy law in 2001 and the new regulations from 2003 allowing
sales of certain drugs outside the pharmacies. It is likely that the trend towards increased liberalisation will
continue, likely resulting in increased competition and price pressure, but this will also represent new
opportunities for Weifa with more products allowed sold OTC. Such changes in political environment, laws and
regulations may affect the companies’ business, financial condition and results of operation.
1.2.2 Risk factors related specifically to Weifa
If product liability lawsuits are brought against the Company, it could incur substantial liabilities
The Company faces an inherent risk of product liability as a result of past clinical testing of its former product
candidates. Any such product liability claims may include allegations of defects in manufacturing, defects in
design, failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of
warranties. If the Company cannot successfully defend itself against product liability claims, the Company may
incur substantial liabilities. Even successful defence would require significant financial and management
resources. Regardless of the merits or eventual outcome, liability claims may result in:
- injury to the Company’s reputation;
- initiation of investigations by regulators;
- costs to defend the related litigation;
- a diversion of management’s time and the Company’s resources;
- substantial monetary awards to trial participants or patients.
To mitigate this risk, the Company carries product liability insurance, which it considers adequate for its past
clinical development activities. Although the Company maintains such insurance, any claim that may be brought
against the Company could result in a court judgment or settlement in an amount that is not covered, in whole
or in part, by the Company’s insurance or that is in excess of the limits of the Company’s insurance coverage.
The Company’s insurance policies also have various exclusions, and the Company may be subject to a product
liability claim for which the Company has no coverage. The Company will have to pay any amounts awarded by
a court or negotiated in a settlement that exceed the Company’s coverage limitations or that are not covered
by the Company’s insurance, and the Company may not have, or be able to obtain, sufficient capital to pay
such amounts.
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Temporary, seasonal or permanent fluctuations in the end users’ habits and needs regarding
Weifa’s products may affect the Company’s business, financial condition and results of operation
Several of Weifa’s products show seasonal fluctuations. This is true e.g. for pain remedies and other cough &
cold products, which typically peak in the flu season and show lower sales in the summer season. There may
also be trend changes in the public opinion regarding consumer health products, whether science-based or not,
and this may lead to preference towards competing products or towards new/other product classes. Such
seasonal or permanent fluctuations may temporarily or permanently influence the Company’s business,
financial condition and results of operation.
If Weifa is not able to defend its strong strategic position in the Norwegian consumer health
market, this may affect the Company’s business, financial condition and results of operation
Weifa’s products currently face competition from a number of similar products within all its four main OTC
categories, including generic substitutes of Weifa’s own products. In the Rx segment, for example Paralgin
Forte currently has no direct generic competition and it is not unlikely that generic competition will come in the
future. Weifa has historically been able to defend its position in the Norwegian consumer health market,
particularly within the pain category, but if it is not able to continue to do so, this could have a material adverse
effect on Weifa’s business, financial condition and results of operations.
Changes in the competitive landscape for Weifa’s main consumer health customers may affect the
Company’s business, financial condition and results of operation
The remaining business of Weifa following the Sale (Consumer Health), has a very concentrated customer base,
with the majority of its sales split between the three largest pharmacy chains and the four largest grocery
retailers. Weifa’s success is to a large extent based on a strong relationship with these customers, and changes
in the competitive landscape for Weifa’s main customers may affect the Company’s business, financial condition
and results of operation.
Weifa is highly dependent on a few individual product families, and a reduction in brand loyalty to
those products may affect Weifa’s business, financial condition and results of operation
In 2014, approximately 85% of Weifa AS’ revenues for the business area Consumer Health derived from the
pain category. Continued success in this product category is to a large extent dependent on the strong brand
loyalty shown by customers towards Weifa’s brands including Paracet/Paracetduo, Ibux and Paralgin Forte (Rx).
If Weifa is not able to maintain this competitive advantage through i.a. communication, product innovations
and targeted positioning, this may affect the Company’s business, financial condition and results of operation.
If Weifa is not able to continue its success with Rx-to-OTC switches, this may affect the Company’s
growth prospects
An important part of Weifa’s growth strategy is to introduce OTC drug products containing APIs that have
previously only been available in drugs that require a prescription (Rx-to-OTC switches). If Weifa is not able to
continue to be successful in this strategy, i.a. due to competition and regulatory issues, this may affect the
Company’s growth prospects.
Weifa is relying on one CMO (Vistin Pharma) for the production of its key pain relief brands, and the
Company will be negatively affected should Vistin Pharma fail to deliver the products as agreed
Weifa has entered into a five-year CMO Agreement with Vistin Pharma for the production and supply of the
Company’s key pain relief brands, cf. section 4.8.1. Under the terms of the CMO Agreement, Vistin Pharma is
the exclusive supplier of these products to Weifa, and the Company will be negatively affected should Vistin
Pharma fail to produce these products in accordance with the CMO Agreement.
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Financial risk
Interest rate risk
The Group’s exposure to the risk of changes to market interest rates relates primarily to the Company’s bond
loan. The bond loan carries a variable annual interest rate of 4% + NIBOR3M. Any annualised
increase/decrease in the NIBOR3M by 10 basis point would increase/decrease the Group's profit before tax by
NOK 0.4 million.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily
trade receivables) and from its financing activities, including deposits with banks and financial institutions.
Customer credit risk is managed by the subsidiary in the Group, subject to established policy, procedures and
control relating to customer credit risk management. Credit quality of a customer is assessed on an individual
basis, and outstanding customer receivables are regularly monitored. The requirement for impairment is
analysed at each reporting date on an individual basis for major customers. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of financial assets. Following the Sale the Group
has seven customers which accounts for the majority of the sale. The counter parties for cash deposits are
Norwegian commercial banks.
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign currency rates. The Group's exposure to the risk of changes in foreign exchange
rates relates primarily the Group's operating activities (when revenue or expense is denominated in a different
currency from the Group's presentation currency), and the Group's foreign currency denominated cash
deposits. Following the Sale, the Group's currency risk mainly relates to the purchase of finished goods from
other companies than Vistin Pharma, which are generally denominated in EUR. The Group uses hedging
instruments to manage the foreign currency risk related to future foreign currency denominated cash flows and
foreign currency denominated trade receivables and trade payables. As of 31 December 2014 the Group had
one hedging contract outstanding for the sale of EUR 200,000 per month for the next 12 months.
Liquidity risk
Liquidity risk is the potential loss arising from the Group's inability to meet its contractual obligations when due.
The Group monitors its risk to a shortage of funds using cash flow forecasts. Following the acquisition of Weifa
AS in August 2014, the Group generates a significant positive operating cash flow. The Group had cash and
cash equivalents of NOK 85.5 million at 31 March 2015. Based on its current cash position, the Company
assesses the liquidity risk to be low.
Risk related to tax issues
As at 31 December 2014, the Company had a total tax loss carry forward of approximately NOK 829 million,
which can be carried forward indefinitely. The Company has historically not recognized a tax asset in the
statement of financial position due to the uncertainty of future taxable profits, however as Weifa AS has a
strong earnings history, the deferred tax asset is recognised at year-end 2014 and amounts to NOK 123.7
million. There will always be some degree of uncertainty relating to the realisation of deferred tax assets,
and/or for the usability of tax loss carried forward not recognised as a tax asset on the balance sheet.
1.2.3 Risk factors related specifically to Vistin Pharma
The Metformin B2B and Opioids B2B business areas have historically shown periods of
underperformance, and any underperformance in the future may affect Vistin Pharma’s business,
financial condition and results of operation
Historically, the Metformin and Opioids businesses have not been profitable. These business areas sell active
ingredients, semi-finished and finished products to other pharmaceutical companies. Their profitability is
amongst other things dependent upon raw material costs, manufacturing costs, labour costs and sales prices.
The profitability of the Metformin and Opioids business areas have over the last years systematically improved
6
through inter alia negotiating lower prices for raw materials, increasing manufacturing volumes and yields (and
thus reduced manufacturing cost), moving up the value-chain by providing semi-finished and finished products,
and moving business to high-value customers willing to pay more for reliable and high-quality products.
Although profitability has increased over the last years, external factors such as demand, competition and raw
materials costs may negatively affect the profitability in the future, and this may temporarily or permanently
influence Vistin Pharma’s business, financial condition and results of operation.
Specific risks related to the Metformin business area
Metformin has been established as the first-line treatment for type 2 diabetes in most countries worldwide.
Although there are no indications that metformin will be replaced by another first-line treatment in diabetes 2,
the future expiration of patents on existing products as well as the introduction of new products may bring
drugs that directly or indirectly competes with metformin from Vistin Pharma. Lifestyle changes in the future
may also lead to fewer people developing type 2 diabetes during their lifetime and thus the market may
decrease in the future. Such decrease in the use of metformin or increased competition in the future may
influence Vistin Pharma’s business, financial condition and results of operation.
Changes in the competitive landscape or market price for the metformin and opioid APIs, semi-
finished and finished products may affect Vistin Pharma’s business, financial condition and results
of operation
While the markets for metformin and opioids have been growing steadily over the last decades and only a few
companies are allowed to manufacture opioids due to strong international control and regulations, both markets
may be characterised as commodity markets. Future changes in the competitive landscape in each market may
therefore affect Vistin Pharma’s business, financial condition and results of operation.
Specific risks related to the Opioid business area
Opioids have been used as strong pain remedies and cough suppressants for decades. Although there are no
indications that opioids will be replaced in the near term, the future may bring new products to market directly
or indirectly competing with opioids from Vistin Pharma. Such decrease in the use of opioids or increased
competition in the future may influence the Company’s business, financial condition and results of operation.
Specific risks related to the CMO tablet manufacturing business area
Weifa AS has produced finished dose tablets for external customers for many years, and has been supplying
products to recognized international pharmaceutical companies. Vistin Pharma is in that respect an experienced
CMO operator. However, the CMO tablet manufacturing business has never existed as a separate business area
and it is therefore difficult to assess how it will perform, as such, going forward.
Vistin Pharma has entered into a long-term CMO agreement with Weifa for the supply of certain products where
the price is determined based on estimated production costs at the time of entering into the contract. In this
contract, Vistin Pharma carries all risk related to cost overruns relative to the estimated production costs, with
the exception of cost overruns above said level that are directly caused by certain predetermined input factors
in which Weifa takes all risk. If Vistin Pharma is unable to meet the budgeted production costs in which the
CMO agreement is based on, it would negatively influence Vistin Pharma’s business, financial condition and
results of operation.
The CMO agreement that Vistin Pharma has entered into with Weifa will constitute a substantial share (~NOK
120 million) of Vistin Pharma’s revenues. The agreement has an initial duration of five years with the option to
extend it for two-year periods at the discretion of Weifa. In the event that Vistin Pharma fail at maintaining a
competitive manufacturing process for the products it supplies to Weifa the contract might not be renewed. If
the contract with Weifa is not extended it could negatively influence Vistin Pharma’s business, financial
condition and results of operation.
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Risk factors related to environmental issues
The two manufacturing plants in Kragerø, Gruveveien and Fikkjebakke, which have been transferred from Weifa
AS to Vistin Pharma AS in connection with the Sale, have faced environmental issues concerning emissions and
emission permits.
In 2013, unauthorized emissions to air were registered at the production site at the Gruveveien plant. The
situation was investigated by the Climate and Pollution Agency, which resulted in further (ongoing as of date)
investigations by the police.
The Climate and Pollution Agency required in 2014 a reduction of emissions from both plants. All emissions to
water from Gruveveien were immediately stopped and collected for disposal. The production has since then
been running uninterrupted at full capacity while meeting the requirements of its permanent emission permit to
both air and water. An application for a new permanent emission permit for Gruveveien will be submitted in
June 2015, and is expected to be approved within 9 months (March 2016).
The Fikkjebakke plant received a temporary emission permit to water in July 2014, which it is currently
operating under. An application for a permanent emission permit was submitted in December 2014 and the
permanent emission permit for Fikkjebakke is expected to be received in October 2015.
Weifa has dedicated considerable resources to identify, analyse, control and reduce the emissions of the two
manufacturing plants. It has engaged external consultants, strengthened its competence within HSE, employed
a new Vice President of Operations and Quality and established a project group that has been responsible for
monitoring the progress towards specified emission goals. The initiatives have resulted in a ~85 percent
reduction in the emission of solvents and pharmaceutical remnants, and the remaining emissions are currently
being combusted. Following Weifa’s initiatives, the risk for unwanted interruption or reduction of activity in the
factories due to emission related issues is considered to be low. However, in the event that the ongoing police
investigations would lead to a charge against Vistin Pharma or that the application for permanent emissions
permits are declined it could negatively impact Vistin Pharma’s business, financial condition and results of
operation. For a further description of the environmental issues see section 4.12 and 6.3.
Vistin Pharma does not have an operating history outside of the Weifa Group and investors may
have difficulty assessing its historical performance and outlook for future revenues and other
operating results
Vistin Pharma was incorporated on 6 March 2015 and, consequently, does not have an operating history as a
separate entity. Financial information upon which prospective investors can evaluate Vistin Pharma’s historical
financial performance is available only from the special purpose carve-out financial information included in
section 6.9 which reflects the activities of the Acquired Interests historically owned by Weifa AS. The financial
information may not necessarily reflect what Vistin Pharma's results of operations, financial condition and cash
flows would have been had Vistin Pharma operated as a separate, stand-alone entity for the periods presented.
Consequently, the financial statements and the other historical financial information included in this Information
Memorandum do not necessarily reflect Vistin Pharma's future results of operations, financial condition, cash
flows or costs and expenses.
Financial risk
Limited access to funds
Vistin Pharma may be dependent on obtaining future financing and/or new equity to enable the contemplated
future growth of the group. No assurance can be given that it will be able to obtain future financing, or that it
will be able to raise new equity capital.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. Vistin Pharma is exposed to credit risk from its operating activities
8
(primarily trade receivables) and from its treasury management, including deposits with banks and financial
institutions.
Foreign exchange risk
Vistin Pharma offers products to the global pharmaceutical market and the company is exposed to currency
exchange fluctuations, as most sales within the metformin and opioid business are in EUR and USD. Some of
these sales are partly covered by a natural hedge, as most of the raw material costs are denominated in USD,
and the company also enters into currency hedging contracts to reduce the foreign exchange risk. Currency
exchange rates are determined by forces of supply and demand on the currency exchange markets, which
again are affected by the international balance of payments, economic and financial conditions and
expectations, government intervention, speculation and other factors. Changes to these foreign exchange rates
in particular may affect Vistin Pharma’s business, financial condition and results of operation.
Liquidity risk
Liquidity risk is the potential loss arising from Vistin Pharma’s inability to meet its contractual obligations when
due. The operation of the company’s business requires significant capital, and there can be no assurance that it
will be able to obtain the necessary liquidity to meet its financial liabilities as they fall due. The company’s
future liquidity needs depend on a number of factors, and is subject to uncertainty with respect to inter alia
future earnings, outcome of legal claims and disputes, etc. A limited liquidity position may have an adverse
effect on Vistin Pharma’s business, financial condition, results of operation and liquidity, and as a worst case,
force the company to cease its operations.
1.3 Risks related to the Weifa Shares and the Vistin Pharma Shares
1.3.1 The price of the Shares may fluctuate significantly
The market price of the Weifa Shares and the Vistin Pharma Shares could fluctuate significantly in response to a
number of factors, including the following:
- actual or anticipated variations in operating results
- changes in financial estimates or recommendations by stock market analysts regarding the companies
- announcements by the companies of significant acquisitions, partnerships, joint ventures or capital
commitments
- sales or purchases of substantial blocks of Shares
- additions or departures of key personnel
- future equity or debt offerings by the companies and its announcements of these offerings
- general market and economic conditions
Moreover, in recent years, the stock market in general has experienced large price and volume fluctuations and
these broad market fluctuations may adversely affect the share price, regardless of its operating results.
1.3.2 There is no existing market for the Vistin Pharma Shares, and an active trading market may
not develop
Given a successful listing of Vistin Pharma, the company’s Shares will subsequent to the Listing be traded on
Oslo Axess. This, however, does not imply that there will be a liquid market for the company’s Shares.
Prior to the Offering, there was no public market for the Shares, and there can be no assurances that an active
trading market will develop, or be sustained or that the Offer Shares will be capable of being resold at or above
the Subscription Price. The market value of the Shares could be substantially affected by the extent to which a
secondary market develops for the Shares following the completion of the Offering. In the case of low liquidity
of the Shares, or limited liquidity among the company’s shareholders, the share price can be negatively affected
and may not reflect the underlying value of the company’s assets.
9
1.3.3 Shareholders not participating in future offerings of Shares may be diluted
Shareholders in Weifa or Vistin Pharma not participating in future offerings of shares may be diluted. Unless
otherwise resolved or authorised by the general meeting of the company, shareholders in Norwegian public
companies have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect
to new shares issued by the company. However, shareholders that choose to not exercise such pre-emptive
right may experience dilution of their shareholding. Furthermore, local selling and transfer restrictions may limit
certain shareholders to exercise their pre-emptive rights.
If Weifa and/or Vistin Pharma, in an equity issue, resolve to deviate from the shareholders' pre-emptive rights,
this may also result in a substantial dilution of the shareholding of shareholders not being invited to participate
in such equity issue.
1.3.4 The issue of additional securities in connection with future acquisitions, any Share
incentive or option plan or otherwise may dilute all other shareholdings
Weifa and/or Vistin Pharma may seek to issue additional equity or convertible equity securities to fund future
acquisitions and other growth opportunities, or in connection with share incentives and option plans. Exercising
options may also cause a dilution of existing shareholders. To the extent that Weifa and/or Vistin Pharma issues
additional securities, the existing shareholders' ownership interest in the company at that time may be diluted.
1.3.5 Future sales, or the possibility for future sales of substantial number of shares could affect
the share price
Weifa and Vistin Pharma cannot predict what effect, if any, future sales of a substantial number of its shares, or
the availability of shares for future sales, will have on the market price of their shares. Sales of substantial
amounts of the shares in the public market, or the perception that such sales could occur, could adversely
affect the market price of the shares, making it more difficult for shareholders to sell their shares and for the
companies to sell equity securities in the future at a time and price that they deem appropriate.
1.3.6 Investors outside of Norway are subject to exchange rate risk
The Weifa Shares are, and the Vistin Pharma Shares will be, priced in NOK, and any investor outside of Norway that wishes to invest in the shares, or to sell shares, will be subject to an exchange rate risk which may cause
additional costs to the investor.
1.3.7 Holders of Shares that are registered in a nominee account may not be able to exercise
voting rights and other shareholder rights as readily as shareholders whose Shares are
registered in their own names with the VPS
Beneficial owners of shares in Weifa and/or Vistin Pharma that are registered in a nominee account (e.g.
through brokers, dealers or other third parties) may not be able to vote for such shares unless their ownership
is re-registered in their names with the VPS prior to the general meetings in these companies. No guarantee
can be made as to whether beneficial owners of the shares will receive the notice for a general meeting in time
to instruct their nominees to either effect a re-registration of their shares or otherwise vote for their shares in
the manner desired by such beneficial owners. Further, beneficial owners of shares that are registered in a
nominee account may not be able to exercise other shareholder rights under the Norwegian Public Limited
Companies Act (such as e.g. the entitlement to participate in a rights offering) as readily as shareholders whose
shares are registered in their own names with the VPS.
1.3.8 The transfer of Shares is subject to transfer restrictions
The transfer of the Weifa Shares and the Vistin Pharma Shares is subject to restrictions under the securities
laws of the United States and other jurisdictions. The companies’ Shares have not been registered under the
U.S. Securities Act of 1933 or any U.S. state securities laws or any other jurisdiction outside Norway and are
not expected to be registered in the future. As such, the companies’ Shares may not be offered or sold in the
United States or to a U.S. person except pursuant to an exemption from the registration requirements of the
US Securities Act and applicable securities laws.
10
2 RESPONSIBILITY STATEMENT
The Board of Directors of Weifa ASA accepts responsibility for the information contained in this Information
Memorandum. The members of the Board of Directors confirm that, having taken all reasonable care to ensure
that such is the case, the information contained in this Information Memorandum is, to the best of their
knowledge, in accordance with the facts and contains no omission likely to affect its import.
Oslo, 2 June 2015
The Board of Directors of Weifa ASA
Glen Ole Rødland
Chairman
Yvonne Litsheim Sandvold
Board member
Øystein Stray Spetalen
Board member
Synne Syrrist
Board member
Ole Enger
Board member
Frank Marius Hansen
Board member
Sigrunn Nilsen
Board member
11
3 DESCRIPTION OF THE SALE
3.1 Overview
On 13 March 2015 the Company announced that the Board of Directors will propose to cause its subsidiary
Weifa AS to sell its business-to-business and tablet production operations (the "Acquired Interests") to Vistin
Pharma AS, a wholly-owned subsidiary of the Company (the "Sale"). The purchase price payable by Vistin
Pharma AS, as consideration for the Acquired Interests, has been determined on arms-length terms, and
amounts to NOK 120 million in cash.
The proposed Sale was approved by the shareholders of Weifa at the extraordinary general meeting held on 16
April 2015 ("EGM"), and on 17 April 2015, the Company's subsidiary Weifa AS entered into a business transfer
agreement with Vistin Pharma AS (the "BTA") regarding the sale of the Acquired Interests. The Acquired
Interests were transferred to Vistin Pharma AS on 1 June 2015.
In connection with the Sale, the Company has established Vistin Pharma ASA ("Vistin Pharma"), a public
limited liability company incorporated under the laws of Norway, for the purpose of being the holding company
for Vistin Pharma AS. Vistin Pharma applied for listing of its shares on Oslo Axess on 23 April (the "Listing"),
and the board of directors of the Oslo Stock Exchange approved the listing application of Vistin Pharma on 26
May 2015, subject to certain conditions being met (cf. section 3.5).
To finance the acquisition of the Acquired Interests and secure working capital and funds for general business
purposes, Vistin Pharma is currently conducting an equity issue of approximately NOK 170 million (the
"Offering").
Vistin Pharma has initially been set up with equity of NOK 1 million, consisting of one (1) million shares with a
par value of NOK 1. Vistin Pharma will prior to the listing reduce the share capital by NOK 1,000,000 to NOK 0
through redemption of the 1,000,000 shares in Vistin Pharma ASA that are owned by Weifa, against distribution
of NOK 1,000,000 to Weifa ASA. The share capital reduction will be conducted simultaneous with the share
capital increase related to the Offering. Following the Offering, Weifa ASA will thus have no ownership in Vistin
Pharma and the investors will have contributed with approximately NOK 170 million of equity to Vistin Pharma.
3.2 Rationale for the Sale
Before the transfer of the Acquired Interests to Vistin Pharma, the Group consisted of two separate business
segments, Consumer Health and B2B. The Consumer Health segment is a pure consumer company selling
branded finished dose products to consumers through pharmacies, grocery stores and other OTC channels. The
B2B segment, on the other hand, manufactures and supplies metformin and opioid products both in active
pharmaceutical ingredient and tablet form to the global pharmaceutical industry. The two business segments
operate independent of each other, although opioids produced by the B2B business are used in some of Weifa’s
consumer health products. As such, the two business segments are exposed to very different market
characteristics and have only limited synergies.
The Sale will allow each business to pursue its own strategic agenda, to create M&A opportunities for both
companies, to increase attention and create more focused business scope for both companies and represents a
logical step in creating two companies with clear independent investment stories;
- Weifa - a pure consumer brand player with leading category positions
- Vistin Pharma - a strong pharmaceutical investment case with key positions and growth potential in
the international metformin and opioids market, and a strong fundament to create a highly efficient
Contract Management Organisation (CMO).
Both companies will have significant freedom, including the potential for pursuing opportunities to form
alliances, unhindered by the burden of an unrelated business’ strategic limitations. Each company can focus on
its core business, with well-defined objectives that are not only clearly understandable to the market, but also
allow these organizations to develop themselves and their strategies in an optimal way.
Vistin Pharma has been established as a debt-free leading producer of active ingredients for diabetes medicine
and opiates for use in pain relief and cough medicine.
12
3.3 Transfer of the Acquired Interests to Vistin Pharma AS
On 17 April 2015 Vistin Pharma AS and Weifa AS entered into the BTA, pursuant to which Vistin Pharma AS
shall acquire the Acquired Interests from Weifa AS. The BTA defines the Acquired Interests, which includes the
following:
i. All properties and buildings owned by Weifa AS, including, but not limited to the properties in
Gruveveien and at Fikkjebakke in Kragerø
ii. the machinery, hardware, office supplies, inventory and other supplies and equipment related to the
properties and the Acquired Interests
iii. all software, including ERP and financial systems, copyrights, domain names, inventions and other
registered or unregistered intellectual property rights related to the Acquired Interests
iv. all products and their complete documentation as well as regulatory permits, including, but not limited to
Drug Master Files and dossiers
v. all site-related documentation and authorisations, manufacturing licences and other regulatory approvals
related to the Acquired Interests
vi. the employer rights related to the employment of the employees
vii. all right, title and interest in the contracts related to the Acquired Interests
viii. books of accounts (copies), personnel records and other files that relate to the ownership or operation of
the Acquired Interests
ix. all accounts receivables, inventory (excluding finished inventory purchased from third party contract
manufacturers) and other current assets pertaining to the Acquired Interests
The purchase price for the Acquired Interests is NOK 120,000,000, payable on completion of the Offering. The
purchase price of the Acquired Interests has been determined by Vistin Pharma, together with the Manager,
based on several valuation techniques, among them a comparison of expected earnings multiples versus similar
companies and a discounted cash flow analysis.
The BTA triggers a change of control clause in certain contracts between the Acquired Interests and its
customers and suppliers giving them the opportunity to terminate their existing contracts. Vistin Pharma has
been in continuous dialogue with both customers and suppliers regarding the transfer of existing contracts from
Weifa AS to Vistin Pharma AS and has, as of 8 May 2015, received consent on eight out of 13 customer
agreements, six out of eight supplier agreements and none out of the three distribution/agent agreements. In
addition, Vistin Pharma has received positive feedback from its dialogue with the remaining customers and
suppliers, and Vistin Pharma expects that all relationships will be maintained. This statement is supported by
the fact that the Acquired Interests will not be subject to any change that will materially impact its customers,
suppliers and/or distribution agreements, and that it will take existing customers 12 - 18 months to establish a
new supply agreement with another pharmaceutical company, which is particularly relevant for the customers
who currently has Weifa AS as their sole supplier. Experience from Aqualis ASA’s acquisition of Weifa AS in
August 2014 offers support to Vistin Pharma’s assessment, as the transaction triggered the change of control
clause in several of Weifa AS’ contracts but all customers remained with Weifa AS following the acquisition. In
addition, the customer contracts relevant to the Acquired Interests do not generally include a guaranteed
minimum volume, which allows its customers and suppliers to continuously evaluate alternative suppliers,
irrespective of any change of control clause. It should also be noted that none of the current contracts, on a
stand-alone basis, are business critical.
In connection with the Sale, Weifa has entered into a consultancy agreement with Gross Management AS
("GM"), pursuant to which GM shall provide services and advice relating to the restructuring of Weifa AS and
execution of the Sale and the Offering. For these services, GM shall be entitled to a fee of NOK 2 million,
provided the Sale is completed. GM is controlled by Mr. Glen Rødland and Mr. Øystein Stray Spetalen, who are
board members of Weifa. The consultancy agreement was approved by the EGM held 16 April 2015.
13
3.4 The Offering
Vistin Pharma is currently conducting a share offering of approximately NOK 170 million, where NOK 120 million
will be used to settle the purchase price for the Acquired Interests, and the balance will be used for working
capital and general business purposes.
The Offering consists of two tranches;
- 15,554,935 new shares at NOK 10 per new share (the “New Shares”) are directed towards the
shareholders of Weifa as of 19 May 2015 (the “Rights Offering”), who are not resident in a
jurisdiction where such offering would be unlawful or would (in jurisdictions other than Norway)
require any prospectus filing, registration or similar action (the "Eligible Shareholders"); and
- 1,500,000 new shares at NOK 10 per new share (the “Employee Offer Shares”) are directed
towards employees, management and Board members of Vistin Pharma (the “Employee Offering”).
The New Shares and Employee Offer Shares are together referred to as the “Offer Shares”. All Weifa
shareholders as of 19 May 2015 have received tradable subscription rights for the Rights Offering. Over-
subscription is allowed.
The subscription period in the Offering commenced on 26 May 2015 and expires on 4 June at 16:30 CET. The
trading period for the subscription rights commenced on 26 May 2015 and expires on 2 June 2015 at 16:30
CET.
The Offering is fully guaranteed by primarily large existing shareholders of Weifa.
Vistin Pharma will bear the fees and expenses related to the Offering and Listing, which are estimated to
amount to approximately NOK 9 million. Thus, net proceeds from the Offering will be approximately NOK 161.5
million. No expenses or taxes will be charged by Vistin Pharma or the Manager to the subscribers in the
Offering.
Please refer to the Prospectus for Vistin Pharma dated 22 May 2015 for further details regarding the Offering.
3.5 Application for admission to trading of the Vistin Pharma Shares
Vistin Pharma applied for admission to trading of its Shares on Oslo Axess on 23 April 2015, and the board of
directors of the Oslo Stock Exchange approved the listing application of Vistin Pharma on 26 May 2015, subject
to the following conditions being met:
- Prior to the first day of listing, the requirement for the number of shareholders as stipulated in Oslo
Axess Listing Rules, section 2.4.2, is fulfilled;
- At least 25% of the shares to be listed are held by the general public as required by the Oslo Axess
Listing Rules, section 2.4.1;
- That Vistin Pharma raises at least NOK 170 million in new equity through the contemplated Offering;
and
- Completes the Sale and Offering as planned
Subject to satisfaction of the abovementioned conditions, Vistin Pharma expects commencement of trading in
the Shares on Oslo Axess on or around 10 June 2015. The Shares will be listed on the Oslo Axess under the
ticker symbol "VISTIN".
14
3.6 Timetable
The timetable set out below provides certain indicative key dates for the Sale and the Offering.
Weifa ASA share trades exclusive the right to receive subscription rights 20 May 2015
Subscription period commences ....................................................... 26 May at 09:00 CET
Subscription period ends ................................................................. 4 June at 16:30 CET
Trading period subscription rights commences ................................... 26 May at 09:00 CET
Trading period subscription rights ends ............................................. 2 June at 16:30 CET
Acquired Interests transferred to Vistin Pharma AS ............................. 1 June 2015
Allocation of Offer Shares ................................................................ 5 June 2015
Delivery of Offer Shares .................................................................. On or about 10 June 2015
Listing and commencement of trading in the Shares ........................... On or about 10 June 2015
3.7 Weifa’s relationship with Vistin Pharma following the Sale
Weifa’s key brands within the consumer health pain segment, i.e. Paracet, Ibux and Paralgin Forte, have
historically been produced at the manufacturing facility at Gruveveien, Kragerø, Norway. The manufacturing
facility at Gruveveien constitutes a part of the Acquired Interests and has thus been transferred to Vistin
Pharma in connection with the Sale. On 17 April 2015 Weifa AS entered into a 5-year contract manufacturing
agreement (the "CMO Agreement") with Vistin Pharma AS for the production of all tablets historically
produced internally by Weifa at Gruveveien. For further information see section 4.8.1.
Effective as of the closing of the Sale, Vistin Pharma AS and Weifa AS have also entered into an agreement
regarding the provision of certain services by Vistin Pharma AS to Weifa AS (the "Transitional Services
Agreement"). Under the agreement Vistin Pharma AS will be responsible for the accounting function for Weifa
AS and Weifa ASA for the remainder of 2015. Vistin Pharma AS will hire two temporary employees that will be
partly responsible for this function, and the costs related to this service will be re-invoiced directly to Weifa, and
appear as a reduction in costs in the accounts of Vistin Pharma. In addition, Vistin Pharma will provide other
minor ad hoc services, such as potential laboratory tests for Weifa AS. Weifa AS will be charged for these
services, but the amount is expected to be limited. The Transitional Services Agreement will cover the period
from the Sale (i.e. 1 June 2015) and until 31 December 2015.
15
4 PRESENTATION OF WEIFA
4.1 Corporate information
Weifa ASA (former Aqualis ASA) is a Norwegian public limited liability company pursuant to the Norwegian
Public Limited Liability Companies Act, incorporated under the laws of Norway and registered in the Norwegian
Register of Business Enterprises (Nw. Foretaksregisteret) with organisation number 983 733 506. The Company
was established on 30 August 2001, and its registered office is Østensjøveien 27, 0661 Oslo, Norway with
telephone number: +47 22 99 86 00.
In August 2014 the Company divested its marine & offshore activities through distribution of the shares in
Aqualis Offshore Holding ASA to its shareholders. Aqualis Offshore Holding ASA was listed on the Oslo Stock
Exchange on 13 August 2014, and changed its name to Aqualis ASA in late August 2014. Simultaneously with
the spin-off the Company acquired Weifa AS, Norway’s leading fully integrated pharmaceutical company, and
the Group again became fully focused on healthcare. The Company changed its name from Aqualis ASA to
Weifa ASA in late August 2014. For a further description of the Group’s history see section 4.3 below.
4.2 Legal structure
As of the date of this Information Memorandum the Group consists of the holding company Weifa ASA and the
wholly-owned subsidiaries Weifa AS and Vistin Pharma ASA. Vistin Pharma ASA is the owner of 100% of the
shares in Vistin Pharma AS. As described in section 3.1, Weifa’s shares in Vistin Pharma ASA will be redeemed
prior to listing of Vistin Pharma on Oslo Axess so that Weifa is left with no ownership in Vistin Pharma ASA (and
Vistin Pharma AS) following the Listing. Thus, following the redemption of Weifa’s shares in Vistin Pharma ASA,
the Group will consist of the holding company Weifa ASA and the wholly-owned subsidiary Weifa AS. Weifa ASA
will have no operations or assets except for 100% of the shares in Weifa AS and the license agreements and
patent portfolio stemming from its former operation under the name of Clavis Pharma. All operational activities
and assets are held by Weifa AS.
4.3 Company history
4.3.1 The history of Clavis Pharma
The history of the Company dates back to the 1990’s when Norsk Hydro developed the Lipid Vector Technology
(“LVT”) by combining its lipid expertise with pharmaceutical know-how, and was able to invent new drug
candidates through chemical synthesis of various lipids with existing drugs. In 2001, Norsk Hydro partnered
with the venture capital firm NeoMed Management to spin-off all LVT-related assets and activities, and the
Company was founded and incorporated as ConPharma AS on 30 August 2001. The Company acquired all
technology rights from Norsk Hydro, with Norsk Hydro retaining residual rights to receive certain payments
from the Company. The Company’s name was changed to Clavis Pharma AS in 2003. In 2006, the Company as
Clavis Pharma ASA (“Clavis Pharma”) completed a private placement and a subsequent initial public offering,
and its shares were listed on Oslo Børs.
By 2009, the Company had developed two late-stage drug candidates, elacytarabine, for the treatment of
patients with relapsed or refractory acute myeloid leukaemia, and CP-4126, for the treatment of patients with
pancreatic cancer. These two drug candidates were ready to start pivotal clinical trials, and in late 2009, the
Company reached a significant milestone when it entered into a global licensing agreement with Clovis
Oncology Inc. (“Clovis Oncology”) for the final development of CP-4126.
Large international pivotal clinical trials for the two drug candidates were started during 2010, and in November
2012 and April 2013 the Company announced the results of these studies for CP-4126 and elacytarabine
respectively. Disappointingly, the results showed that there were no meaningful difference in overall survival
between these drug candidates and the drugs used in the control arms. As a consequence, all further
development of these two drug candidates was stopped. At this stage, the Company no longer had any drug
candidates in clinical development and decided to suspend all further R&D activities related to the LVT-
technology.
16
4.3.2 Entering the Marine & Offshore business – change of name from Clavis Pharma to Aqualis
ASA
Following an evaluation of various strategic options after the negative outcome of the clinical trials described
above, the Company decided to diversify its business activities by creating a new business unit, to cover the
specialist marine & engineering consultancy market. On 4 September 2013, the Company signed a letter of
intent to acquire Aqualis Offshore Ltd ("Aqualis Offshore"). To reflect the new strategy, the Company’s name
was changed from Clavis Pharma ASA to Aqualis ASA in October 2013. The acquisition of Aqualis Offshore was
completed on 8 November 2013 and a NOK 54 million rights issue was carried out in late 2013 in order to
secure growth capital for the new business area. In February/March 2014, the Company further raised NOK 59
million in three subsequent equity issues.
The Marine & Offshore business experienced tremendous growth and opened offices in all the world’s key oil &
gas regions. During 2014, the Group expanded its Marine & Offshore operations further through the acquisition
of Tristein AS – a provider of marine operations for the offshore oil, gas and wind industries, and Offshore Wind
Consultants Ltd – a provider of consultancy services to the offshore wind industry. Both acquisitions were
completed in Q2 2014.
4.3.3 Acquisition of Weifa AS and spin-off of the Marine & Offshore operations – change of
name from Aqualis ASA to Weifa ASA
On 16 June 2014, Aqualis ASA signed a binding share purchase agreement with Weifa Holding AS regarding the
acquisition of 100% of the shares in Weifa AS, a leading Norwegian fully-integrated pharmaceutical company,
for a total cash consideration of NOK 1,127.2 million. In connection with the acquisition of Weifa AS, the
Company decided to spin-off its Marine & Offshore operations into a separate company to be listed on Oslo
Børs.
Aqualis Offshore Holding ASA was incorporated on 2 June 2014 as the holding company for the Marine &
Offshore business area, and on 5 August 2014, the EGM of the Company resolved to distribute the shares in
Aqualis Offshore Holding ASA to its shareholders (as a dividend). On 13 August 2014 the Company completed
the spin-off and separate listing of Aqualis Offshore Holding ASA on Oslo Børs.
The acquisition of Weifa AS was financed through a NOK 800 million equity issue and a NOK 400 million bond
loan. The acquisition was completed on 15 August 2014, and the Company changed its name from Aqualis ASA
to Weifa ASA on 19 August 2014. Aqualis Offshore Holding ASA changed its name to Aqualis ASA on 21 August
2014.
Following the spin-off and acquisition of Weifa AS the Group’s main operations have been related to the
activities of Weifa AS.
4.3.4 Streamlining of its healthcare operations – sale of the Group’s B2B operations
On 13 March 2015 Weifa announced that the Board of Directors will propose to cause its subsidiary Weifa AS to
sell its business-to-business (“B2B”) and tablet production operations to Vistin Pharma AS, a wholly-owned
subsidiary of Weifa. On 17 April 2015, Weifa AS entered into a business transfer agreement with Vistin Pharma
AS regarding the sale, and on 1 June 2015 the Acquired Interest were transferred to Vistin Pharma.
Following the Sale Weifa will become a pure consumer brand player with leading category positions. For further
information regarding the Sale see section 3.
4.4 Business description
Weifa AS was founded in 1940, and has historically been a fully-integrated pharmaceutical company and a
major supplier of active ingredients to the international pharmaceutical industry. Prior to completion of the
Sale, the Group’s operations were organised into three business areas; “Consumer Health”, “Metformin B2B”
and “Opioids B2B”. The business areas were independent of each other, although the opioids were used in the
Group’s own consumer health prescription pain killers and cough suppressants. There is also a common basis in
manufacturing of APIs within the two B2B areas. Management, supply chain, R&D, quality and regulatory were
shared operations.
17
Following the Sale, the Group’s business constitutes the Consumer Health operations and the management of a
portfolio of patents relating to the Group’s LVT-technology, developed under the former Clavis Pharma ASA, as
well as licensing agreements for the potential development of selected drug compounds.
A further description of the Group’s operations following the Sale is given below. A description of the Metformin
and Opioids B2B business areas which have been transferred to Vistin Pharma are given in section 6.
4.4.1 Consumer Health
4.4.1.1 Overview
Consumer Health has historically represented the main business in Weifa AS and includes all of the Group’s
products that are available to consumers in pharmacies, grocery stores, gas stations and kiosks.
Weifa is the market leader for pain relief products in Norway, with well-established brands such as Paracet,
Ibux and Paralgin Forte. Weifa was the number one OTC company in the Norwegian pharmacy channel and the
number two company in the OTC mass market channel in 2014 with market shares of 14.9 percent and 40.2
percent respectively (measured by pharmacy purchasing price (PPP)).
The Group’s portfolio comprises products within the complete range of regulatory status:
Prescription drugs ("Rx")
Over-the-counter ("OTC") or non-prescription drugs
Vitamins, minerals & supplements ("VMS")
The latter category (VMS) is generally exempt from drug regulations and covered by other regulations like EFSA
(European Food Safety Authority) and thus often referred to as OTX products.
Weifa has built some of the strongest OTC brands in Norway, including brands like Paracet, Ibux and Pyrisept.
This has been possible through the Group’s local presence, focus and close collaboration with major chains in
the pharmacy and grocery retail sector. Effective brand-building in the retail sector is about marketing
communications, placing power and distribution. By tapping into professional environments in these areas,
Weifa has built valuable expertise and experience, as well as a powerful network.
The Group’s products can be categorized in the following four categories:
18
The figures given above are based on 2014 full year financial figures for Weifa AS. The percentages in brackets
indicate the categories’ share of total revenues for the Consumer Health business area.
4.4.1.2 Product overview
The figure below sets out an overview of the Group’s products, split by product category and regulatory status.
4.4.1.3 Key products
The Group’s key products are:
- Paracet was launched in 1977. It is Norway's most frequently used pain reliever and has a market
share of over 80%. Paracet is an effective paracetamol product that can be consumed by both adults
and children. Its effects are fast and long-lasting - up to five hours. Paracet is used for most mild to
moderate pain, such as headaches, muscle and joint pains, discomfort related to fever, influenza and
colds, as well as menstruation pains and toothaches. Paracet has very few side effects in normal
usage. In 2013, Weifa introduced Paracetduo, a paracetamol combination product containing caffeine.
The introduction of the product has been successful for Weifa, adding to the Group’s sales in the
paracetamol category.
- Ibux was launched in 1986, and is the dominant brand in the non-steroidal anti-inflammatory drugs
(“NSAIDs”) segment. Ibux gel was launched in year 2000. Ibux is an ibuprofen product, and works
rapidly and effectively on pain and inflammation and is particularly effective for menstrual pain,
headache and pains in muscles and joints.
- Paralgin Forte is a well-known Rx brand that was launched in 1960. Paralgin Forte is a combination
of paracetamol and codeine, and is still market leader in the moderate pain segment.
- Bronkyl was launched in 1989 as an Rx product and was switched to an OTC expectorant for chesty
cough in 2012. Bronkyl is currently the sixth largest OTC product in Norway.
- Pyrisept is one of Weifa’s oldest OTC brands, and was launched in the early 1940’s. Pyrisept is still a
market leader within wound disinfection
19
The pie chart below sets out the above mentioned key products’ revenue contribution in 2014. Note that the
figures below are based on 2014 full year financial figures for Weifa AS. The percentages in brackets indicate
the products’ share of total revenues for the Consumer Health business area.
Figure 4-1: Revenue contribution from key products in 2014
4.4.1.4 Rx-to-OTC switches
Weifa has a strong track record in Rx-to-OTC switches, which means making a previous prescription drug
available to consumers as a non-prescription drug. Rx-to-OTC switch is a data-driven, scientifically rigorous,
and highly regulated process that allows consumers to have OTC access to a growing range of medicines. For a
medicine to be granted OTC status, it must have a wide safety margin and be effective, and must bear
understandable labelling to ensure proper use. Many OTC products are on the market today that was available
only by prescription only decades ago.
Such switches are one of the main growth drivers in today’s consumer health market, and are expected to
provide attractive growth opportunities for Weifa going forward.
The figure below illustrates the Group’s historical Rx-to-OTC switches.
Figure 4-2: The Group’s Rx-to-OTC switches
Paracet; NOK 121m
(38 %)
Ibux;NOK 87m(27 %)
Paralgin Forte; NOK 53m (17 %)
Bronkyl;NOK 12m
(4 %)
Pyrisept; NOK 7m(2 %)
Other;NOK 39m(12 %)
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4.5 Strategy
Weifa continuously develops new products and solutions aimed at addressing the needs of consumers,
customers and professional partners. Weifa has set itself clear goals going forward. Its ambition within
medicines and lifestyle products is to remain the leading Norwegian consumer health company. This includes
strengthening its position as the number one player in the pain market, and becoming the fastest growing
player within the cough and cold category. In addition, Weifa will explore opportunities for expanding into new
consumer health market segments as well as expanding its business to the Nordic-Baltic region. With its strong
position in the Norwegian consumer health market, Weifa is potentially a high-value in-licencing partner for
companies seeking to establish positions in the attractive Norwegian OTC market. Different types of
partnerships will be essential in achieving the goal of becoming a significant pan Nordic consumer health
company, ranging from distributorships, co-selling and co-marketing to strategic cooperation and acquisitions.
4.6 Customers
The Group’s Rx, OTC and OTX products are sold through wholesalers. In Norway there are three wholesalers for
the pharmacy channel and three wholesalers for the mass market (grocery stores, gas stations and kiosks). The
Rx products are only sold through pharmacy wholesalers. Weifa has a strong strategic position in the Norwegian
consumer health market, both in the pharmacy and mass market channels.
The Group’s main customers in the respective channels are listed below.
Pharmacy channel main customers:
- Alliance Healthcare
- Apokjeden Distribusjon
- Norsk Medisinaldepot (NMD) Mass market channel main customers:
- NorgesGruppen
- Rema
- Coop
The customers conduct their business in Norway and the agreements ensure delivery throughout the whole of
Norway. Prices in the agreements are generally a result of annual negotiations between the parties. The right to
price adjustments therefore varies depending upon the terms on which the agreements have been entered into.
Likewise, the right to discounts and bonuses vary between agreements. Weifa is dependent upon these
agreements for the distribution and sales of their products to the end users.
4.7 Suppliers
The raw materials (paracetamol, ibuprophen, etc.) for the Group’s products are purchased from commercial
international suppliers; either directly by Weifa or indirectly by their contract manufacturers and licensors. The
raw material codeine phosphate (used in Paralgin Forte) which previously was produced internally by Weifa, will
be produced by Vistin Pharma following the Sale and hence purchased from Vistin Pharma (see section 4.8.1).
4.8 Manufacturing
Following the Sale, all of the Group’s production will be outsourced. The Group’s products consist of products manufactured by;
- Vistin Pharma through the CMO agreement entered into in connection with the Sale, cf. section 4.8.1;
- Products developed by Weifa, but manufactured by contractors; and
- Products developed (and mostly manufactured) by third parties and in-licensed by Weifa.
The tablet based products (Paracet, Ibux, Paralgin Forte etc.) have historically been produced internally by
Weifa at the production plant in Kragerø (Gruveveien), which has been transferred to Vistin Pharma in
connection with the Sale. The tablet based production will thus be part of the CMO agreement with Vistin
Pharma following the Sale.
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Weifa has outsourced the manufacturing of all other in-house developed products to contract manufacturers in
Europe, and is dependent upon the supplies of these products. The Group cannot easily relocate the outsourced
production from one contract manufacturer to another. It is possible, but the Group would incur some
relocation costs and will also need to carry out a tech transfer in the event that the Group needs to relocate the
production. The Company expects such relocation to take approximately 1-2 years.
The manufacture- and supply agreements are generally entered into on Weifa’s standard template and regulate
the suppliers’ use of Weifa know-how to manufacture products and exclusively supply these products to Weifa.
The finished products are manufactured and returned to Weifa ready for launch in the OTC market. In order to
supply Weifa with the correct volumes, the agreements generally require that Weifa makes short term binding
and long term non-binding forecasts.
4.8.1 CMO agreement with Vistin Pharma AS
On 17 April 2015, Weifa AS entered into a five year exclusive contract manufacturing agreement (the “CMO
Agreement”) with Vistin Pharma AS for the production of all tablets currently produced internally by Weifa for
the sale through its consumer health segment (i.e. Ibux, Paracet, Paralgin Forte) and certain products to third
parties in which Weifa AS has the exclusive right to sell within certain geographical areas (i.e. metformin,
strong pain killers). The CMO Agreement includes an option to extend the agreement for two-year periods.
Neither party can fully or partially terminate the CMO Agreement within the initial five year period, unless the
other party commits a material breach, as defined in the CMO Agreement, or if the other party declares to be
insolvent, or any voluntary or involuntary proceedings by or against such party are opened for the bankruptcy
or liquidation of the party. Weifa AS may terminate the CMO Agreement with immediate effect in the event that
Vistin Pharma undergoes a change of control, which may reasonably be deemed to be a competitor of Weifa.
The CMO Agreement was negotiated between the two parties and an external lawyer and is considered to be on
arms-length terms. It should, however, be noted that the CMO Agreement was based on an “open-book”
principle, as Weifa had insight into the production costs at the time of entering into the CMO Agreement. In
addition, it would have taken Weifa 12 to 18 months to establish a new supplier relationship with an external
party due to strict testing requirements before a new supplier relationship is established and fully functional.
Weifa therefore did not have the option to change to another supplier at the time of entering into the CMO
Agreement. The CMO Agreement is still considered to be on competitive market based terms.
Pursuant to the CMO Agreement, Vistin Pharma AS shall, to the extent it is able to deliver on Weifa AS’ orders,
be the exclusive supplier of said tablets to Weifa AS within the European Economic Area (respectively, the
“Territory”). In return, Weifa AS shall order its entire requirement of said products to be sold within the
Territory from Vistin Pharma AS. Considering that Weifa is a Norwegian brand with sales in Norway and that
sales outside the Territory is highly unlikely, the CMO Agreement is, for all practical purposes, fully and
mutually exclusive.
Further, Vistin Pharma AS shall not produce any products based on the APIs covered by the CMO Agreement to
customers for sale in the Nordic countries, while for the APIs used in Paralgin Forte, this restriction extends to
the Territory. In addition, Vistin Pharma AS shall not use any of Weifa AS’ know-how to supply products to any
third party other than Weifa AS.
The price of the products that will be supplied by Vistin Pharma AS to Weifa AS is based on the estimated fully
loaded production costs (including allocation of Vistin Pharma’s general overhead and administration expenses),
excluding depreciation, at the time of entering into the contract, plus a mark-up of 8%. Under the CMO
Agreement, Vistin Pharma AS carries all risks related to cost overruns, with the exception of cost overruns
directly caused by certain predetermined input factors (e.g. raw materials) in which Weifa AS takes all risk. Any
cost savings relative to the fixed cost level set at the time of entering into the contract shall be equally split
between Vistin Pharma AS and Weifa AS. The price setting methodology used in the CMO Agreement is not
materially different from the other CMO agreements that have been transferred to Vistin Pharma in connection
with the Sale, as the quoted price typically is based on an estimated production cost plus a margin. However,
the agreements typically do not explicitly state the cost base and margin. This was included in the CMO
Agreement because it was entered into on an “open book” basis, as Weifa AS had knowledge of the actual
production costs at the time of entering into the CMO Agreement. Vistin Pharma estimates that the other CMO
agreements that have been transferred to Vistin Pharma as part of the Sale are based on a similar margin level.
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It should, however, be noted that the CMO agreements are not directly comparable, as the CMO Agreement
will be the only agreement where the APIs used in the tablets are sourced from an external party (with the
exception of API for Paralgin Forte).
4.9 Product development and innovation
The Group currently does not conduct laboratory research and development of new chemical entities (NCEs) or
biological products. The development organisation focuses on new products based on known APIs, innovative
formulations and packaging as well as new therapeutic indications meeting consumer needs.
The current 10 employees in the R&D staff, have strong competence in drug formulation and technologies,
medical/clinical development and regulatory.
Despite the fact that the Group does not possess own research laboratories, continuous and targeted product
development is one of the key elements of Weifa’s innovative strategy. The Group extends and expands its
product portfolio through own development, co-development as well as in-licensing.
The Group’s expertise in line extensions (new flavours, forms, colours, added ingredients, packaging size under
an existing brand) and Rx-to-OTC switches has been a key factor to the success of brands like Paracet and
Ibux. Paracetduo, an example of the Group’s ability to introduce innovative line extensions, was the first
paracetamol combination medicine to be launched in Norway. The Group offers both OTC and prescription (Rx)
drug products as well as nutraceuticals and medical devices.
Professional partnerships are central to Weifa’s development strategy. Weifa knows the international
pharmaceutical community and know-how to match its strengths with the right professional partners. An
extensive network of partners contributes to the Group’s development projects, including several contract
research organisations (CROs). The Group’s highly skilled development organisation is geared for partnership
across the different stages of product development – from market research and new product conceptualisation
through product- and process development, manufacturing and control to regulatory strategy.
An important reason for the Group’s profitable growth the last number of years is its clear innovation strategy.
Paracetduo, Bronkyl, Dexyl, Weifa-C, and more recently Proxan, Ibux Gel with menthol and Complete Multi are
all examples of the Group’s strong focus on innovation.
By the end of 2014, the Group had a more exciting product pipeline than ever before in its corporate history,
which bodes well for future growth.
4.9.1 Recent product launches
The Group has launched several new innovations the recent years:
• Trampalgin (Rx) (2014) – a strong painkiller containing tramadol and paracetamol
• Aselli (2014) – re-launch of Weifa’s first approved drug, a wound healing ointment
• Proxan (2014) – a new OTC naproxen containing painkiller for treatment of menstrual pain
• Weifa C concept (2014) – a series of vitamin C products including lozenges, stickpacks and rosehip
extracts. Two of the product innovations, Weifa C granulate and Weifa C lozenges, were new products
to the Norwegian market
• Paracetduo (2013) – the first paracetamol combination product for the OTC market, which in addition
to paracetamol, also contains caffeine for added analgesic effect
• Dexyl (2013) – a novel xylometazoline based nasal de-congestion spray containing dexpantenol for
added soothing effect on irritated and dry membranes. Dexyl represents the first xylometazoline nasal
spray combination product to prevent dryness and irritation
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• Bronkyl (2012) – a new OTC expectorant for chesty cough, an efficient and well documented
expectorant, containing acetylcisteine, against viscous mucus due to chronic bronchitis. The product
was initially an Rx product and was switched to OTC in 2012.
On 1 February 2015, Weifa launched an additional three new products:
(i) Within the pain relief category, Weifa launched Ibux gel with menthol, a significant line extension to
support and strengthen the Ibux brand. It is an anti-inflammatory cooling gel for local pain
treatment, and the only pain relief gel product on the Norwegian market combining ibuprofen and
menthol;
(ii) A completely new nutraceutical concept in the pharmacy channel. Complete Multi is a range of
dietary supplement products in tablet form, ensuring the daily requirement of vitamins and minerals
through four product variations targeting individual consumer groups and needs: “men”, “women”,
“sport” and “50+”;
(iii) Complete cranberry effervescent tablets as an important line extension to the Group’s bestseller
cranberry product in Norway.
4.10 Patents, licenses and other material business agreements
The Group does not hold any patents for its Consumer Health products and the products manufactured and/or
distributed by the Group are generally not subject to patent rights. However, the Group has covered its
branded finished products by trademarks. In addition, the Group and its licensors rely on copyright protection
such as dossiers and on know-how protected as trade secrets. The Group is dependent upon a number of
business agreements regarding supplies of raw materials (cf. section 4.7), products produced by contractors,
in-licensed products as well as for sale of finished products (cf. section 4.8). Through a strong focus on supply
chain and product quality, Weifa has managed to achieve a very high service level to its customers.
The Group is dependent upon regulatory approvals for the manufacturing, distribution, marketing and sales of
its products.
The Group has entered into various licensing agreements related to pharmaceuticals developed or initially
marketed by third parties, and is dependent upon these agreements for these pharmaceutical products. The
license agreements typically entitle the Group to apply for regulatory marketing authorisations based on
dossiers prepared by the third party and to market the pharmaceuticals supplied by such third parties under
Weifa’s brands within a defined territory. A number of the agreements include an obligation of the Group to
exclusively purchase the pharmaceuticals from the licensor for a period of time from the first marketing of the
product. The dossiers are used for marketing authorisation applications and include data proving that the drug
has quality, efficacy and safety properties suitable for the intended use. In addition to the purchase price for
the products supplied, the Group is normally obliged to pay a lump sum license fee upon marketing
authorisations being granted. A revenue based royalty is generally payable if the products are not supplied by
the licensor.
Trademarks
The Group has an active strategy for registering Norwegian trademarks and has lately also registered
trademarks in Sweden. The Group currently has approximately 60 active Norwegian trademark registrations.
The Group also holds domain names for its main OTC products and other relevant domains.
Patent portfolio Weifa has a portfolio of patents relating to the Lipid Vector Technology (LVT) developed by Norsk Hydro and the
former Clavis Pharma, as well as licensing agreements for the potential development of the compounds CP-
4033 and CP-4200. LVT is a proprietary technology that involves chemically linking a specific lipid (vector) to a
selected pharmaceutical agent (parent drug). The new molecule which is created is a New Chemical Entity
(NCE) that may be patented. A large number of the LVT NCEs covering a wide range of therapeutic areas have
in model systems demonstrated enhanced biological performance compared to the parent drug.
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CP-4200 is licensed to Mt. Sinai School of Medicine, New York. CP-4200 is a novel LVT derivative of azacytidine,
which pre-dominantly acts as a modifier of gene expression (epigenetic modulator). Epigenetic modulators are
intended to restore the normal function of genes that control how cells develop and grow in the human body at
doses with low cytotoxic activity. VidazaR (azacitidine) is currently approved in the US for all forms of
myelodysplastic syndromes (MDS), while in the EU it is approved for the more severe forms of MDS as well as
for certain forms of acute myeloid leukaemia (AML).
CP-4033 has been licensed to Translational Therapeutics, Inc. (“TT”), an early-stage private biopharmaceutical
company based in Massachusetts, USA. CP-4033 is a ribavirin elaidate, the LVT derivative of ribavirin, and is
currently in pre-clinical development for aggressive thyroid cancer. 30% of human cancers have abnormally
high levels of elongation factor F4E (elF4E), which stimulates cell growth. In preclinical studies ribavirin has
brought elF4E levels back to normal and thus significantly slowed down cell growth. Aggressive thyroid cancer
is a fast growing cancer known to have abnormal elF4E activity and is an ultra-orphan indication (incidence of
750 cases per year in the US). Aggressive thyroid cancer has no currently approved standard therapy and
patients have a life expectancy of 4-6 months.
The current patent portfolio offers composition of matter protection for a large number of specific LVT
compounds and includes the original LVT technology patent, antiviral derivatives and the gemcitabine
derivatives, as well as two new families filed in 2006 and 2008 covering new anticancer and anti-inflammatory
compounds. In addition, a new patent for the formulation of elacytarabine was approved in the US in 2014
giving patent protection to year 2031.
The Company has been in discussions with potential partners for these assets, and is prepared for a sale, or
further out-licensing, of these assets should the right opportunity arise.
4.11 Regulatory approvals
The import, manufacturing, marketing, sales and export of medicinal products are thoroughly regulated through
laws and regulations. The most important laws, regulations and regulatory approvals concerning the Group are
described below.
In Norway, the main legislation is the Norwegian Act on Medicinal Products of 12 April 1992 no. 132, which is
supplemented by a large number of regulations that apply to specific areas, of which the Regulation on
Manufacturing and Import of Medicinal Products (FOR-2004-11-02-1441) is the most important. The Norwegian
Medicines Agency (NoMA) is the public supervisory authority responsible for ensuring that medicinal products
marketed in Norway are safe and effective in their use. NoMA gives licenses and authorisations, classifies
medicinal products and sets the prices for drugs that require prescription.
A manufacturing license is obtained by filing for such license with NoMa and providing necessary information
with respect to the manufacturing process, what sort of medicinal products will be manufactured and where the
manufacturing will take place. The manufacturer must ensure that the manufacturing is in accordance with
GMP. Likewise, the manufacturer must ensure compliance to GDP (Good Distribution Practice) for warehouse
and distribution activities; a wholesaler licence is obtained by filing with NoMa.
Weifa holds a Manufacturing Authorisation for Medicinal Products for the premises at Østensjøveien 27;
including Manufacturing Operations defined as “Batch certification only”. The licence is valid from 1 June 2015
until 1 June 2020 and states that Weifa operates in accordance with GMP.
In addition, Weifa holds a Wholesale Distribution Authorisation for medicinal products for the warehouse and
distribution operations at the third party warehouse at Vistin Pharma AS in Kragerø. The licence is valid from 1
June 2015 and states that Weifa complies with GDP.
The third party warehouse holds a wholesale licence granted from NoMa valid until 9 September 2019.
All medicinal products must have a valid Marketing Authorisation (MA) in each country in order to be lawfully
marketed. Application for MA must be filed with NoMA and also with authorities in other countries where Weifa
intend to market the product. Weifa holds MAs for all its marketed products in Norway except for Dapson and
Hirudoid.
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4.12 Environmental issues
Weifa has faced environmental issues in connection with its two manufacturing plants in Kragerø; Gruveveien
and Fikkjebakke, concerning emissions and emission permits. Following the Sale, the two manufacturing plants,
are no longer part of the Group.
In 2013, unauthorized emissions to air were registered at the production site at the Gruveveien plant. The
situation was investigated by the Climate and Pollution Agency, which resulted in further (ongoing as of date)
investigations by the police. The BTA for the Acquired Interests specifies that Weifa AS will be liable to pay
damages related to the ongoing investigation if the indemnity claim ranges from NOK 2 million to 10 percent
(NOK 12 million) of the consideration for the Acquired Interests. The range has been determined as a part of
the negotiation of the BTA and is not in any way representative to what the indemnity claim could be in the
event that the investigation leads to a charge against Vistin Pharma. In the event that the claim exceeds NOK
12 million, Vistin Pharma will be liable for the amount in excess of the NOK 12 million. The risk and potential
size of the claim was thoroughly investigated in relation to the acquisition of Weifa AS in August 2014 and
Vistin Pharma assesses that the probability of an indemnity claim exceeding NOK 12 million is low.
Other than the abovementioned, there are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is aware), during a period covering
the previous 12 months which may have, or have had in the recent past significant effects on the Group’s
financial position or profitability.
4.13 Regulations and external factors
The Group’s products are subject to approvals and price regulations by the regulatory authorities. Changes in
political regimens may lay the ground for increased regulations or more liberal markets. New laws and
regulations will likely be the tool to implement such changes. In Norway, there has been a liberal trend the last
decade, initiated by the new pharmacy law in 2001 and the new regulations from 2003 allowing sales of certain
drugs outside the pharmacies. It is likely that the trend towards increased liberalisation will continue, likely
resulting in increased competition and price pressure, but this will also represent new opportunities for Weifa
with more products allowed sold OTC. Such changes in political environment, laws and regulations may affect
the Group’s business, financial condition and results of operation.
There have been no material changes to the competitive landscape or any governmental, economic, fiscal,
monetary or political policies or factors likely to have a material effect on the Group’s prospects for the current
financial year.
4.14 Material contracts outside the ordinary course of business
On 17 April 2015 Weifa AS entered into a business transfer agreement with Vistin Pharma AS, under which
Vistin Pharma AS will acquire the Acquired Interests from Weifa AS for a total cash consideration of NOK 120
million. The Acquired Interests were transferred to Vistin Pharma AS on 1 June 2015. For a further description
see section 3.3.
On 16 June 2014 the Company entered into a share purchase agreement with Weifa Holding AS regarding the
acquisition of 100% of the shares in Weifa AS for a cash consideration of NOK 1,101 million, plus an estimated
interest adjustment of approximately NOK 14.7 million (8% p.a.) from the date of signing the share purchase
agreement and until the expected closing time. The acquisition was completed on 15 August 2014.
For a further description of the Group’s history and recent company acquisitions, see section 4.3.
Except for the abovementioned, the Group has not entered into any contracts of material importance for the
Group’s business, which are not part of the ordinary course of business during the last two years.
4.15 Significant changes in the financial or trading position of the Group since 31 March 2015
There have been no significant changes in the financial or trading position of the Group since 31 March 2015,
except for those related to the Sale, which are described in this Information Memorandum.
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4.16 Trend information
There have been no material changes in production, sales and inventory, and costs and selling prices for the
Group since the end of 2014 and up until the date of this Information Memorandum, except for the impact of
the Sale of the Acquired Interests described in section 3.
The Company is not aware of any trends, uncertainties, demands, commitments or events that could have a
material effect on the Group’s prospects for the current financial year, except for the impact of the Sale of the
Acquired Interests described in section 3.
4.17 Board of Directors, Executive Management and Corporate Governance
4.17.1 Board of Directors
The Company’s Articles of Association provide that the Board of Directors shall consist of a minimum of three
and a maximum of eight Board Members. As of the date of this Information Memorandum, the Board of
Directors consists of seven Board Members, as set out below. The Board of Directors remain the same following
the Sale.
Name Position Current term Shares in Weifa Business address
Glen Rødland ....................................................................... Chairman 2014-2016 242,555,131¹ c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo
Yvonne L. Sandvold .............................................................. Board member 2013-2015 - c/o Frognerbygg AS, Sørkedalsv.7, 0369 Oslo
Øystein Stray Spetalen ......................................................... Board member 2013-2015 242,555,131² c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo
Synne Syrrist ...................................................................... Board member 2013-2015 - Rundhaugveien 5A, 0495 Oslo
Ole Enger ............................................................................ Board member 2014-2016 1,587,302 Riddervoldsgate 3, 0258 Oslo
Sigrunn Nilsen ..................................................................... Board member 2014-2016 - c/o Weifa ASA, Østensjøveien 27, 0661 Oslo
Frank Marius Hansen ............................................................ Board member 2014-2016 7,600 c/o Weifa ASA, Østensjøveien 27, 0661 Oslo
¹ Shares owned by companies associated with Glen Rødland (Strata Marine & Offshore AS, AS Ferncliff, Ferncliff Listed DAI AS, Gross Management
AS and Ricin AS)
² Shares owned by companies controlled by, or associated with, Øystein Stray Spetalen (Strata Marine & Offshore AS, AS Ferncliff, Ferncliff Listed
DAI AS, Gross Management AS and Ricin AS)
None of the Board members hold any share options. There are no family relations between any of the
Company’s Board members or Executive Management.
Brief biographies of the Board members
Glen Rødland, Chairman
Mr. Rødland is a director and co-investor of Direct Active Investments in Ferncliff TIH AS, where he has been a
partner since 2006. Before joining Ferncliff he worked for 15 years with portfolio management and investment
banking for DNB (Vital) and Swedbank First Securities (formerly Elcon Securities). Mr. Rødland has also worked
as a market and investment analyst at JEBSENS, a Norwegian shipping company, as a management consultant
in PWC, and as a research assistant at the Norwegian school of economics and business administration (NHH).
Mr. Rødland is a member of the board of directors of several companies, including Spectrum ASA and Strata
Marine & Offshore AS. Mr. Rødland has PhD studies in Finance from NHH and UCLA. Mr. Rødland is a Norwegian
citizen and resides in Oslo, Norway.
Yvonne Litsheim Sandvold, Board member
Ms. Sandvold is the Chief Operating Officer of Frognerbygg AS, and has extensive experience from the
Norwegian real estate industry. Ms. Sandvold currently serves on the Board of several private companies. Ms.
Sandvold holds a cand. psychol. degree from the University of Oslo. Ms. Sandvold is a Norwegian citizen and
resides in Oslo, Norway.
Øystein Stray Spetalen, Board member
Mr. Spetalen is the chairman and owner of the investment firm Ferncliff TIH AS. Mr. Spetalen is an independent
investor. He has worked in the Kistefos Group as an investment manager, as corporate advisor in different
investment banks and as a portfolio manager in Gjensidige Forsikring. Mr. Spetalen is a chartered petroleum’s
engineer from NTNU. Mr. Spetalen is a Norwegian citizen and resides in Oslo, Norway.
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Synne Syrrist, Board member
Ms. Syrrist is an independent business consultant, and has extensive experience as a non-executive director of
both private and public companies. Ms. Syrrist was previously a partner and financial analyst at First Securities.
She currently serves on the board of several public companies, including Awilco Drilling Plc, Aqualis ASA and
Eidesvik Offshore ASA. She holds an MSc from the Norwegian University of Science and Technology, and
qualified as an authorised financial analyst at the Norwegian School of Economics and Business Administration.
Ms. Syrrist is a Norwegian citizen and resides in Oslo, Norway.
Ole Enger, Board member
Mr. Enger has extensive industrial experience and is currently the Chairman of the Board of REC Solar ASA. Mr.
Enger was previously the CEO of REC ASA, a position held from April 2009. Prior to REC ASA, Mr. Enger was the
president & CEO of SAPA AB, and he has also held the position as president & CEO of Elkem AS and Executive
Vice President of Elkem AS. In addition, he has lead Norsk Hydro’s Bio-division, including the development of
Omega 3 products for both pharmaceutical and food applications, and has been the Chairman of the Board of
Borregaard, a producer of fine chemicals for the global pharmaceutical market. Mr. Enger holds a degree from
the Norwegian University of Life Sciences and a business degree from the Norwegian School of Economics. Mr.
Enger is a Norwegian citizen, and resides in Oslo, Norway.
Sigrunn Nilsen, Employee representative
Ms. Nilsen has been employed at Weifa AS since 1994, and currently holds the position as Operator at the
factory in Kragerø. Ms. Nilsen has been elected to the Board by the employees of Weifa. She is a Norwegian
citizen and resides in Kragerø, Norway
Frank Marius Hansen, Employee representative
Mr. Hansen has been employed at Weifa AS since 1998, and currently holds the position as Purchaser
Consumer Health. Mr. Hansen has been elected to the Board by the employees of Weifa. He is a Norwegian
citizen and resides in Kragerø, Norway
4.17.2 Executive Management
Prior to the transfer of the Acquired Interests to Vistin Pharma AS on 1 June 2015 the Company’s Executive
Management consisted of the following:
Name Position Shares held in Weifa Options held in Weifa
Kjell-Erik Nordby .................................................................. Chief Executive Officer - 10,098,224
Gunnar Manum .................................................................... Chief Financial Officer 470,944 10,338,224
Liesl Hellstrand .................................................................... Vice President HR - 7,213,017
Astrid Bratvedt .................................................................... Vice President R&D - 7,213,017
Valborg Godal Vold ............................................................... Vice President B2B - 7,213,017
Kathrine Gamborg Andreassen ............................................... Vice President Consumer Health - 7,213,017
In connection with the acquisition of Weifa AS in August 2014, the Executive Management was granted share
options to subscribe for shares in the Company. The share options have an exercise price of NOK 0.63 per
share, which is equal to the subscription price in the private placement completed on 24 June 2014 to finance
the acquisition of Weifa AS. The share options have a term of 3 years, where 1/3 are exercisable after 12, 24
and 36 months, respectively. When the options are exercised, a number of shares with a value corresponding
to 25% of the realised gain on the options are subject to a lock-up period of two years.
The Company’s registered business address, Østensjøveien 27, 0661 Oslo, Norway, serves as the c/o address
for the members of the Executive Management.
All but Kathrine Gamborg Andreassen and Astrid Bratvedt were transferred to Vistin Pharma in connection with
the Sale. The former members of the Company’s Executive Management, as set out above, who have been
transferred to Vistin Pharma in connection with the Sale, retain their share options in Weifa.
As of the date of this Information Memorandum, the Executive Management of Weifa consists of the following:
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Name Position Shares held in Weifa Options held in Weifa
Kathrine Gamborg Andreassen ............................................... Chief Executive Officer - 13,213,017
To be employed ................................................................... Chief Financial Officer n.a. n.a.
Ole Henrik Eriksen................................................................ Chief Operating Officer 4 7,213,017
Morten Hovland Sand ........................................................... Vice President Sales 50,484 7,213,017
Astrid Bratvedt .................................................................... Vice President R&D - 7,213,017
The Company has currently an ongoing recruitment process with regards to a Chief Financial Officer.
Brief biographies of the Executive Management members
Kathrine Gamborg Andreassen, Chief Executive Officer
Ms. Andreassen joined Weifa in August 2012 as Vice President of Weifa’s Consumer Health business area. She
is an experienced marketing professional and has held several top management positions within the FMCG, food
and health business (Orkla, Bakers). Ms. Andreassen holds a M.Sc. in Business Strategy & Marketing from the
University of Wisconsin.
Ole Henrik Eriksen, Chief Operating Officer
Ole Henrik Eriksen joined Weifa in 2014 as VP Business Development when Aqualis ASA acquired Weifa AS. He
has spent 30 years in the pharma, biotech and medtech industry and has held various management and
executive positions. He has worked for Nycomed Imaging (now GE Healtcare) developing contrast agents for
the global market, for Medinnova (now Inven2) establishing companies based on inventions from the National
Hospital and was appointed the first CEO of Clavis Pharma ASA, where he worked until the company changed
name to Aqualis ASA in 2013 and acquired Weifa AS in 2014. Mr. Eriksen holds a M.Sc. in Organic Chemistry
from the Norwegian Institute of Technology in Trondheim (1984).
Morten Hovland Sand, Vice President Sales
Mr. Sand joined Weifa in 2007, and has been head of sales since 2008. He is an operational leader with
profound experience from the FMCG and food business (Mills, Coca Cola Company, Esso). Mr. Sand holds a BBA
from BI Norwegian Business School.
Astrid Bratvedt, Vice President R&D
Ms. Bratvedt has been head of R&D since 2009. She previously headed Weifa's Regulatory and Medical
Department. Ms. Bratvedt holds a M. Sc. in Pharmacy and took post graduate studies in management and
project management.
4.17.3 Benefits upon termination of employment
At the date of this Information Memorandum, no member of the administrative, management or supervisory
bodies’ has entered into employment contracts with the Company or any of its subsidiaries which provide for
any special benefits upon termination.
4.17.4 Employees
As of the date of this Information Memorandum (i.e. following the Sale) the Group has 28 employees, as set
out below.
Function # employees
Executive Management ......................................................... 4
Sales .................................................................................. 5
Marketing............................................................................ 4
R&D ................................................................................... 9
Business development & supply chain ..................................... 3
Quality Assurance ................................................................ 3
Total.................................................................................. 28
In addition to the above, the Company has an ongoing recruitment process in relation to a Chief Financial Officer and the Company is expecting to hire 1-2 employees within finance & accounting.
29
4.17.5 Corporate Governance
Audit committee
The function of the audit committee is to prepare matters to be considered by the Board and to support the
Board in the exercise of its management and supervisory responsibilities relating to financial reporting,
statutory audit and internal control. Currently, the Company’s full Board constitutes the audit committee.
Remuneration committee
The remuneration committee, appointed by the Board, makes proposals to the Board on the employment terms
and conditions and total remuneration of the CEO, and other members of the executive management, as well as
the details of the employee share option plan. These proposals are also relevant for other management entitled
to variable salary payments. The Company’s remuneration committee consists of the Board members Glen
Rødland (chairman) and Synne Syrrist.
Corporate governance compliance
The Company complies with the Norwegian Code of Practice for Corporate Governance issued by the Norwegian
Corporate Governance Board, latest edition of 30 October 2014 with the exception of the following:
Chairman of the general meeting
Considering the Company’s organisation and shareholder structure, the Company considers it unnecessary to
appoint an independent chairman for the General Meeting, and this task will for practical purposes normally be
performed by the Chairman of the Board. However, the need for an independent chairman is evaluated in
advance of each meeting based on the items to be considered at the general meeting.
Audit Committee
In accordance with the Company’s Articles of Association the Company has, for practical purposes, elected to
have the full Board constitute the Audit Committee. The duties and responsibilities of the Audit Committee are
governed by the formal instructions approved by the Board, and these matters are thus handled by the full
Board.
4.18 Corporate Information and Share Capital
4.18.1 Share Capital
As of the date of this Information Memorandum, the Company’s share capital is NOK 237,990,516.90 divided
into 1,586,603,446 Shares, each with a nominal value of NOK 0.15. The Company has one class of shares, and
each Share carries one vote. All the Shares are validly issued and fully paid. All of the Company’s shareholders
have equal voting rights.
30
4.18.2 Share Capital History
The following table sets out the development of the Company's share capital since 2011 and until the date of
this Information Memorandum.
Date
Type of change
Change in
share capital
(NOK)
Par value
(NOK)
New number of
Shares
New share
capital (NOK)
19.01.2011 Public offering 600,000 1 30,361,650 30,361,650
05.07.2011 Private placement 174,041 1 30,535,691 30,535,691
02.11.2011 Share option plan 32,400 1 30,568,091 30,568,091
24.01.2012 Private placement 2,862,124 1 33,430,215 33,430,215
14.02.2012 Share option plan 116,600 1 33,546,815 33,546,815
04.05.2012 Share option plan 208,700 1 33,755,515 33,755,515
08.11.2013 Share issue 43,750,000 1 77,505,515 77,505,515
08.11.2013 Share issues 38,755,515 1 116,261,030 116,261,030
23.12.2013 Share issue 326,087 1 116,587,117 116,587,117
11.02.2014 Private placement – tranche I 11,000,000 1 127,587,117 127,587,117
14.03.2014 Private placement – tranche II 11,000,000 1 138,587,117 138,587,117
08.04.2014 Subsequent offering 2,000,000 1 140,587,117 140,587,117
05.05.2014 Share issue 9,500,000 1 150,087,117 150,087,117
25.06.2014 Private Placement 20,000,000 1 170,087,117 170,087,117
30.06.2014 Share issue 2,675,056 1 172,762,173 172,762,173
16.07.2014 Share issue 3 1 172,762,176 172,762,176
12.08.2014 Share capital decrease 146,847,850 0.15 172,762,176 25,914,326
12.08.2014 Share issue 166,666,667 0.15 1,283,873,287 192,580,993
10.09.2014 Share issue 23,809,524 0.15 1,442,603,446 216,390,517
22.09.2014 Private placement 21,600,000 0.15 1,586,603,446 237,990,517
4.18.3 Notifiable Holdings
As of 1 June 2015, which was the latest practicable date prior to the date of this Information Memorandum, and insofar as known to the Company, the following persons holds, directly or indirectly, 5 percent or more of the issued share capital of the Company:
Name Number of shares In percentage
Strata Marine & Offshore AS¹ 211,843,537 13.5
Holta Life Sciences AS 90,000,000 5.67
Famaday Trading Inc 84,930,000 5.35
MP Pensjon PK 84,587,746 5.33
¹Including associated companies
31
5 PRINCIPLE MARKETS
The market statistics in this section has, unless otherwise noted, been obtained from “Tall og Fakta”, an annual
publication published by the Association of the Pharmaceutical Industry in Norway (Nw. Legemiddelindustrien)
and its subsidiary Farmastat (together “LMI/Farmastat”), available free of charge at the following webpage:
http:/ /www.lmi.no/tall-og-fakta.
The Group’s Consumer Health products are present in the OTC (non-prescription) market, the Rx market
(prescription) and the VMS (vitamins, minerals & supplements) market.
5.1.1 The OTC market in Norway
OTC drugs are medicines sold directly to consumers without prescriptions from healthcare professionals, as
compared to prescription drugs, which may be sold only to consumers possessing a valid prescription. OTC
drugs are selected by a regulatory agency (Statens Legemiddelverk in Norway) to ensure that they contain
ingredients that are safe and effective when used without a physician's care. The OTC drug market in Norway
amounted to NOK 1,096 million in 2014 measured in pharmacy purchasing price (“PPP”), and consists of the
following main segments (based on LMI/Farmastat classification):
Revenue 2014, NOK million measured in PPP Growth from 2013
Pain and fever 251.6 1.0%
Stomach / intestinal 142.0 0.2% Stop smoking 181.7 2.5%
Skin 86.6 5.6%
Cough & cold 163.7 0.9% Vitamins & minerals 52.5 (4.1)%
Allergies 19.3 3.5%
Hormonal preparations 14.3 (5.2)%
Sum 911.6 1.2%
Total sale of OTC drugs 1,095.9 2.9%
Source: LMI/Farmastat
Since 2004, it has been allowed to sell some of the OTC products outside pharmacies, and these products are
currently available to the mass market in grocery stores, kiosks and petrol stations. These are mainly mild pain
killers and cough & cold products.
In 2014, the OTC market in the pharmacy channel had a turnover of NOK 836 million (3.4% year-over-year
growth) (based on pharmacy purchase price (PPP)). The mass market channel had a turnover of NOK 474
million (6.8% growth compared to 2013) (based on pharmacy retail price (PRP)). The development in the
turnover of OTC-drugs and its share of the total pharmaceutical market is depicted in the figures below.
Measured by volume, i.e. defined daily doses ("DDD"), OTC-drugs’ share of the total pharmaceutical market has
declined steadily in the period 2004 – 2014. However, measured by pharmacy retail price ("PRP"), the OTC-
drugs’ share of the total pharmaceutical market has been relatively stable the recent years.
The ten largest pharmaceutical companies in Norway within OTC drugs based on 2014 revenue measured in
PPP are depicted in the table below:
985962963
1 200
1 100
1 000
900
800
700
600
500
400
300
200
100
0
MNOK
2014
1 097
2013
1 088
2012
1 053
2011
1 022
2010
1 044
2009
1 102
2008
1 060
2007
1 030
200620052004
11.6%
13.1%13.9%14.0%14.5%
15.5%
16.9%17.1%17.2%18.1%
19.1%19.8%
2014
10.9%
2013
11.5%
2012
11.2%
2011
11.2%
2010
11.5%
2009
11.4%
2008
12.5%
2007
12.0%
2006
11.7%
2005
11.4%
2004
DDDPRP
Turnover - OTC OTC share of total pharmaceutical market
Source: LMI/Farmastat. Numbers in PPP 2014 kroner Source: LMI/Farmastat
32
Position in
2014 (2013)
Company
Revenue 2014,
NOK million measured in PPP
Turnover growth
Share of
total market
1 (1) Novartis Norge AS 243.2 4.5% 22.2%
2 (2) Weifa AS 216.7 1.0% 19.8%
3 (3) McNeill 160.1 0.0% 14.6% 4 (4) Takeda Nycomed AS 83.5 (7.3)% 7.6%
5 (6) Bayer AS 34.7 7.9% 3.2%
6 (7) Meda AS 34.6 8.2% 3.2% 7 (5) Actavis Norway AS 32.9 (3.0)% 3.0%
8 (8) Boehringer Ingelheim 26.3 (1.9)% 2.4%
9 (10) Théa Nordic 19.8 6.3% 1.8% 10 (-) Aco Hud 17.8 10.7% 1.6%
Total revenue all OTC drugs 1,095.8 2.9% 100.0%
Source: LMI/Farmastat
Weifa is present in categories such as pain, cough & cold and nutraceuticals & wound – and is a market leader in several of the categories. In 2014, Weifa had three out of the 20 OTC drugs with the highest revenue measured in PPP, as evidenced by the following table (Weifa products in grey):
Position in
2014 (2013)
Product
Revenue 2014,
NOK million measured in PPP
Change from 2013
Sample application
area
1 (1) Otrivin 108.4 2.6% Stuffy nose
2 (3) Paracet 99.0 4.6% Pain
3 (2) Nicorette 97.6 (0.5)% Anti-smoking 4 (5) Nicotinell 84.1 6.1% Anti-smoking
5 (4) Ibux 83.8 (3.7)% Pain
6 (6) Canesten 23.7 (3.1)% Antifungal 7 (8) Livostin 18.2 10.1% Allergies
8 (20) Voltarol Forte 15.5 87.9% Pain
9 (7) Voltarol 12.9 (26.6)% Pain 10 (9) Bisolvon 12.5 (4.2)% Respiratory disorders
11 (10) Microlax 11.1 2.7% Constipation
12 (12) Klyx 10.6 5.4% Constipation 13 (17) Bronkyl 10.5 11.8% Chronic bronchitis
14 (14) Duphalac 10.1 3.8% Constipation
15 (18) Viscotears 9.8 5.6% Dry eyes 16 (13) Norlevo 9.5 (3.5)% Birth control
17 (15) Noskapin 9.4 (1.9)% Cough
18 (11) Pepcid 9.0 (14.5)% Pyrosis 19 (21) Niferex 9.0 10.2% Iron deficiency
20 (16) Nycoplus C-vitamin 8.7 (8.8)% Nutraceuticals
Source: LMI/Farmastat
Based on LMI/Farmastat figures, Ibux and Paracet are the market leaders in the pain and fever category with a combined market share above 70% in 2014. Based on Farmastat and Nielsen, Paracet (+duo) is market leader in the Paracetamol category with a market share of 87% and Ibux (+Proxan) is the market leader in NSAIDS with 74% in 2014. In the cough & cold category, Weifa has brands like Bronkyl with a market share of approximately 24% in the expectorant drugs category. Pyrisept is the largest wound cleansing brand with market share of approximately 43%. The nasal spray Dexyl was launched in the end of 2013, and reached 4.4% market share at the end of 2014.
The major Weifa products in the mass market channel are Paracet and Ibux, which both have experienced strong growth. Paracet and Ibux have together had a 65% volume growth since 2004. In 2014, the sales split between the pharmacy channel and the mass market channel was approximately 50/50 for these products. The figure below illustrates the development in the Company’s market share in key categories from 2013 to 2014.
33
5.1.2 Competitive overview
Weifa’s main competitors within the OTC market include Novartis, Takeda Nycomed and McNeill (owned by Johnson & Johnson). Novartis’ main products are within the anti-smoking segment, the nasal spray segment (Otrivin) and the pain segment (Voltarol). They dominate the nasal spray segment, and have experienced a strong growth in the pain segment. Novartis is a strong contributor to the growth in the OTC market, with heavy investments in advertising. Takeda Nycomed is a market leader within VMS, and is also present in the pain and cough & cold segment. McNeill has a broad range of products within a range of segments, including anti-smoking (Nicorette), gastro (Microlax, Imodium) and allergy (Livostin).
5.1.3 Rx (prescription) pain market in Norway
The following market information is based on information from LMI/Farmastat. In 2014, the pain Rx category (Rx NSAID, Rx Paracetamol and weak opioids) amounted to NOK 435 million in total. Pain Rx had a positive value growth of 3.7% in 2014 compared to 2013, and a volume growth of 2.1%. Weifa’s Paralgin Forte is the leading paracetamol and codeine combination brand (43% volume market share). Weifa is the second largest player in the opioids end market after Mundipharma (by value). Paralgin Forte and Trampalgin are Weifa’s only brands, while Mundipharma’s portfolio consists of a number of products. The figure below illustrates the Group’s main competitors within the Rx moderate pain market. Figure 5-1: Main competitors within the Rx moderate pain market
*Weifa products Source: Farmastat Units
.
Paralgin
Forte*41 %
Tramadol
32 %
Codaxol
12 %
Norspan
9 %
Pinex Forte
5 %
Trampalgin*
1 %
34
6 PRESENTATION OF VISTIN PHARMA
6.1 Business overview
Vistin Pharma is a producer and supplier of active pharmaceutical ingredients (API) and finished dose
formulation (FDF) tablets used in medications for diabetes, pain relief and cough medicine. Vistin Pharma sells
its products to leading pharmaceutical companies worldwide. The company has one segment with three
business areas; Metformin, Opioids and CMO tablet manufacturing.
Vistin Pharma ASA was incorporated on 6 March 2015 for the purpose of being the holding company for Vistin
Pharma AS, which has acquired the Acquired Interests from Weifa AS. Vistin Pharma is headquartered in Oslo
with two production plants in Kragerø.
6.1.1 Metformin
The Metformin business, which is the largest of the three business areas in terms of revenue, supplies
metformin products in three different forms from its dedicated Fikkjebakke plant in Kragerø, Norway. Metformin
is the first line treatment for type 2 diabetes. Based on customer feedback from the past 10 years, the business
area supplies one of the purest and most free-flowing qualities of metformin available in the market. The
metformin is sold to more than 30 international pharmaceutical companies that use it to make finished
products, primarily in tablet form. According to the company’s executive management estimates, Vistin Pharma
has the fifth largest metformin production capacity in the world, and holds eight percent of the global
manufacturing capacity. The production process is currently certified by all significant international regulatory
bodies and Vistin Pharma is the only European manufacturer to be certified by the US Food and Drug
Administration (FDA).
The Metformin business area supplies three different forms of metformin to meet different customer
requirements:
- Metformin hydrochloride (“Metformin HCl”) - (bulk powder)
- Direct compressible metformin, a granulated pre-tablet form (“Metformin DC”) - (granulated)
- Tablets (250 mg, 500 mg, 850 mg and 1000 mg) – (finished dose tablets)
The different forms are extracted at different steps in the manufacturing process, with Metformin HCl being the
least processed and finished dose tablets being the most (see figure below). The more processed products are
sold at a higher price but are typically associated with a higher production cost, as they are subject to a higher
level of customer customization. The majority of the Acquired Interests’ metformin sale was in the fiscal year
ended December 31, 2014 in the form of Metformin HCl followed by Metformin DC and metformin tablets.
Figure 6-1: Metformin synthesis
(1) Dicyandiamide; (2) Dimetylamin hydrochloride
Note: The synthesis uses mineral oil
The metformin in HCl and DC form is produced at the dedicated Fikkjebakke facility, in Kragerø, Norway. The
purpose-built plant was opened in 2002. The facility offers state-of-the-art technology and a high level of
automation. According to Vistin Pharma, the strictly controlled and modern production process provides among
Input factors Step 1 Step 2 Step 3
DCDA(1)
DMA(2)
Oil, water, etc.
Metformin HCI Metformin DC Metformin tablets
35
the purest and best free-flowing qualities in the market. This has been proven through customer feedback from
more than 10 years. The plant currently has an annual production capacity of 3,100 MT of Metformin HCl and
800 - 1,000 MT of Metformin DC and is at the date of this Information Memorandum run at full capacity. The
metformin HCI capacity can be increased to 3,500 MT through de-bottlenecking and the installation of new
packaging lines. This will only require minor investments and will, according to the company, be sufficient to
meet the expected near-term increase in demand. For the longer term, the production capacity can be
increased by ~3,000 MT by adding another production line within the same production facility. The additional
capacity can be added at an estimated cost of NOK 40-50 million and with a ~18 month lead time. The
production process was re-approved/audited by the FDA in July 2014 and is certified according to Good
Manufacturing Practice (GMP).
Metformin in tablet form is manufactured at the multi-purpose tablet manufacturing facility, Gruveveien, in
Kragerø, Norway
The Metformin business area positions the metformin products and services as “high value” in a competitive
market with many low-cost Asian competitors. The “high value” customers consist of pharmaceutical companies
worldwide that produce patented and branded metformin products. These companies require responsiveness
and consistent quality, and are therefore willing to pay a premium price. The Metformin business area, which
earlier was dependent to a large extent on sales in the lower value spot-market, is now targeting the higher
end market, based on strong relationships with the pharmaceutical companies and long-term product supply
agreements. The main focus is on signing long-term contracts with Western and Japanese customers that
demand reliable supply and consistent high quality APIs. The shift towards the high-end market is expected to
result in a higher average unit price and stronger margins, as well as an increase in sales visibility as revenues
are contracted several months ahead of product delivery. The effect of the strategic shift is already evident, as
contracts for ~95 percent of Vistin Pharma’s metformin production capacity in 2015 was secured by the end of
the first quarter of 2015.
6.1.2 Opioids
The Opioid business area serves more than 40 pharmaceutical companies worldwide with codeine and
pholcodine API produced at the Gruveveien facility in Kragerø, Norway. According to the company, Vistin
Pharma is one of few independent suppliers of opioids with in-house API and tablet production capabilities,
making it an attractive collaboration partner for companies that are vertically integrated further back in the
opioid supply chain. The APIs are used as ingredients in strong painkillers and cough syrup. In addition, the
business area supplies finished dose formulation (FDF) codeine tablets. Vistin Pharma holds a strong position in
the opioids industry, built on proven high-quality products, reliable supply and the ability to handle controlled
drugs safely and efficiently. Weifa AS has operated within the industry since 1950, and has developed a
relationship of trust with both regulators and the police, enabling rapid execution of new orders.
The Opioids business area supplies the following three products;
- Codeine API
- Pholcodine API
- Codeine tablets (“FDF”)
For the fiscal year ended December 31, 2014 codeine API generated the most revenue, followed by pholcodine
API and codeine tablets.
According to Vistin Pharma, and based on volume data provided by the INCB, the Opioid business area holds a
global market share of 6-7% and 15-20% for codeine API and pholcodine API, respectively. In 2014, the Opioid
business area signed a five-year supply contract for FDF tablets with a major supplier of strong pain killers for
the UK market. This demonstrates the company’s ability to move up the value chain and strengthen its position
as a major opioids supplier offering products ranging from APIs to finished dose tablets.
The codeine and pholcodine APIs are extracted and synthesized from morphine rich concentrate of poppy straw
(M-CPS), while codeine also can be extracted and synthesized from codeine rich concentrate of poppy straw (C-
36
CPS). M-CPS is currently the main raw material obtained from the opium plant for codeine production, while C-
CPS is a relatively new concentrate from genetically modified opium plants. Using C-CPS eliminates several
steps in the extraction and synthesis of codeine and Vistin Pharma is considering increasing the use of C-CPS
when synthesizing codeine. This could positively impact the company’s production process.
Figure 6-2: Opioid value chain
The Opioid products are produced at the Gruveveien manufacturing facility in Kragerø, Norway. The production
facility consists of a chemical production line that manufactures codeine and pholcodine APIs for the Opioids
business area, and a multi-purpose tablet facility that produces FDF tablets and high volume tablets for all of
Vistin Pharma’s business areas. The initial facility was completed in 1950. Since then a second building has
been added and the facilities have been upgraded several times. The chemical API unit has a total annual
production capacity of 30 MT, divided between ~27 MT of codeine and ~3 MT of pholcodine. According to Vistin
Pharma’s executive management this represents ~7% and ~16% of global manufacturing capacity of codeine
and pholcodine, respectively. The total production capacity of the chemical unit can be increased by 5 MT
through fine tuning of the existing production process and de-bottlenecking. According to company estimates
the additional capacity will require an investment of NOK 6-8 million.
The multi-purpose tablet manufacturing facility has a total capacity of ~650 million tablets a year. The facility is
GMP and GDP certified, and the production level can be increased to 950 million tablets with limited
investments in the production facilities.
6.1.3 CMO tablet manufacturing
Tablet manufacturing, formerly an integrated part of the Consumer Health segment of Weifa AS, has been
established as a separate business area in connection with the Sale and produces finished products through
CMO agreements with external parties. Vistin Pharma has entered into a five year agreement with Weifa for the
production of Weifa’s key pain relief brands, i.e. Paracet, Ibux and Paralgin Forte (the “CMO Agreement”). The
CMO Agreement with Weifa is further described in section 4.8.1. As of the date of this Information
Memorandum, this is the only CMO agreement allocated to the business area. While Vistin Pharma will establish
a defined strategy for its CMO division in the months following its listing on Oslo Axess, the company generally
expects to target the markets in which Vistin Pharma already has a presence.
The tablets supplied by the CMO tablet manufacturing business area are produced at the Gruveveien multi-
purpose tablet facility, which is further described in 6.1.2.
6.2 Patents, licenses and material business agreements
Vistin Pharma does not hold any patents and the products manufactured and/or distributed by the company are
generally not subject to patent rights.
Vistin Pharma has a dossier for the production of metformin tablets of various concentrations and strengths.
The dossier has to be continuously updated to satisfy regulatory requirements and guidelines but it does not
have a defined duration. The company’s dependency upon the dossier will be limited, as the manufacturing of
M-CPS Morphine
Codeine
Pholcodine
C-CPS Codeine
Synthesis
Synthesis
Synthesis
Synthesis
37
metformin tablets will constitute a small share of the company’s sales. Since the dossier is related to the
production of metformin tablets, which is a generic product with a number of suppliers and accompanying
dossiers, the value of the dossier in itself is limited. The company’s assessment is that it would be very difficult
to sell the dossier and it has therefore not been allocated any value in the Sale.
Vistin Pharma is dependent upon a number of business agreements regarding supplies of raw materials as well
as for sales of APIs and finished products. In addition, the company is dependent upon regulatory approvals for
the manufacturing and sales of its products. For a further discussion of these, see section 6.2.1 to 6.2.4 below.
6.2.1 Metformin
The material business agreements regarding the Metformin business area relates to raw materials suppliers and
customers. The company is dependent upon these agreements for the sourcing of raw materials and sales of
products to customers.
There are two main raw materials for the metformin synthesis carried out at Fikkjebakke. These raw materials
are sourced from several international suppliers in order to secure sufficient supplies of the right quality. The
supply contracts have been based on Weifa AS’ templates with small variations in the contents. The agreements
do not create any purchase or sales exclusivity, are based on non-binding forecasts and nothing in the
agreements obliges Vistin Pharma to purchase a particular quantity, volume or value of goods. The supply
agreements are supplemented by quality agreements in which general product requirements are set out.
The main metformin customers are large international pharmaceutical companies. The contracts have been
entered into on the customer’s contractual terms and therefore vary in terms and wording. However, in general
the contracts contain detailed quality requirements for the products that the company has to comply with.
These requirements include manufacturing according to GMP, retaining an effective change control system,
issuing a Certificate of Analysis and a Certificate of Conformance for each batch manufactured, etc. The
agreements do in general not contain any purchasing obligations and delivery conditions are Delivery at Place.
The contracts are also supplemented with non-disclosure agreements to protect the parties’ scientific, technical
and business information.
6.2.2 Opioids
The material agreements regarding the Opioids business area relates to raw materials suppliers and customers.
The company is dependent upon these agreements for the raw material supplies and sales of products to
customers.
The raw material for opioids is raw opium. The market is constrained due to the type of product and the
according regulatory requirements. There are a limited number of suppliers and Weifa has worked to establish
long term supply agreements with sustainable volumes.
The main opioids customers are international pharmaceutical companies. Similar to the Metformin business, the
agreements regulate supplies, quality assurance and confidentiality.
In 2014, the Acquired Interests signed a five-year supply contract for FDF tablets with a major supplier of
strong pain killers for the UK market. This demonstrates Vistin Pharma’s ability to move up the value chain and
strengthen its position as a major opioids supplier.
6.2.3 CMO
In connection with the Sale, Vistin Pharma has entered into a five year contract manufacturing agreement with
Weifa AS for the production of all tablets currently produced internally by Weifa, cf. section 4.8.1. The
agreement covers the manufacturing of Paracet, Ibux and Paralgin Forte, as well as certain other products that
Weifa AS has the exclusive right to sell in certain geographic areas.
38
6.2.4 Regulatory approvals
The import, manufacturing, marketing, sales and export of medicinal products are thoroughly regulated through
laws and regulations. The most important laws, regulations and regulatory approvals concerning Vistin Pharma
are described below.
In Norway, the main legislation is the Norwegian Act on Medicinal Products of 12 April 1992 no. 132, which is
supplemented by a large number of regulations that apply to specific areas, of which the Regulation on
Manufacturing and Import of Medicinal Products (FOR-2004-11-02-1441) is the most important. The Norwegian
Medicines Agency (NoMA) is the public supervisory authority responsible for ensuring that medicinal products
marketed in Norway are safe and effective in their use. NoMA gives licenses and authorisations, classifies
medicinal products and sets the prices for drugs that require prescription. The relevant certificates to the
Acquired Interests that are managed by NoMA are valid in all countries in Europe as well as a number of other
countries outside the EU.
Manufacturing license
A manufacturing license is obtained by filing for such license with NoMa and providing necessary information
with respect to the manufacturing process, what sort of medicinal products will be manufactured and where the
manufacturing will take place. The manufacturer must ensure that the manufacturing is in accordance with
GMP. Vistin Pharma will hold manufacturing licenses, which include sale and import of any raw material
necessary for producing medicinal products at the premises located at Fikkjebakke and Gruveveien. All licenses
are valid from 1 June 2015 until 1 June 2020.
GMP certificate
Both Fikkjebakke and Gruveveien hold written confirmation from NoMA, which state that they comply with the
principles and guidelines of GMP (GMP certificates). The GMP certificates are set to expire in June 2015 and
April 2016 for the Gruveveien and Fikkjebakke facilities, respectively. The Gruveveien facility was re-inspected
by NoMA in May 2015 and the company expects to receive a new GMP certificate shortly after the current one is
expiring. Vistin Pharma will be able to operate under the expired certificate until the evaluation of a new
certificate is completed. The company expects that the Fikkjebakke facility will be re-inspected for a renewal of
its GMP certificate in late 2015 or early 2016. There are no costs associated with the renewal of the GMP
certificate.
GDP certificate
The Gruveveien facility also holds a certificate of good distribution practice (GDP). This certificate is not
necessary for the Fikkjebakke plant, as it is only required for plants that will engage in the storage and
distribution of medicinal products for third parties, which Gruveveien will engage in through the CMO
Agreement with Weifa AS. The Gruveveien facility was last inspected in August 2012 and the certificate is set to
expire in August 2017. The current GDP certificate is issued to Weifa AS, and Vistin Pharma does not expect
that a GDP certificate will be issued to Vistin Pharma until the existing one expires. Instead, it is expected that
NoMA will declare that the validity of the current certificate in Weifa AS’ name will be valid for Vistin Pharma
from the completion of the Sale until it expires. There are no costs associated with the renewal of the GDP
certificate.
FDA approval
Foreign regulatory authorities, e.g. US Food and Drug Administration (“FDA”), may also demand approval of
manufacturing plants before export of APIs or finished products to their country. The Fikkjebakke facility was
re-approved by the FDA as late as in July 2014. The expiry of the FDA approval is not defined, as inspections
are risk based and, as such, dependent upon a continuous evaluation by the FDA. The Fikkjebakke facility was
inspected and approved by the FDA in 2011 and re-inspected and re-approved in July 2014 (~3 years).
However, this is not necessarily indicative of the duration until the next inspection.
There is an inherent risk that the company could lose one or many of the certificates which are required for it to
operate. The company could lose one or many of its licenses due to such things as missing documentation and
new knowledge regarding safety. However, it is the company’s assessment that the risk of losing one or many
of the certificates is limited as it would require that the company repeatedly breaches the regulations without
making the necessary modifications or corrections to its production process and/or production facilities.
39
6.3 Environmental issues As described in section 4.12 Weifa has faced environmental issues in connection with the two manufacturing
plants, Gruveveien and Fikkjebakke, concerning emissions and emission permits. The manufacturing plants are
part of the Acquired Interests and have thus been transferred to Vistin Pharma in connection with the Sale.
The Climate and Pollution Agency required in 2014 a reduction of emissions from both plants. All emissions to
water from Gruveveien were immediately stopped and collected for disposal. The production has since then
been running uninterrupted at full capacity while meeting the requirements of its permanent emission permit to
both air and water. To meet the requirements of the permanent emission permit the company is required to
collect and destruct water used in the production process. This has an estimated monthly cost of NOK 170,000.
The current emission permit requires renewal and an application for a new permanent emission permit for
Gruveveien will be submitted in June 2015. If the new permit is approved, Vistin Pharma will be allowed to
discharge the water directly into the public outlet, which will eliminate the costs mentioned above. Vistin
Pharma expects that the application process will be completed within 9 months (March 2016).
The Fikkjebakke plant received a temporary emission permit to water in July 2014, which it is currently
operating under. An application for a permanent emission permit was submitted in December 2014 and Vistin
Pharma expects to receive a permanent emission permit in October 2015. Should Vistin Pharma not receive a
permanent emission permit for the Fikkjebakke plant, the company expects that it will have to comply with its
previous permanent emission permit. The previous permanent permit allows no emissions. To operate in line
with this permit, the company expects that it will be required to install a new purification system in connection
with the manufacturing plant. Due to the low probability of this occurring, the company has not estimated the
cost of installing a new purification system.
Weifa has dedicated considerable resources to identify, analyse, control and reduce the emissions of the two
manufacturing plants. It has engaged external consultants, strengthened its competence within HSE, employed
a new Vice President of Operations and Quality and established a project group that has been responsible for
monitoring the progress towards specified emission goals. The initiatives have resulted in a ~85 percent
reduction in the emission of solvents and pharmaceutical remnants and the remaining emissions are currently
being combusted. Following Weifa’s initiatives, the risk for unwanted interruption or reduction of activity in the
factories due to emission related issues is considered to be low.
6.4 Significant changes in Vistin Pharma’s financial or trading position since 31 March 2015
Except for the acquisition of the Acquired Interests from Weifa AS, the ongoing Offering and the contemplated
Listing (cf. section 3.3-3.5), there has been no significant change in the financial or trading position of the
company since 31 March 2015.
6.5 Trend information
There have been no material changes in production, sales and inventory, and costs and selling prices for the
Acquired Interests since the end of 2014 and up until the date of this Information Memorandum.
The company is not aware of any trends, uncertainties, demands, commitments or events that could have a
material effect on the company’s prospects for the current financial year.
6.6 Board of Directors, Executive Management and Employees
6.6.1 Board of Directors
Vistin Pharma’s Articles of Association provide that the Board of Directors shall consist of a minimum of three
and a maximum of eight Board members. As of the date of this Information Memorandum, Vistin Pharma’s
Board of Directors consists of the following:
Name Position Served since Term expires Business address
Ole Enger ............................................................................ Chairman 2015 2017 Riddervoldsgate 3, 0258 Oslo
Øystein Stray Spetalen ......................................................... Board member 2015 2017 c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo
Kathrine Gamborg Andreassen ............................................... Board member 2015 2017 Østensjøveien 27, 0661 Oslo
40
In addition, the following two individuals will be appointed to the Board of Directors following the listing of
Vistin Pharma on Oslo Axess:
Name Position Served since Term expires Business address
Einar J. Greve ...................................................................... Board member On or about 10
June 2015
2017 Munkedamsveien 45F, 8. etasje,
PO Box 1566 Vika, 0188 Oslo
Ingrid Leisner ...................................................................... Board member On or about 10
June 2015
2017 Vettaliveien 8, 0781, Oslo
6.6.2 Executive Management
As of the date of this Information Memorandum Vistin Pharma’s Executive Management consists of the
following:
Name Position
Kjell-Erik Nordby ............................................................ Chief Executive Officer
Gunnar Manum .............................................................. Chief Financial Officer
Valborg Godal Vold ......................................................... Vice President – Sales and Marketing
Liesl Hellstrand .............................................................. Vice President – HR
Gitte Jensen Wegge ........................................................ Vice President – Operations
Hilde Merete Næss ......................................................... Vice President – Quality Assurance
No employee, including any member of the Executive Management, has entered into employment agreements
which provide for any special benefits upon termination, except for Kjell-Erik Nordby who is, under certain
circumstances, entitled to 18 months’ severance pay.
In connection with the Sale, Weifa has entered into an agreement with Kjell-Erik Nordby and Gunnar Manum,
which entitle them to a bonus payment of NOK 750,000 and NOK 300,000 respectively, following completion of
the Sale and the Offering.
6.6.3 Employees
The following table sets out the number of employees in Vistin Pharma, split by the various business areas.
Contractors and freelancers have been accounted for on a 100% utilization basis.
Division
Total
Executive Management 6
Administration 13
Metformin 52(1)
Opioids 9
CMO tablet manufacturing 71
Sales and marketing 4
Total 155
(1) Includes four temporary employees
6.6.4 Shareholdings
Board of Directors
As at the date of this Information Memorandum, none of the Board Members holds any Shares or share options
in the company However, the Board members Ole Enger, Øystein Stray Spetalen and Einar J. Greve have
underwritten parts of the Offering. In addition, based on the Board members shareholdings in Weifa the
following members of the Board have received subscription rights in the Offering:
Board member Number of subscription rights
Ole Enger ......................................................................................................................................................... 15 561
Øystein Stray Spetalen¹ .................................................................................................................................... 2 076 897
Einar J. Greve .................................................................................................................................................. 49 019
¹Including associated companies
41
Executive Management
As at the date of this Information Memorandum, none of the members of the Executive Management hold any
Shares or share options in the company. However, based on the Executive Managements shareholdings in
Weifa, the following members of the Executive Management have received subscription rights in the Offering:
Number of subscription rights
Gunnar Manum ................................................................................................................................................ 4 617
6.7 Corporate information and share capital
6.7.1 General corporate information
The company’s registered and commercial name is Vistin Pharma ASA. The company is a public limited liability
company pursuant to the Norwegian Public Limited Liability Companies Act (Nw: Allmennaksjeloven),
incorporated under the laws of Norway. The company was incorporated on 6 March 2015 by Weifa ASA for the
purpose of the Sale and the Listing and to be the parent company of Vistin Pharma AS going forward. The
company’s organisation number is 915157882, and its registered office is Østensjøveien 27, 0661 Oslo, Norway
with telephone number: +47 35 98 42 00. The company’s webpage is www.vistin.com.
6.7.2 Legal structure
Vistin Pharma ASA and Vistin Pharma AS are currently wholly owned subsidiaries of Weifa ASA. Following the
Sale and the Offering, the group will consist of the holding company, Vistin Pharma ASA, and its wholly owned
subsidiary, Vistin Pharma AS.
The holding company, Vistin Pharma ASA, does not conduct any operational activities. All operational activities
are conducted by Vistin Pharma AS.
6.7.3 Corporate governance
Vistin Pharma has adopted and implemented a corporate governance regime which complies with the
Norwegian Code of Practice for Corporate Governance. The company will follow all recommendations of the
code, with the following exemptions:
Item 6: The company may from time to time recommend that the Chairman of the Board chairs the General
Meeting.
Item 11: The Board intends to solicit consultancy services from a company held by the Chairman Ole Enger.
These services will be in addition to the services Mr. Enger shall provide as Chairman of the board. The
rationale for the arrangement is that the company will be a newly formed stand-alone entity, and at least for a
period, it is deemed in the interest of the company that the Executive Management has extra support i.a. in the
business development and communication areas.
6.7.4 Application for admission to trading of the Vistin Pharma Shares
Vistin Pharma applied for admission to trading of its Shares on Oslo Axess on 23 April 2015, and the board of
directors of the Oslo Stock Exchange approved the listing application of Vistin Pharma on 26 May 2015, subject
to the following conditions:
- Prior to the first day of listing, the requirement for the number of shareholders as stipulated in Oslo
Axess Listing Rules, section 2.4.2, is fulfilled;
- At least 25% of the shares to be listed are held by the general public as required by the Oslo Axess
Listing Rules, section 2.4.1;
- That Vistin Pharma raises at least NOK 170 million in new equity through the ongoing Offering; and
- Completes the Sale and Offering as planned
Subject to satisfaction of the abovementioned conditions, Vistin Pharma expects commencement of trading in
the Shares on Oslo Axess on or around 10 June 2015. The Shares will be listed on Oslo Axess under the ticker
symbol "VISTIN".
42
6.7.5 Share Capital
Vistin Pharma’s current share capital is NOK 1 000 000 divided into 1 000 000 ordinary shares, each with a
nominal value of NOK 1.00. The company has one class of shares, and each share carries one vote and has
equal rights to dividend. All the shares are validly issued and fully paid. As of the date of this Information
Memorandum, Vistin Pharma has one (1) shareholder, Weifa ASA, owning 100% of the outstanding shares. The
company's share capital will be reduced by NOK 1,000,000 from NOK 1,000,000 to NOK 0 through redemption
of the 1,000,000 shares in Vistin Pharma ASA that are currently owned by Weifa, against distribution of NOK
1,000,000 to Weifa. The share capital reduction will be conducted simultaneous with the share capital increase
related to the Offering. Following the Offering, Weifa will thus have no ownership in Vistin Pharma and the
investors will have contributed with approximately NOK 170 million of equity to the company.
The following changes in the share capital have taken place since incorporation in March 2015:
Date Type of change
Share
capital
increase (NOK)
Share
capital
(NOK)
Subscription
price
(NOK/share)
Par value
(NOK/
share)
Issued
shares
Total
shares
06.03.15 Incorporation 1 000 000 1 000 000 1.00 1.00 1 000 000 1 000 000
6.8 Legal and arbitration proceedings
Except for the environmental issues related to the company’s two manufacturing plants, cf. section 4.12 and
6.3, there are no governmental, legal or arbitration proceedings, including any such proceedings which are
pending or threatened, during a period covering at least the previous 12 months which may have, or have had
in the recent past significant effects on the company’s financial position or profitability.
6.9 Carve-out financial information
Vistin Pharma ASA was incorporated on 6 March 2015, and has no financial history. The company is currently a
wholly-owned subsidiary of Weifa ASA. The Acquired Interests that have been transferred to Vistin Pharma AS
have historically been part of Weifa AS and thus no separate statutory financial statements have been prepared
for the Acquired Interests transferred to Vistin Pharma.
Audited special purpose carve-out financial information for the Acquired Interests for the years ended 31
December 2014 and 2013 are presented below and attached as Appendix C to this Information Memorandum.
The audited special purpose carve-out financial statements for the Acquired Interests presented below have
been prepared based on recognition and measurement principles in International Financial Reporting Standards
(IFRS) as approved by the European Union, and are mandatory for fiscal years beginning on or after 1 January
2014 and their interpretations adopted by the International Accounting Standards Board (IASB). However,
given the carve-out, certain assumptions are required for determining which assets and liabilities, income and
expenses as well as cash flows are to be assigned to the Acquired Interests as described in note 2 to the special
purpose carve-out financial statements for the Acquired Interests (Appendix C).
The special purpose carve-out financial statements have been prepared on the basis of Weifa AS' internal
reporting for the departments relating to the Acquired Interests, based on historical results and carrying
amounts as at 31 December 2014 and 2013.
The assets that have been transferred as a part of the Acquired Interests are related to both the Consumer
Health and B2B segments of Weifa AS. A majority of the revenue related to the Acquired Interests will be
transferred to Vistin Pharma, with the exception of certain contracts in which Weifa has exclusivity. A portion of
the Consumer Health revenue will be transferred to Vistin Pharma through the CMO Agreement between Vistin
Pharma and Weifa. The results, presented in the annual and quarterly reports of Weifa AS and Weifa ASA,
either as a whole or by segment, are therefore not representative to the financial results of the assets that have
been transferred as a part of the Acquired Interests.
43
The special purpose carve-out financial statements reflect assets, liabilities, revenue and expenses directly
attributable to the operations included, including management fee allocations recognised historically in the
relevant accounting records on a legal entity basis. However, the special purpose carve-out financial position,
results of operations and cash flows of the Acquired Interests may differ from those that would have been
achieved had the Acquired Interests operated as an autonomous entity for all the years presented, as the
Acquired Interests may have had, for example, additional administrative expenses, including legal, accounting,
treasury and regulatory compliance and other costs normally incurred by an autonomous entity. No such
expenses have been allocated, or added, for the purpose of the special purpose carve-out financial statements.
Total revenue comprises of revenue from external B2B customers and allocated revenue from sale of finished
goods from Acquired Interests to Weifa AS under a contract manufacturing (CMO) agreement. Historically, CMO
was not a separate business area and historical transactions between the Acquired Interests and Weifa AS have
therefore not been recorded. To incorporate these sales for the purpose of the special purpose carve-out
financial statements, revenue from the sales to Weifa AS from the Acquired Interests has been allocated based
on an allocation key considering the revenue base at a cost plus model (i.e. direct costs and allocated overhead
plus a manufacturing margin of 8%). As further described in section 4.8.1, the company has entered into a
CMO agreement with Weifa AS for the production and supply of finished dose tablets historically being produced
internally in Weifa AS by the Acquired Interests. The allocation key used for the purpose of the special purpose
carve-out financial statements is consistent with the future agreement for sales to Weifa AS by Vistin Pharma
and is considered to represent a reliable and representative allocation method for the prior periods. Sales are
recognised by Vistin Pharma at the time of shipment to the external customer of Weifa AS.
The selected financial information set forth below should be read in conjunction with the audited special
purpose carve-out financial statements attached as Appendix C to this Information Memorandum.
44
6.9.1 Statements of special purpose carve-out profit and loss and other comprehensive income
The table below sets out the Acquired Interests’ audited special purpose carve-out statement of income for the
years ended 31 December 2013 and 2014.
NOK 1,000 2014 2013
Revenue ............................................................................................................................ 361 461(1) 347 253(1)
Total revenue and income ................................................................................................ 361 461 347 253
Cost of materials ................................................................................................................. 154 708 147 819
Payroll expenses ................................................................................................................. 108 594 106 872
Depreciation, amortisation and impairment ............................................................................ 110 093 16 272
Other operating expenses .................................................................................................... 70 369 65 263
Operating profit/(loss) .................................................................................................... -82 304 11 027
Finance income ................................................................................................................... - 1 365
Finance costs ...................................................................................................................... 2 080 -
Profit/(Loss) before tax from continuing operations ....................................................... -84 383 12 393
Income tax expense ............................................................................................................ -22 784 4 008
Profit/(Loss) for the period ............................................................................................. -61 600 8 385
Other comprehensive income
Other comprehensive income not to be reclassified to profit or loss in subsequent periods
Remeasurement of pension plans .......................................................................................... -2 552 24 868
Income tax effect ................................................................................................................ -689 6 714
Total other comprehensive income not to be reclassified to profit or loss ........................ -1 863 18 154
Other comprehensive income for the year, net of tax ...................................................... -1 863 18 154
Total comprehensive income for the year, net of tax ....................................................... -63 463 26 539
Total comprehensive income for the year, net of tax attributable to:
Equity holders of the parent company ................................................................................... -63 463 26 539
Non-controlling interests ...................................................................................................... - -
Total................................................................................................................................. -63 463 26 539
Note: (1) 33.0% and 34.1% of the recognized special purpose carve-out revenue in 2014 and 2013,
respectively, was allocated to inter-company transaction as described using the principles in section 6.9 above.
Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended
31 December 2013 and 2014
45
6.9.2 Statement of special purpose carve-out financial position
The table below sets out the Acquired Interests’ audited special purpose carve-out financial position as at 31
December 2013 and 2014.
NOK 1,000 2014 2013
ASSETS
Non-current assets
Property, plant and equipment .............................................................................................. 28 278 129 574
Deferred tax assets¹ ............................................................................................................ 32 929 7 804
Total non-current assets .................................................................................................. 61 207 137 379
Current assets
Inventory ........................................................................................................................... 92 075 88 328
Trade receivables ................................................................................................................ 47 660 45 128
Other receivables ................................................................................................................ 2 732 -
Total current assets ......................................................................................................... 142 466 133 456
Total assets ...................................................................................................................... 203 673 270 835
INVESTED CAPITAL AND LIABILITIES
Invested capital
Parent company investment ................................................................................................. 127 977 199 777
Total invested capital ....................................................................................................... 127 977 199 777
Non-current liabilities
Net employee defined benefit liability .................................................................................... s 9 325 5 648
Total non-current liabilities .............................................................................................. 9 325 5 648
Current liabilities
Trade payables ................................................................................................................... 39 104 33 593
Other current liabilities ........................................................................................................ 27 267 31 816
Total current liabilities ..................................................................................................... 66 371 65 409
Total liabilities ................................................................................................................. 75 696 71 057
Total equity and liabilities ................................................................................................ 203 673 270 835
¹ The deferred tax asset cannot be transferred as a part of the net asset transaction of the Acquired Interests
and Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first
year of operation. Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests
for the years ended 31 December 2013 and 2014
46
6.9.3 Special purpose carve-out cash flow statements
The table below sets out the Acquired Interests’ audited special purpose carve-out statement of cash flow for
the years ended 31 December 2013 and 2014.
NOK 1,000 2014 2013
Cash flow from operating activities
Net profit/(loss) before income tax ........................................................................................ -84 383 12 393
Non-cash adjustment to reconcile profit before tax to cash flow:
Difference between pension costs and in-/out payment in pension scheme ................................. 1 153 1 153 -432
Depreciation, amortisation and impairment ............................................................................ 110 093 16 272
Unrealised foreign currency (gains)/losses ............................................................................. 245 -
Changes in working capital:
Changes in trade receivables and trade creditors .................................................................... 2 735 -1 363
Changes in inventory ........................................................................................................... -3 746 -10 511
Changes in other accruals .................................................................................................... -8 963 4 842
Net cash flow from operating activities ............................................................................ 17 133 21 200
Cash flow from investing activities
Purchase of equipment ........................................................................................................ -8 797 -8 197
Net cash flow from investing activities ............................................................................ -8 797 -8 197
Cash flow from financing activities
Net invested capital transferred** ......................................................................................... -8 337 -13 002
Net cash flow from financing activities ............................................................................ -8 337 -13 002
Net change in cash and cash equivalents* .............................................................................. - -
Cash and cash equivalents beginning period ........................................................................... - -
Cash and cash equivalents end period ............................................................................. - -
*No cash and cash equivalents are part of the Acquired Interests as the funding of Vistin Pharma should be
done through the Offering.**Net invested capital transferred is a net amount of change in invested capital
considering all cash is left with Weifa AS. Source: Weifa AS' internal reporting for the departments relating to
the Acquired Interests for the years ended 31 December 2013 and 2014.
47
6.10 Segment reporting
Vistin Pharma has one business segment with three business areas; Metformin, Opioids and CMO tablet
manufacturing.
The special purpose carve-out financial information for the Acquired Interests sets out the following
geographical revenue distribution. It is not yet determined whether Vistin Pharma will continue to report
geographically segmented revenue going forward.
NOK 1,000 2014 2013
Revenue by geography
Norway .............................................................................................................................. 119 229 118 373
Germany ............................................................................................................................ 77 954 63 298
Algeria ............................................................................................................................... 61 081 45 191
Switzerland ........................................................................................................................ 31 597 28 167
Great Britain....................................................................................................................... 22 297 25 626
Other countries ................................................................................................................... 49 302 66 598
Total revenue ................................................................................................................... 361 461 347 253
Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014.
6.11 Auditor
Vistin Pharma’s auditor is Ernst & Young AS, Dronning Eufemias gate 6, 0154 Oslo, Norway. The company’s
auditor is member of The Norwegian Institute of Public Accountants.
Ernst & Young AS was appointed as the company’s auditor on 6 March 2015 and has audited the company’s
interim financial statements for the period from 6 March 2015 to 31 March 2015. The auditor’s report for this
period was issued without qualifications.
6.12 Capital resources
Prior to the Offering, Vistin Pharma will have no cash or cash equivalents, as the funding will be raised in the
Offering. The capital raised in the Offering will be used to acquire the Acquired Interests from Weifa AS, for
working capital as well as other capital requirements. Following the Offering, the acquisition of the Acquired
Interests and net of transaction costs, Vistin Pharma expects to have a cash balance of approximately NOK 41
million.
At the date of this Information Memorandum there are no material restrictions on the company’s access or
possibility to use its cash and cash equivalents.
6.12.1 Working capital
Vistin Pharma is of the opinion that the working capital available to the group is sufficient for the group’s
present requirements, for the period covering at least 12 months from the date of this Information
Memorandum.
48
6.13 Additional information
6.13.1 Documents on display
Copies of the following documents will be available for inspection at Vistin Pharma’s business address at
Østensjøveien 27, 0661 Oslo, Norway for a period of twelve months from the date of the Information
Memorandum.
The company’s Articles of Association and Certificate of Incorporation
Audited interim financial statements for Vistin Pharma ASA for the interim period 6 March 2015 to 31
March 2015
Audited special purpose carve-out financial statements for the Acquired Interests for the years ended
31 December 2014 and 2013
49
7 SELECTED HISTORICAL FINANCIAL INFORMATION
7.1 Historical financial information
The following financial information has been derived from the Company’s audited consolidated financial
statements as of, and for each of the three years ended 31 December 2014, 2013 and 2012, and from the
unaudited condensed financial statements for the three month period ended 31 March 2015 and 2014.
Aqualis Offshore Ltd and its subsidiaries (acquired 8 November 2013) have been included in the Company’s
consolidated statement of profit and loss as discontinued operations up to the spin-off of its marine and
offshore activities on 12 August 2014. Weifa AS is consolidated in the Group’s financial statements from 15
August 2014.
In December 2013, the Board of Directors resolved that the presentation currency in the consolidated financial
statements of the Group should be changed from Norwegian kroner to USD from 1 January 2014. Following the
decision by the Board to spin-off the Company’s marine and offshore activities, and the decision to acquire
Weifa AS, the presentation currency in the consolidated financial statements of the Group was changed back to
NOK from 1 July 2014.
The financial statements have been prepared in accordance with IFRS as adopted by the EU and valid as at 31
December 2014. The IFRS principles have been applied consistently for 2014, 2013 and 2012. Please see 2014
Annual Report page 34 to 40 for the Company’s accounting policies, incorporated by reference to this
Information Memorandum.
The information incorporated by reference in this Information Memorandum shall be read in connection with the
cross-reference list set out in section 9.2.
50
7.2 Statement of comprehensive income
The Company’s consolidated statements of comprehensive income for the three month period ended 31 March
2015 and 2014 and the three years ended 31 December 2014, 2013 and 2012 are set out below.
Three month period ended 31
March
Year ended 31 December
In NOK thousands 2015
(unaudited)
2014
(unaudited)
2014
2013
2012
Revenue .............................................................................................................. 151,505 - 217,861 662 77,271
Other income........................................................................................................ (253) 19 387 3,888 7,710
Total revenue and income .................................................................................. 151,252 19 218,248 4,550 84,981
Cost of materials ................................................................................................... 45,935 - 110,508 - -
Payroll expenses ................................................................................................... 41,040 1,567 68,745 33,216 56,458
Depreciation, amortisation and
impairment ..........................................................................................................
3,597 -
5,738 2,102 313
Other operating expenses ...................................................................................... 40,845 1,048 70,629 55,327 132,204
Operating profit (loss) ....................................................................................... Gross profit 19,835 (2,596) (37,372) (86,095) (103,994)
Finance income ..................................................................................................... 2,433 446 3,573 5,739 11,246
Finance costs ........................................................................................................ 7,956 388 10,851 1,854 2,958
Profit /(loss) before tax from
continuing operations ........................................................................................
14,312
(2,538) (44,650) (82,210) (95,706)
Income tax expense .............................................................................................. 3,865 - (239,012) - -
Profit / (loss) for the period
from continuing operations ................................................................................
10,447
(2,538) 194,362 (82,210) (95,706)
Profit /(loss) for the period from
discontinued operations .....................................................................................
-
(2,895) (5,041) (5,335) -
Profit /(loss) for the period ............................................................................... 10,447 (5,433) 189,321 (87,545) (95,706)
Earnings per share for
continuing operations (NOK)
Basic profit from continuing
operations attributable to equity
holders of the parent ............................................................................................. 0.01 (0.02) 0.31 (2.00) (2.9)
Diluted profit from continuing
operations attributable to equity
holders of the parent ............................................................................................. 0.01 (0.02) 0.30 (2.00) (2.9)
Earnings per share (NOK)
Basic profit for the year attributable
to equity holders of the parent ................................................................................ 0.01 (0.10) 0.30 (2.13) (2.9)
Diluted profit for the year
attributable to equity holders of the
parent ................................................................................................................. 0.01 (0.10) 0.29 (2.13) (2.9)
51
7.3 Statement of financial position
Set out below are the Company’s consolidated statements of financial position as of 31 March 2015 and for the
three years ended 31 December 2014, 2013 and 2012.
As of 31 March As of 31 December
In NOK thousands 2015
(unaudited)
2014
2013
2012
Assets
Non-current assets
Property, plant and equipment ................................... 32,026 30,119 2,262 2,324
Intangible assets ...................................................... 1,129,895 1,132,676 93,472 -
Deferred tax assets .................................................. 119,845 123,710 - -
Total non-current assets ....................................... 1,281,766 1,286,505 95,734 2,324
Current assets
Inventory ................................................................ 101,170 105,336 - -
Trade receivables ..................................................... 109,588 102,809 12,969 -
Other receivables ..................................................... 786 4,811 9,944 11,095
Other current financial assets .................................... 4,861 4,861 - -
Cash and cash equivalents ........................................ 85,521 144,274 94,029 222,620
Total current assets .............................................. 301,926 362,091 116,942 233,715
Total assets ........................................................... 1,583,692 1,648,596 212,676 236,039
Equity and liabilities
Equity
Share capital ........................................................... 237,991 237,991 116,587 33,756
Share premium ........................................................ 689,042 689,043 154,342 190,955
Other paid-in capital ................................................. 3,510 2,078 12,284 12,529
Retained earnings .................................................... 213,845 203,397 (89,427) (95,706)
Total equity ........................................................... 1,144,388 1,132,509 193,786 141,534
Interest-bearing loans .............................................. 338,247 387,660 - 21,642
Other long-term liabilities.......................................... 16,975 16,758 - -
Total non-current liabilities ................................... 355,222 404,418 - 21,642
Current liabilities
Trade payables ........................................................ 35,813 52,670 4,413 15,418
Other current liabilities ............................................. 48,269 58,999 14,477 57,445
Total current liabilities .......................................... 84,082 111,669 18,890 72,863
Total liabilities ...................................................... 439,304 516,087 18,890 94,505
Total equity and liabilities ..................................... 1,583,692 1,648,596 212,676 236,039
7.4 Statement of cash flow
The table below summarises the Company’s consolidated statements of cash flow for the three month period
ended 31 March 2015 and 2014 and the three years ended 31 December 2014, 2013 and 2012.
52
As of 31 March As of 31 December
In NOK thousands 2015
(unaudited)
2014
(unaudited)
2014
2013
2012
Cash flow from operating
activities
Net profit/(loss) before income
from continuing operations ........................................ 14,312 (2,538) (44,650) (82,210) (95,706)
Net profit/(loss) before income
from discontinuing operations .................................... - (2,895) (5,041) (5,335) -
Non-cash adjustment to
reconcile profit before tax to
cash flow:
Estimated value of employee
share options........................................................... 1,432 - 2,212 (542) 12,529
Depreciation, amortisation and
impairment ............................................................. 3,597 1,197 5,738 2,774 313
(Gain)/loss on disposal of plant
& equipment ........................................................... - - - (581) -
Unrealised foreign currency
(gains)/losses .......................................................... - - - 41 133
Changes in working capital:
Changes in trade receivables
and trade creditors ................................................... (23,636) (3,963) (9,202) (23,973) 6,205
Changes in deferred income ...................................... - - - - (77,063)
Changes in inventory ................................................ 4,166 - 20,919 - -
Changes in other accruals ......................................... (6,958) (3,551) 14,126 (41,404) (645)
Effects related to acquisition of
subsidiary ............................................................... - - - 3,761 -
Net interest (income)/expense ................................... 5,523 - 7,075 (4,075) (8,075)
Net cash flow from operating
activities ...............................................................
(1,564)
(11,750) (8,823) (151,544) (162,309)
Cash flow from investing
activities
Proceeds from sale of plant &
equipment............................................................... - - - 804 -
Purchase of equipment and
intangibles .............................................................. (2,723) 988 (6,617) (735) (1,393)
Acquisition of subsidiary, net of
cash ....................................................................... - - (1,094,876) 8,972 -
Interest received ...................................................... 2,433 922 2,417 3,166 10,069
Net cash flow from investing
activities ...............................................................
(290)
1,910 (1,099,076) 12,207 8,676
Cash flow from financing
activities
Effect of disposal of subsidiary
(distributed to shareholders) ..................................... - - (139,671) - -
Proceeds from share issue ......................................... - 53,350 1,038,390 62,009 163,141
Proceeds from exercise of share
options ................................................................... - - - - 6,365
Transaction costs on the issue of
shares .................................................................... - (2,601) (40,886) (2,821) (6,828)
Proceeds from borrowings ......................................... - - 387,082 - -
Repayment of borrowings ......................................... - - (80,350) (47,348) -
Repurchase of own bonds ......................................... (51,050) - - - -
Interest paid ........................................................... (5,849) (653) (6,421) (1,053) (1,596)
53
As of 31 March As of 31 December
In NOK thousands 2015
(unaudited)
2014
(unaudited)
2014
2013
2012
Net cash flow from financing
activities ...............................................................
(56,899)
50,096 1,158,144 10,787 161,082
Net change in cash and cash
equivalents ............................................................. (58,753) 40,256 50,245 (128,550) 7,449
Cash and cash equivalents
beginning of period .................................................. 144,274 94,029 94,029 222,620 215,304
Net foreign exchange difference ................................. - - - (41) (133)
Cash and cash equivalents
end of period .........................................................
85,521
134,285 144,274 94,029 222,620
54
7.5 Statement of changes in equity
The table below sets out the changes in equity for the years ended 31 December 2014, 2013 and 2012.
In NOK thousands Share
capital
Share
premium
Other
paid-in
capital
Retained
earnings
Foreign
curr.
transl.
reserve Total
Non-
cont.
inter.
Total
equity
Equity as at 01.01.2012 ...................................................... 30,568 175,608 12,155 (156,298) 62,033 62,033
Allocation of prior year loss..................................................... (144,143) (12,155) 156,298
Total comprehensive income ................................................... - - - (95,706) (95,706) (95,706)
Issue of share capital:
Private placement ................................................................ 2,862 160,279 - - 163,141 163,141
Exercise of share options ...................................................... 326 6,039 - - 6,365 6,365
Transaction costs ................................................................ - (6,828) - - (6,828) (6,828)
Capital increase..................................................................... 3,188 159,490 - - 162,678 162,678
Share-based payment ............................................................ - - 12,529 - 12,529 12,529
Equity as at 31.12.2012 ...................................................... 33,756 190,955 12,529 (95,706) 141,534 141,534
Allocation of prior year loss..................................................... (83,177) (12,529) 95,706
Total comprehensive income ................................................... - - - (87,545) (1,882) (89,427) (89,427)
Issue of share capital:
Employee share issue .......................................................... 5,000 3,000 8,000 8,000
Rights Issue ........................................................................ 33,755 20,253 54,008 54,008
Issue of shares at acquisition ................................................ 43,750 26,250 13,442 83,442 (408) 83,034
Acquisition of non-controlling
interest ............................................................................. 326 424 (1,158) (408)
408 -
Transaction costs ................................................................ - (2,821) - - (2,821) (2,821)
Capital increase..................................................................... 82,831 47,106 12,284 142,221 142,221
Share-based payment ............................................................ - (542) - (542) (542)
Equity as at 31.12.2013 ...................................................... 116,587 154,342 12,284 (87,545) (1,882) 193,786 - 193,786
Allocation of prior year loss..................................................... - (82,216) - 82,216 - - - -
Total comprehensive income ................................................... - - - 191,264 1,882 193,146 - 193,146
Issue of share capital:
Private placement, Feb. ........................................................ 11,000 17,050 28,050 28,050
Subsequent private placement,
March ............................................................................... 11,000 14,300 25,300 25,300
Subsequent Offering, April .................................................... 2,000 2,840 4,840 4,840
Acquisition subsidiary, Tristein. ............................................. 9,500 14,250 760 24,510 24,510
Private placement, June ....................................................... 20,000 45,000 65,000 65,000
Acquisition subsidiary, OWC. ................................................. 2,675 4,681 3,183 10,539 10,539
Private placement, Aug. ....................................................... 166,667 533,333 700,000 700,000
Rights Issue, Sept. .............................................................. 23,810 76,190 100,000 100,000
Private placement, Sept. ...................................................... 21,600 93,600 115,200 115,200
Transaction costs ................................................................ (29,847) (29,847) (29,847)
Total issue of share capital ..................................................... 268,252 771,397 3,943 - - 1,043,592 - 1,043,592
Share-based payment ............................................................ 2,211 2,211 2,211
Capital decrease (par value
write-down) .......................................................................... (146,848) 141,882 (133) 5,099 - -
Distribution of paid-in capital .................................................. (296,363) (16,227) 12,363 (300,227) (300,227)
Equity as at 31.12.2014 ...................................................... 237,991 689,042 2,078 203,397 - 1,132,508 - 1,132,508
55
The table below sets out the unaudited changes in equity for the three month period ended 31 March 2015 and
2014.
In NOK thousands
(Unaudited) Share
capital
Share
premium
Other
paid-in
capital
Retained
earnings
Foreign
currency
translation
reserve Total
Equity as at 01.01.2014 ........................................ 116,587 154,342 12,284 (87,545) (1,882) 193,786
Allocation of prior year loss ....................................... - (82,216) - (82,216) - -
Total comprehensive income ..................................... - - - (5,433) (5,433)
Issue of share capital:
Private placement, Feb ........................................... 11,000 17,050 - - - 28,050
Subs. private placement, Mar .................................. 11,000 14,300 - - - 25,300
Transaction costs ................................................... - (2,601) - - - (2,601)
Total issue of share capital ........................................ 22,000 28,749 - - - 50,749
Foreign currency translation ...................................... - - - - 214 214
Equity as at 31.03.2014 ........................................ 138,587 100,875 12,284 (10,762) (1,668) 239,316
Equity as at 01.01.2015 ........................................ 237,991 689,042 2,078 203,397 - 1,132,508
Allocation of prior year loss ....................................... - - - - - -
Total comprehensive income ..................................... 10,447 10,447
Share-based payment .............................................. - - 1,432 - - 1,432
Equity as at 31.03.2015 ........................................ 237,991 689,042 3,510 213,844 - 1,144,387
7.6 Segment information
Prior to the Sale the Company had two main business areas; Consumer Health and B2B (business-to-business),
which comprised the basis for primary segment reporting. The table below sets out the Company’s consolidated
segment information for the years ended 31 December 2014 and 2013.
In NOK thousands 2014
2013
Consumer Health ..................................................... 128,267 -
B2B ........................................................................ 90,406 -
HQ & Other ............................................................. (425) 4,550
Total revenue and income ..................................... 218,248 4,550
The table below sets out geographic segment information for the years ended 31 December 2014 and 2013.
The information is based on the location of the customers.
56
In NOK thousands 2014
2013
Norway ................................................................... 127,455 662
Algeria .................................................................... 24,294 -
Germany ................................................................. 23,773 -
Switzerland ............................................................. 13,603 -
Hong Kong .............................................................. 7,588 -
Great Britain............................................................ 5,680 -
Other countries ........................................................ 15,467 -
Total revenue per consolidated statement of profit
and loss................................................................. 217,861 662
In 2012 the Group’s activities were related to the development of new potential anti-cancer drugs (under the
name of Clavis Pharma ASA), and the Group’s activities were organised as one operating unit for internal
reporting purposes. Total revenues for the financial year ended 31 December 2012 was NOK 85 million.
7.7 Capital resources
7.7.1 Liquidity
As of 31 March 2015 the Group had NOK 85.5 million in cash and cash equivalents. Following the Sale the
Group’s cash and cash equivalents will increase by NOK 120 million.
As of 31 March 2015 the Group had an equity ratio of 72%, compared to 69% at year-end 2014.
The Company is not aware of any restrictions on the Group’s access or possibility to use its cash and cash
equivalents which could have a direct or indirect material effect on the Group’s operations.
The strategy going forward is to fund further growth through existing cash reserves and cash flow from
operations, and if needed, by raising additional equity capital.
7.7.2 Debt structure
Non-current liabilities
As of 31 March 2015 the Group has NOK 338.2 million in interest bearing debt, which relates to the NOK 400
million bond loan issued on 7 August 2014 to partly finance the acquisition of Weifa AS. The bond loan is shown
at amortised costs at 31 March 2015.
The bond loan has a maturity of 5 years, and is repayable in full on 7 August 2019, and is thus classified under
long-term borrowings. The loan carries an annual interest rate of 4% + NIBOR3M, with quarterly interest
payments. Under the terms of the bond agreement, the bondholders have a share pledge over the shares in
Weifa AS. The Group is also required to maintain a cash balance of no less than NOK 20 million, an interest
coverage ratio of not less than 2.0x and an equity ratio of not less than 40%. In 2014 the Group incurred a
total interest expense of NOK 9.6 million on the bond loan (2013: 0 million).
In February 2015 the Company bought NOK 50 million of own bonds, thus net outstanding in the market as of
the date of this Information Memorandum is NOK 350 million. The NOK 50 million bonds are held for liquidity
purposes and will not be cancelled.
Other long-term liabilities as of 31 March 2015 amount to NOK 17 million, which relates to the Company’s
unfunded defined benefit plans, which provide certain employees a guaranteed level of pension.
Current liabilities
Total current liabilities as of 31 March 2015 consist of NOK 35.8 million in trade payables and NOK 48.3 million
in other current liabilities. Other current liabilities relate to i.a. withholding tax, allowance for holiday pay,
deferred revenue and accrued expenses.
57
7.7.3 Tax loss carry forward
At year-end 2014 the Group had a tax loss carry forward of approximately NOK 829 million which can be
carried forward indefinitely. The Group has historically not recognised a tax asset in the statement of financial
position due to the uncertainty of future taxable profits, however as Weifa AS has a strong earnings history, the
deferred tax asset is recognised at year-end 2014 and amounts to NOK 123.7 million.
7.7.4 Working Capital
The Company is of the opinion that it has sufficient working capital for its present requirements (i.e. for the
next 12 months).
7.8 Auditor
The Company’s auditor since 2003 has been Ernst & Young AS, Dronning Eufemias gate 6, 00154 Oslo, Norway.
The Company’s auditor is member of The Norwegian Institute of Public Accountants. Ernst & Young AS has
audited the Company’s annual accounts for the financial years 2014, 2013 and 2012, and the Auditor’s reports
for these three years were issued without qualifications. Ernst & Young AS has issued an Independent
Assurance report on the unaudited pro forma condensed financial information included as Appendix A. Ernst &
Young AS has not audited, reviewed or produced any report on any other information provided in this
Information Memorandum.
58
8 UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
8.1 Introduction
On 13 March 2015 the Company announced that the Board of Directors will propose to cause its subsidiary
Weifa AS to sell its business-to-business and tablet production operations (the "Acquired Interests") to Vistin
Pharma AS, a wholly-owned subsidiary of the Company (the "Sale"). The purchase price payable by Vistin
Pharma AS, as consideration for the Acquired Interests, has been determined on arms-length terms, and
amounts to NOK 120 million in cash. The proposed Sale was approved by the shareholders of Weifa at the
extraordinary general meeting held on 16 April 2015 ("EGM"), and on 17 April 2015, the Company's subsidiary
Weifa AS entered into a business transfer agreement with Vistin Pharma AS (the "BTA") regarding the sale of
the Acquired Interests. The BTA defines the Acquired Interests, which includes the following:
i. All properties and buildings owned by Weifa AS, including, but not limited to the properties in
Gruveveien and at Fikkjebakke in Kragerø
ii. the machinery, hardware, office supplies, inventory and other supplies and equipment related to the
properties and the Acquired Interests
iii. all software, including ERP and financial systems, copyrights, domain names, inventions and other
registered or unregistered intellectual property rights related to the Acquired Interests
iv. all products and their complete documentation as well as regulatory permits, including, but not limited
to Drug Master Files and dossiers
v. all site-related documentation and authorisations, manufacturing licences and other regulatory
approvals related to the Acquired Interests
vi. the employer rights related to the employment of the employees
vii. all right, title and interest in the contracts related to the Acquired Interests
viii. books of accounts (copies), personnel records and other files that relate to the ownership or operation
of the Acquired Interests
ix. all accounts receivables, inventory (excluding finished inventory purchased from third party contract
manufacturers) and other current assets pertaining to the Acquired Interests
The Acquired Interests includes all necessary operational assets and employees for Vistin Pharma AS to become
an independent and fully operational company immediately following the completion of the Sale.
The Acquired Interests were transferred to Vistin Pharma on 1 June 2015. The purchase price shall be paid by
Vistin Pharma to Weifa as soon as Vistin Pharma has obtained access to the proceeds from the Offering.
The purchase price of NOK 120 million is based upon the Acquired Interests’ book values as of 31 December
2014 (the “Initial Balance”). Vistin Pharma shall no later than 15 days after the closing of the Sale deliver an
updated balance sheet to Weifa reflecting the book values of the acquired assets and the assumed liabilities as
per 31 May 2015, or the later month end if closing is to occur in any later month than June 2015 (the “Closing
Balance”). In the event that the aggregate net book value of the Acquired Interests as determined in the final
Closing Balance deviates from the Initial Balance with more than NOK 2 million and such deviations are results
of regular operational activities and not by other non-business related circumstances, there shall be an
adjustment to the purchase price through an increase or reduction as the case may be. Any such adjustment
shall be made through an adjustment to the payables under the contracts to be transferred as part of the
Acquired Interests.
In connection with the Sale, Weifa AS entered into a five year exclusive contract manufacturing agreement (the
“CMO Agreement”) with Vistin Pharma AS on 17 April 2015 regarding the production of all tablets currently
produced internally by Weifa AS for the sale through its Consumer Health business (i.e. Ibux, Paracet, Paralgin
Forte) and certain products to third parties in which Weifa AS has the exclusive right to sell within certain
geographical areas (i.e. metformin, strong pain killers). The price of the products that will be supplied by Vistin
Pharma AS to Weifa AS is based on the estimated fully loaded production costs (including allocation of Vistin
Pharma’s general overhead and administration expenses), excluding depreciation, at the time of entering into
the contract, plus a mark-up of 8%. Under the CMO Agreement, Vistin Pharma AS carries all risks related to
59
cost overruns, with the exception of cost overruns directly caused by certain predetermined input factors (e.g.
raw materials) in which Weifa AS takes all risk. Any cost savings relative to the fixed cost level set at the time
of entering into the contract shall be equally split between Vistin Pharma AS and Weifa AS.
For more information about the Sale and the CMO Agreement, see section 3.
The Company acquired Weifa AS on 15 August 2014 (the “Acquisition”).
8.2 Basis for preparation
The unaudited pro forma condensed financial information as of and for the year ended 31 December 2014 is
compiled based upon the following information:
• The audited consolidated statements for the Company as of 31 December 2014
• The unaudited financial information for Weifa AS for the period from 1 January 2014 to 14 August
2014 (date of acquisition by Weifa ASA) prepared in accordance with NGAAP, sourced from
Weifa’s internal consolidation schedules
• The conditions in the Business Transfer Agreement described in section 3.3 and above
• The audited special purpose carve-out financial statements for the Acquired Interests as of 31
December 2014
The pro forma adjustments are made by the Company’s Executive Management based on currently available
information and certain assumptions.
The pro forma condensed financial information is prepared solely for illustrative purposes. The unaudited pro
forma condensed financial information has been prepared for illustrative purposes only to show how the
Acquisition and the Sale might have affected the Company’s consolidated statement of comprehensive income
for 2014 if the Acquisition and the Sale occurred on 1 January 2014, and the consolidated statement of financial
position as of 31 December 2014 if the Sale had occurred at the balance sheet date. There are no pro forma
adjustments related to the Acquisition in the statement of financial position as the Acquisition is fully reflected
in this statement.
Because of its nature, the unaudited pro forma condensed financial information addresses a hypothetical
situation and, therefore, does not represent the Company's actual financial position or results if the transactions
had in fact occurred on those dates and is not representative of the results of operations for any future periods.
Investors are cautioned not to place undue reliance on this unaudited pro forma financial information.
The unaudited pro forma condensed financial information does not give effect to any restructuring cost that
may be incurred as a result of the Sale, or any additional costs or negative operating efficiencies that may
result from the Sale.
The unaudited pro forma condensed financial information has been compiled based on accounting principles
consistent with those of the Company (IFRS as adopted by EU). The unaudited pro-forma condensed financial
information has been prepared under the assumption of going concern.
The unaudited pro forma condensed financial information for the Company does not include all of the
information required for financial statements under IFRS, and should be read in conjunction with the historical
information of Weifa ASA.
The consolidated financial statements of the Company are prepared according to IFRS, and the financial
statements for Weifa AS are prepared according to NGAAP (Norwegian Generally Accepted Accounting
Principles). Based on a review of Weifa AS’ applied accounting principles for 2014 there are no material
differences between NGAAP and the accounting policies of the Company. The unaudited pro forma condensed
financial information has been compiled in connection with the Sale of the Acquired Interests from Weifa AS to
Vistin Pharma AS.
60
The unaudited pro forma condensed financial information has been compiled to comply with the requirements in
section 3.5.2.6 of the “Continuing Obligations of Stock Exchange Listed Companies” issued by Oslo Børs (Oslo
Stock Exchange). The unaudited pro forma condensed financial information has been prepared in accordance
with Annex II of Regulation (EC) 809/2004. This information is not in compliance with SEC Regulation S-X, and
had the securities been registered under the U.S: Securities Act of 1933, this unaudited pro forma financial
information, including the report by the auditor, would have been amended and / or removed from the
information memorandum.
8.3 Unaudited pro forma condensed financial information
8.3.1 Unaudited pro forma condensed statement of comprehensive income for the twelve months ended 31
December 2014
In NOK thousands
Weifa ASA
Consoli-
dated
Weifa AS
01.01 – 14.08.14¹
Pro forma
adjust.
relating to
the Acquisition
Notes to
pro forma
adjust.
relating to
the Acquisition
Pro forma
adjust.
relating to
the Sale
Notes to
pro forma
adjust.
relating to the Sale
Pro forma
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue ............................ 217,861 338,417 (242,232) (1) 314,046
Other income ..................... 387 109 496
Total revenue and
income ............................. 218,248 338,526 (242,232)
314,542
Cost of materials ................. 110,508 114,624 (42,479) (2) 182,653
Payroll expenses ................. 68,745 80,309 (108,594) (3) 40,460
Depreciation, amortisation &
impairment ........................
5,738 10,718 (1,387) (1) (2,825) (4) 12,244
Other operating
expenses ........................... 70,629 81,010 (66,869) (5)
84,770
Operating profit
(loss) ............................... (37,372) 51,865 1,387 (21,464) (5,585)
Finance income ................... 3,573 1,474 5,047
Finance costs ...................... 10,851 4,046 15,542 (2) (2,080) (6) 28,360
Profit/(loss) before
tax from continuing
operations ........................
(44,650) 49,293 (14,156) (19,385) (28,898)
Income tax expense ............ (239,012) 13,309 (3,822) (3) (5,234) (7) (234,759)
Profit/(loss) from continuing
operations ........................
194,362
35,984
(10,334)
(14,151)
205,861
Profit/(loss) from
discontinuing
operations ........................
(5,041) (5,041)
Profit/(loss) for
the period ........................ 189,321 35,984 (10,334) (14,151) 200,820
Other comprehensive
income:
Other comprehensive
income to be
reclassified to profit
or loss in subsequent
periods
Currency translation
differences ......................... 1,882 1,882
Total OCI to be
reclassified to
profit or loss ....................
1,882 1,882
61
Other comprehensive
income not to be
reclassified to profit
or loss in subsequent periods:
Remeasurement of
pension plans ..................... 2,661 2,552 (8) 5,213
Income tax effect ................ 719 689 1,408
Total OCI not to be
reclassified to
profit or loss ....................
1,943 1,863 3,805
Other
comprehensive
income for the year, net of tax ................
3,825 1,863 5,687
Total
comprehensive
income for the
year, net of tax ................
193,146 35,984 (10,334)
(12,288)
206,508
Total
comprehensive
income for the
year, net of tax
attributable to:
Equity holders of the
parent company .................. 193,146 35,984 (10,334) (12,288) 206,508
Non-controlling
interests ............................ - - - - -
Total ................................ 193,146 35,984 (10,334) (12,288) 206,508
¹Inclusion of Weifa AS from 01.01.14 and to the date of acquisition by Weifa ASA (15.08.14)
Pro forma adjustments relating to the Acquisition:
(1) Represents the amortisation for 2014 of customer relationships and trade names identified as
intangible assets in the PPA on the acquisition for Weifa AS for the period from 01.01.14 to 14.08.14 of
NOK 6.9 million, offset by the reduction in depreciation in Weifa AS for the period from 01.01.14 to
14.08.14 to recognise the fair value adjustment to fixed assets on the acquisition of Weifa AS from
01.01.14. See below for the PPA in relation to the Acquisition. This pro forma adjustment will have
continuing impact.
(2) Represents the estimated interest on the NOK 400 million bond loan issued in connection with the
acquisition of Weifa AS, and the related amortised bond costs, for the period from 01.01.14 to
07.08.14. The bond loan carries an interest rate of 3 months NIBOR + 4% p.a., adjusted quarterly. For
the purpose of the pro forma adjustment the 3 months NIBOR at the end of each quarter have been
used. This pro forma adjustment will have continuing impact.
(3) Represents the tax impact of pro forma adjustments to amortisation and interest expenses. This pro
forma adjustment will have a continuing impact.
Pro forma adjustments relating to the Sale:
(1) Represents revenue from sales to customers, which are transferred to Vistin Pharma as part of the
Sale. This pro forma adjustment will have a continued impact.
(2) Raw material costs are reduced by an amount of NOK 161.7 million relating to the B2B Assets and the
tablet production transferred in connection with the Sale. The amount includes NOK 7.0 million
recognised as cost of materials in 2014 in Weifa ASA Group relating to the fair value adjustment to the
inventory on the acquisition of Weifa AS, and relating to the B2B Assets. This is partly offset by NOK
119.2 million in costs relating to finished goods (tablets), which will be bought from Vistin Pharma
following the Sale, in accordance with the CMO Agreement entered into with Vistin Pharma AS on 17
April 2015. The price of the products that will be supplied by Vistin Pharma AS to Weifa AS is based on
the estimated fully loaded production costs (incl. allocation of Vistin Pharma’s general overhead and
administration expenses), excluding depreciation, at the time of entering into the contract, plus a
mark-up of 8%. The CMO Agreement is further described in section 4.8.1. This pro forma adjustment
will have a continued impact, with the exception of the inventory adjustment of NOK 7.0 million.
62
(3) These are the costs related to employees being transferred to Vistin Pharma as part of the Sale. This
pro forma adjustment will have a continued impact.
(4) Represents the depreciation relating to fixed assets being transferred as part of the Sale. This pro
forma adjustment will have a continued impact.
(5) Represents NOK 70.4 million in other operating costs relating to the operations being transferred as
part of the Sale, net of NOK 3.5 million in estimated transactions costs relating to the sale. This pro
forma adjustment will have a continued impact, with the exception of the estimated transaction costs
of NOK 3.5 million.
(6) Represents foreign exchange losses of NOK 2.1 million relating to the operations being transferred as
part of the Sale. This pro forma adjustment will have a continued impact.
(7) Represents the tax impact of pro forma adjustment (1) - (6). This pro forma adjustment will have a
continued impact, with the exception of the tax effect of NOK 2.8 million relating to inventory
adjustment of NOK 7 million (ref. note 2) and the estimated transaction costs of NOK 3.5 million (ref.
note 5), which will not have a continued impact.
(8) Represents the adjustment to the pension plan relating to employees being transferred to Vistin
Pharma.
63
Purchase price allocation in connection with the Acquisition
The fair values of the identifiable assets and liabilities of Weifa AS as at the date of the acquisition were:
In NOK thousands
Weifa AS
15.08.2014
Fair value
adjustments
Fair value of assets
and liabilities
Assets
Non-current assets
Property, plant & equipment ...................................... 123,999 (98,999) 25,000
Intangible assets ...................................................... - 1,136,917 1,136,917
Other financial assets ............................................... 4,020 - 4,020
Deferred tax assets .................................................. 5,457 - 5,457
Total non-current assets ....................................... 133,476 1,037,918 1,171,394
Current assets
Inventory ................................................................ 83,055 43,200 126,255
Trade receivables ..................................................... 75,061 - 75,061
Other receivables ..................................................... 1,153 - 1,153
Cash and cash equivalents ........................................ 45,175 - 45,175
Total current assets .............................................. 204,444 43,200 247,644
Total assets ........................................................... 337,920 43,200 1,419,038
Non-current liabilities
Deferred tax liabilities ............................................... - 124,074 124,074
Interest-bearing loans .............................................. - - -
Other long-term liabilities.......................................... 14,768 - 14,768
Total non-current liabilities ................................... 14,768 124,074 138,842
Current liabilities
Trade payables ........................................................ 13,592 - 13,592
Interest-bearing loans .............................................. 80,350 - 80,350
Other current liabilities ............................................. 59,075 - 59,075
Total current liabilities .......................................... 153,017 - 153,017
Total net assets ..................................................... 170,135 957,044 1,127,179
The purchase price allocation identified fair value adjustments on property, plant and equipment, intangible
assets, inventory, and deferred tax liabilities. The fair value adjustment to property, plant and equipment is
based on an assessment of the value in use of these assets. The fair value of intangible assets consists of
trademarks (NOK 314.6 million), customer relationships (NOK 196.2 million) and trade name (NOK 4.5 million).
These intangible assets fulfil the recognition criteria under IAS 38 and are recognised separately. Deferred tax
liabilities related to the fair values have been recognised (NOK 165.4 million). The adjustments to inventory
relates to excess value of inventory. The residual value of the purchase price has been allocated to goodwill
(NOK 621.6 million). None of the goodwill recognised is expected to be deductible for income tax purposes.
The fair value of customer relationships for the consumer health business is amortised over 20 years. The trade
names are amortised over 3 years. The fair value adjustment to inventory has been recognised as cost of
materials when the inventory is sold.
64
8.3.2 Unaudited pro forma condensed statement of financial position as of 31 December 2014
In NOK thousands
Weifa ASA
Consolidated
Assets and liab.
transferred as part of
the Sale¹ (unaudited)
Pro forma
adjustments
(unaudited)
Notes to pro
forma
adjustments
(unaudited)
Pro forma
consolidated
(unaudited)
Assets
Non-current assets
Property, plant and equipment ................................... 30,119 (28,278) - 1,841
Intangible assets ...................................................... 1,132,676 - - 1,132,676
Deferred tax assets .................................................. 123,710 - 945 (1) 124,655
Total non-current assets ....................................... 1,286,505 (28,278) 945 1,259,172
Current assets
Inventory ................................................................ 105,336 (92,075) - 13,261
Trade receivables ..................................................... 102,809 (47,660) - 55,149
Other receivables ..................................................... 4,811 (2,732) - 2,079
Other current financial assets .................................... 4,861 - - 4,861
Cash and cash equivalents ........................................ 144,274 120,000 - 264,274
Total current assets .............................................. 362,091 (22,466) - 339,625
Total assets ........................................................... 1,648,596 (50,744) 945 1,598,797
Equity and liabilities
Equity
Share capital ........................................................... 237,991 - - 237,991
Share premium ........................................................ 689,043 - - 689,043
Other paid-in capital ................................................. 2,078 - - 2,078
Retained earnings .................................................... 203,397 16 (2,555) (1) 200,858
Total equity ........................................................... 1,132,509 16 (2,555) 1,129,970
Interest-bearing loans .............................................. 387,660 - - 387,660
Net employee defined benefit
liability ...................................................................
16,758 (9,325) - 7,433
Total non-current liabilities ................................... 404,418 (9,325) - 395,093
Current liabilities
Trade payables ........................................................ 52,670 (39,104) 3,500 (1) 17,066
Other current liabilities ............................................. 58,999 (2,331) - 56,668
Total current liabilities .......................................... 111,669 (41,435) 3,500 73,734
Total liabilities ...................................................... 516,087 (50,760) 3,500 468,827
Total equity and liabilities ..................................... 1,648,596 (50,744) 945 1,598,797
¹Assets and liabilities relating to the B2B business and tablet production transferred to Vistin Pharma AS, as part of the Sale, for
a cash consideration of NOK 120 million. The amounts are equal to the amounts in the specific purpose carve-out of financial
position for Vistin Pharma AS as at 31 December 2014, except for deferred tax asset, which cannot be transferred as a part of
the net asset transaction of the Acquired Interests, the cash and cash equivalent of NOK 120 million, which is the cash proceeds
from the Sale, and other current liabilities, which is a residual amount used to adjust the net book value of assets transferred to
approx. NOK 120 million. The amounts are based on the balance sheet value of the items to be transferred at 31 December
2014, and may differ from the values on the transfer date at 1 June 2015.
Notes to pro forma adjustments:
(1) Represents the transaction costs relating to the Sale of NOK 3.5 million with a tax effect of NOK 0.9
million. These pro forma adjustments will not have a continued impact.
65
9 ADDITIONAL INFORMATION
9.1 Documents on display
Copies of the following documents will be available for inspection at the Company’s offices at Østensjøveien 27,
NO-0661 Oslo, Norway, during normal business hours from Monday to Friday each week (except public
holidays) for a period of 12 months from the date of this Information Memorandum:
The Company's certificate of incorporation and Articles of Association;
All reports, letters, and other documents, historical financial information, valuations and statements
prepared by any expert at the Company's request any part of which is included or referred to in this
Information Memorandum; and
The historical financial information of the Company and its subsidiary undertakings for each of the
two financial years preceding the publication of this Information Memorandum.
9.2 Cross-reference list
The information incorporated by reference in this Information Memorandum should be read in connection with
the cross reference list as set out in the table below. Except as provided in this section, no other information is
incorporated by reference into this Information Memorandum. Information not incorporated by reference is
either deemed not relevant to the investor or described elsewhere in this Information Memorandum.
Section in
Information
Memorandum
Incorporated by reference Reference document and link
7 The Company’s unaudited
financial statement for Q1 2015 http://www.weifa.no/en/Investors/Quarterly-Reports/
7 The Company’s audited financial
statement for the year ended 31
December 2014
http://www.weifa.no/en/Investors/Annual-Reports/
7 The Company’s audited financial statement for the year ended 31
December 2013
http://www.weifa.no/en/Investors/Annual-Reports/
7 The Company’s audited financial
statement for the year ended 31
December 2012
http://www.weifa.no/en/Investors/Annual-Reports/
66
10 DEFINITIONS AND GLOSSARY
In the Information Memorandum, the following defined terms have the following meanings:
API .................................................. Active pharmaceutical ingredient which is used as an ingredient by pharmaceutical
companies when making medications.
Aqualis Offshore ................................ Aqualis Offshore Ltd.
Articles of Association ......................... The Company’s articles of association.
B2B .................................................. Business-to-business.
Acquired Interests .............................. The assets transferred from Weifa AS to Vistin Pharma on 1 June 2015.
Board of Directors .............................. The board of directors of the Company.
Board Members ................................. The members of the Board of Directors.
BTA .................................................. Business transfer agreement entered into on 17 April 2015 by Vistin Pharma AS and
Weifa AS.
Carnegie ........................................... Carnegie AS.
C-CPS............................................... Codeine concentrate of poppy seeds.
Clavis Pharma ................................... Clavis Pharma ASA.
CMO ................................................. Contract manufacturing organisation
CMO Agreement ................................ CMO agreement entered into on 17 April 2015 by Vistin Pharma AS and Weifa AS
regarding the production of all tablets (Paracet, Ibux and Paralgin Forte) currently
produced internally by Weifa at Gruveveien
Company .......................................... Weifa ASA.
DDD ................................................. Defined daily doses.
EGM ................................................. The Company’s extraordinary general meeting held 16 April 2015
Executive Management ....................... The executive management team of the Group.
FDA .................................................. US Food and Drug Administration.
FDF .................................................. Finished dose formulation.
Group ............................................... The Company and its consolidated subsidiaries.
GMP ................................................. Good manufacturing practice.
IAS 34 .............................................. International Accounting Standard 34 “Interim Financial Reporting” as adopted by
the EU.
IFRS ................................................. International Financial Reporting Standards as adopted by the EU.
Information Memorandum ................... This Information Memorandum dated 2 June 2015.
Listing .............................................. The listing of the Shares of Vistin Pharma on Oslo Axess.
LVT .................................................. Lipid Vector Technology.
MA ................................................... Marketing authorisation.
M-CPS .............................................. Morphine rich concentrate of poppy straw.
Metformin DC .................................... Direct compressible metformin, a granulated pre-tablet form.
Metformin HCl ................................... Metformin hydrochloride.
NCE ................................................. New chemical entities.
NSAID .............................................. Non-steroidal anti-inflammatory drug.
Offering ............................................ 15 554 935 new shares offered to shareholders in Weifa ASA as of the Record Date
and 1 500 000 new shares offered to employees, executive management and Board
members of Vistin Pharma.
Oslo Axess ........................................ A Norwegian regulated market operated by the Oslo Stock Exchange.
Oslo Børs .......................................... A Norwegian regulated market operated by the Oslo Stock Exchange.
Oslo Stock Exchange .......................... Oslo Børs ASA.
OTC ................................................. Over-the-counter.
OTX ................................................. Products that are exempt from drug regulations and covered by other regulations
like EFSA (European Food Safety Authority)
Pro Forma Financial Information .......... Unaudited pro forma financial information showing how the Sale could have affected
the Group’s income statement for the year ended 31 December 2014 as if the Sale
had taken place at 1 January 2014.
PPP .................................................. Pharmacy purchasing price.
67
PRP .................................................. Pharmacy retail price.
Rx .................................................... Drugs that require a prescription.
Rx-to-OTC switches ............................ OTC registering a drug product containing an API which previously has only been
available as Rx
Sale ................................................. The sale of Weifa AS’ B2B and CMO tablet manufacturing business to Vistin Pharma
AS.
Territory ........................................... European Economic Area.
Vistin Pharma .................................... Vistin Pharma ASA.
VMS ................................................. Vitamins, minerals & supplements.
Weifa ............................................... Weifa ASA.
APPENDIX A
Independent assurance report on audited pro forma condensed
financial information for the year ended 31 December 2014
EY Statsautoriserte revisorerErnst &Young AS
Dronning Eufemias gate 6, NO-0191 OsloBuilding a better Oslo Atrium, P.O.Box 20, NO-0051 Osloworking world
To the Board of Directors of Weifa ASA
Foretaksregisteret: NO 976 389 387 MVATlf: +47 24 00 24 00Fax: +47 24 00 29 01
www.ey.noMedlemmer av den norske revisorforening
Independent Practitioner's Assurance Report on the Compilation of Pro Forma FinancialInformation Included in an Information Memorandum
In accordance with the requirements in section 3.5.2.6 of the "Continuing Obligations of StockExchange Listed Companies" issued by Oslo Børs (Oslo Stock Exchange) we have completed ourassurance engagement to report on the compilation of unaudited pro forma financial information ofWeifa ASA (the "Company"). The pro forma financial information consists of the unaudited proforma condensed statement of financial position as at 31 December 2014, the unaudited pro formacondensed statement of comprehensive income for the year ended 31 December 2014 and relateddescription and notes as set out in section 8 of the Information Memorandum dated 2 June 2015(the "Information Memorandum") issued by the Company. The applicable criteria on the basis ofwhich the Company has compiled the pro forma financial information are specified in EU RegulationNo 809/2004 and described in section 8 of the Information Memorandum (the "applicable criteria").
The pro forma financial information has been compiled for illustrative purposes only to provideinformation about how the acquisition of Weifa (the "Acquisition") and the sale of the company'sB2B business and tablet production (the "Sale"), as set out in section 8 of the InformationMemorandum might have affected the Company's consolidated financial position as at 31December 2014 and the Company's consolidated financial performance for the year ended 31December 2014 as if the Acquisition and Sale had taken place at 31 December 2014 and 1January 2014 respectively. As part of this process, the Company has extracted financial informationfrom the Company's consolidated financial statements and unaudited financial information for WeifaAS for the period 1 January to 14 August 2014. The auditor's report on the Company's consolidatedfinancial statements for the year ended 31 December 2014 is included in appendix B to theInformation Memorandum. No audit or review reports have been issued on the consolidatedfinancial information for the Company or Weifa AS used in the compilation of the pro forma financialinformation for 2014.
The Board of Directors' and Management's Responsibility for the Pro Forma Financial InformationThe Board of Directors and Management are responsible for compiling the pro forma financialinformation on the basis of the requirements of EU Regulation No 809/2004 as required by theContinuing Obligations.
Practitioner's Responsibilities
Our responsibility is to express an opinion, as required by Annex II item 7 of EU Regulation No809/2004 about whether the pro forma financial information has been compiled by the Company onthe basis stated and that this basis is consistent with the accounting policies of the Company.
We conducted our engagement in accordance with International Standard on AssuranceEngagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro FormaFinancial Information Included in Prospectus, issued by the International Auditing and AssuranceStandards Board. This standard requires that the practitioner comply with ethical requirements and
A member firm of 6~nst 8 Younq Global Limitetl A member firm of Ernst &Young Global Limited
EYBuilding a betterworking world
plan and perform procedures to obtain reasonable assurance about whether the Company has
compiled the pro forma financial information on the basis of the applicable criteria and whether this
basis is consistent with the accounting policies of the Company. Our work primarily consisted of
comparing the unadjusted financial information with the source documents as described in section 8
of the Information Memorandum, considering the evidence supporting the adjustments and
discussing the Pro Forma Financial Information with management of the Company.
The aforementioned opinion does not require an audit of historical unadjusted financial information,
the adjustments to conform the accounting policies of Weifa AS to the accounting policies of the
Company, or the assumptions summarized in section 8 of the Information Memorandum. For
purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the pro forma financial information,
nor have we, in the course of this engagement, performed an audit or review of the financial
information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in an Information Memorandum is solely to
illustrate how the significant transaction might have impacted the unadjusted financial information of
the entity if the event had occurred or the transaction had been undertaken at an earlier date.
Because of its nature, the Pro Forma Financial Information addresses a hypothetical situation and,
therefore, does not represent the Company's actual financial position or performance. Accordingly,
we do not provide any assurance that the actual outcome of the event or transaction at 1 January or
31 December 2014 would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information has
been compiled on the basis stated involves performing procedures to assess whether the
applicable criteria used by the Company in the compilation of the pro forma financial information
provide a reasonable basis for presenting the significant effects directly attributable to the event or
transaction, and to obtain sufficient appropriate evidence about whether:
• The related pro forma adjustments give appropriate effect to those criteria;
• The pro forma financial information reflects the proper application of those adjustments to the
unadjusted financial information; and
• The pro forma financial information has been compiled on a basis consistent with the accounting
policies of the Company.
The procedures selected depend on the practitioner's judgment, having regard to the practitioner's
understanding of the nature of the company, the event or transaction in respect of which the pro
forma financial information has been compiled, and other relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
K3
EYBuilding a betterworking world
Opinion
In our opinion:a) The pro forma financial information has been properly compiled on the basis stated in section 8
of the Information Memorandum
b) That basis is consistent with the accounting policies of the Company.
This report is issued for the sole purpose of the Information Memorandum required by Oslo Børs'
"Continuing Obligations of Stock Exchange Listed Companies section 3.5 as set out in the
Information Memorandum reviewed by Oslo Børs (Oslo Stock Exchange). Therefore, this report is
not appropriate in other jurisdictions and should not be used or relied upon for any purpose other
than as described in the Information Memorandum. We accept no duty or responsibility to and deny
any liability to any party in respect of any use of, or reliance upon, this report in connection with any
type of transaction, including the sale of securities other than the transaction as set out in the
Information Memorandum reviewed by Oslo Børs.
Oslo, 2 June 2015ERNST $~- GAS/'.
Ro ---
State AuthoriseØublic Accountant (Norway)
A rn~=ri1>ci (ii ni ot f-rast 3 Young Glol).il I.iniit t~cl
APPENDIX B
Unaudited financial statements for Weifa AS for the period from 1
January 2014 to 14 August 2014
Unaudited Financial Statements for Weifa AS for the period
from 1 January 2014 to 14 August 2014
WEIFA AS - Unaudited Statement of Comprehensive Income for the period from 1 January 2014 to 14 August 2014
(NOK '000) 01.01-14.08.14
Revenue 338 417
Government grants
Other income 109
Total revenue and income 338 526
Cost of materials 114 624
Payroll expenses 80 309
Other operating expenses 81 010
Depreciation, amortisation and impairment 10 718
Other income
O perating profit/(loss) 51 865
Finance income 1 474
Finance costs 4 046
Profit/(Loss) before tax from continuing operations 49 293
Income tax expense 13 309
Profit/(Loss) for the period from continuing operations 35 984
Profit/(Loss) for the period from discontinued operations
Profit/(Loss) for the period 35 984
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent
periods
Currency translation differences
Income tax effect
Total comprehensive income for the period 35 984
Total comprehensive income for the period, net of tax attributable to:
Equity holders of the parent company
Non-controlling interests
Total 35 984
APPENDIX C
Audited special purpose carve-out financial statements for the
Acquired Interests for the years ended 31 December 2014 and 2013
Carve-out Financial Statements
for Acquired Interest
2014 and 2013
2
for the year ended 31 December
Acquired Interests
(NOK 000's) Note 2014 2013
Revenue 2,5,6,19 361 461 347 253
Total revenue and income 361 461 347 253
Cost of materials 14 154 708 147 819
Payroll expenses 8 108 594 106 872
Depreciation, amortisation and impairment 11 110 093 16 272
Other operating expenses 7 70 369 65 263
Operating profit/(loss) -82 304 11 027
Finance income 9 - 1 365
Finance costs 9 2 080 -
Profit/(Loss) before tax from continuing operations -84 383 12 393
Income tax expense 10 -22 784 4 008
Profit/(Loss) for the period -61 600 8 385
Equity holders of the parent company -61 600 8 385
Total -61 600 8 385
Earnings per share (NOK): basic and diluted - -
Specific purpose Carve-out Statement of Profit and Loss
Profit/(Loss) for the year attributable to:
3
for the year ended 31 December
Acquired Interests
(NOK 000's) Note 2014 2013
Loss for the year -61 600 8 385
Other comprehensive income not to be reclassified to profit or loss in
subsequent periods
Remeasurement of pension plans 17 -2 552 24 868
Income tax effect 10 -689 6 714
Total OCI not to be reclassified to profit or loss -1 863 18 154
Other comprehensive income for the year, net of tax -1 863 18 154
Total comprehensive income for the year, net of tax -63 463 26 539
Total comprehensive income for the year, net of tax attributable to:
Equity holders of the parent company -63 463 26 539
Non-controlling interests - -
Total -63 463 26 539
Specific purpose Carve-out Statement of Other Comprehensive Income
4
Specific purpose Carve-out Statement of Financial Position
as at 31 DecemberAcquired Interests
(NOK 000's) Note 2014 2013
ASSETS
Non-current assets
Property, plant & equipment 11 28 278 129 574
Deferred tax assets* 10 32 929 7 804
Total non-current assets 61 207 137 379
Current assets
Inventory 14 92 075 88 328
Trade receivables 13 47 660 45 128
Other receivables 13 2 732 -
Total current assets 142 466 133 456
Total assets 203 673 270 835
INVESTED CAPITAL AND LIABILITIES
Invested capital
Parent company investment 127 977 199 777
Total invested capital 127 977 199 777
Non-current liabilities
Net employee defined benefit liability 17 9 325 5 648
Total non-current liabilities 9 325 5 648
Current liabilities
Trade payables 16 39 104 33 593
Other current liabilities 16 27 267 31 816
Total current liabilities 66 371 65 409
Total liabilities 75 696 71 057
Total invested capital and liabilities 203 673 270 835
______________________ __________________ ____________________
Glen Rødland Ole Enger Frank Marius Hansen
Chairman of the Board Board member Board member
______________________ __________________ __________________
Sigrunn Nilsen Øystein Stray Spetalen Kjell-Erik Nordby
Board member Board member CEO
Board of Directors and Chief Executive Officer of Weifa AS
Oslo, 11 May 2015
*The deferred tax asset cannot be transferred as a part of the net asset transaction of the
Acquired Interests and Vistin Pharma will therefore be in an immediate taxable position if it
generates taxable income in its first year of operation.
5
Specific purpose Carve-out Statement of changes in
invested capital
Acquired Interests
(NOK 000's) Note
Invested
capital
Invested capital as at 1 January 2013 186 240
Loss for the year 8 385
Other comprehensive income for the year 18 154
Total comprehensive income 26 539
Net invested capital transferred -13 002
Invested capital as at 31 December 2013 199 777
Invested capital as at 1 January 2014 199 777
Loss for the year -61 600
Other comprehensive income for the year -1 863
Total comprehensive income -63 463
Net invested capital transferred -8 337
Invested capital as at 31 December 2014 127 977
6
Specific purpose Carve-out Statement of Cash flows
for the year ended 31 December
Acquired Interests
(NOK 000's) Note 2014 2013
Cash flow from operating activities
Net profit/(loss) before income tax -84 383 12 393
Non-cash adjustment to reconcile profit before tax to cash flow:
Difference between pension cost and in-/out payment in pension scheme 17 1 153 -432
Depreciation, amortisation and impairment 11 110 093 16 272
Unrealised foreign currency (gains)/losses 9 245 -
Changes in working capital:
Changes in trade receivables and trade creditors 13.16 2 735 -1 363
Changes in inventory 14 -3 746 -10 511
Changes in other accruals -8 963 4 842
Net cash flow from operating activities 17 133 21 200
Cash flow from investing activities
Purchase of equipment 11 -8 797 -8 197
Net cash flow from investing activities -8 797 -8 197
Cash flow from financing activities
Net invested capital transferred** -8 337 -13 002
Net cash flow from financing activities -8 337 -13 002
Net change in cash and cash equivalents* - -
Cash and cash equivalents beginning period - -
Cash and cash equivalents end period - -
* No cash and cash equivalents are part of the Acquired Interest, as the funding of the Company will be achieved through an
IPO.
** Net invested capital transferred is a net amount of change in invested capital considering all cash is left with Weifa AS.
7
Note 1 Background and formation for the specific purpose carve-out financial statements
On 17 April 2015 Weifa AS entered into a definitive agreement for the sale of it's operations relating to production of finished dose tablets
("CMO") and the production and sale of API's ("B2B") the "Acquired Interests" to a new legal entity, Vistin Pharma AS. Vistin Pharma
AS is 100% owned by Vistin Pharma ASA, which will carry out an IPO to finance this acquisition of the Acquired Interests. This IPO
requires the preparation of a Prospectus and these specific purpose carve-out financial statements have been prepared for the purpose of
inclusion herein and to provide historical financial information about the Acquired Interests for the investors. The Acquired Interests
represents the assets and liabilities, which will be transferred to Vistin Pharma AS, as part of the transaction.
The sales transaction is expected to be completed on 1 June 2015.
The Acquired Interests include the following:
i. All properties and buildings owned by Weifa AS, including, but not limited to the properties in Gruveveien and at Fikkjebakke in
Kragerø
ii. the machinery, hardware, office supplies, inventory and other supplies and equipment related to the properties and the Acquired
Interests
iii. all software, including ERP and financial systems, copyrights, domain names, inventions and other registered or unregistered
intellectual property rights related to the Acquired Interests
iv. all products and their complete documentation as well as regulatory permits, including, but not limited to Drug Master Files and
dossiers
v. all site-related documentation and authorisations, manufacturing licences and other regulatory approvals related to the Acquired
Interests
vi. the employer rights related to the employment of the employees
vii. all right, title and interest in the contracts related to the Acquired Interests
viii. books of accounts (copies), personnel records and other files that relate to the ownership or operation of the Acquired Interests
ix. all accounts receivables, inventory (excluding finished inventory purchased from third party contract manufacturers) and other current
assets pertaining to the Acquired Interests
The specific purpose carve-out financial statements for the Acquired Interest include the assets and liabilities stated above and revenue
and costs relating to these assets and liabilities. See note 2 for basis for of preparation.
The remaining parts of Weifa AS will for the purpose of these specific purpose carve-out financial statements be named "New Weifa AS".
The specific purpose carve-out financial statements were approved for release by the Board of Directors of Weifa AS on 11 May 2015.
8
Note 2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these specific purpose carve-out financial
statements are set out below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
The specific purpose carve-out financial statements are prepared in English only.
Basis of preparation
In connection with the potential IPO of Vistin Pharma ASA, specific purpose carve-out financial statements for
the Acquired Interest were prepared as at and for the year ended 31 December 2014, including specific
purpose carve-out comparative financial statements as at and for the year ended 31 December 2013.
The specific purpose carve-out financial statements have been prepared on the basis of Weifa AS' internal
reporting for the departments relating to the Acquired Interest, based on historical results and carrying
amounts as at 31 December 2014 and 2013.
The specific purpose carve-out financial statements have been prepared based on recognition and
measurement principles in International Financial Reporting Standards (IFRS) as approved by the European
Union, and are mandatory for fiscal years beginning on or after 1 January 2014 and their interpretations
adopted by the International Accounting Standards Board (IASB). However, given the carve-out, certain
assumptions are required for determining which assets and liabilities, income and expenses as well as cash
flows are to be assigned to the Acquired interests as described below under basis for allocation. Furthermore,
the carve-out financial statements have been prepared on a historical cost basis, except for currency swap
derivatives that have been recognised at fair value.
Basis for allocation
The specific purpose carve-out financial statements reflect assets, liabilities, revenue and expenses directly
attributable to the operations included. However, the specific purpose carve-out financial position, results of
operations and cash flows of the Acquired Interest may differ from those that would have been achieved had
the Acquired Interest operated as an autonomous entity for all the years presented, as the Acquired Interest
may have had, for example, additional administrative expenses, including legal, accounting, treasury and
regulatory compliance and other costs normally incurred by an autonomous entity. No such expenses have
been allocated, or added, for the purpose of the specific purpose carve-out financial statements.
Total revenue comprises of revenue from external B2B customers and allocated revenue from sale of finished
goods from Acquired Interests to Weifa AS under a contract manufacturing (CMO) agreement. Historically,
CMO was not a separate business area and historical transactions between the Acquired Interests and Weifa
AS have therefore not been recorded. To incorporate these sales for the purpose of the special purpose carve-
out financial statements, revenue from the sales to Weifa AS from the Acquired Interests has been allocated
based on an allocation key considering the revenue base at a cost plus model (i.e. direct costs and allocated
overhead plus a manufacturing margin of 8%). The Company has entered into a CMO agreement with Weifa
AS for the production and supply of finished dose tablets currently being produced internally in Weifa AS by
the Acquired Interests. The allocation key used for the purpose of the special purpose carve-out financial
statements is consistent with the future agreement for sales to Weifa AS by the Company and is considered
to represent a reliable and representative allocation method for the prior periods. Sales are recognised by the
Company at the time of shipment to the external customer of Weifa AS.
Departments with joint functions (IT, HR, Finance etc.) have been allocated based on employees transferred
and on estimated time consumed in the Acquired Interest.
Income tax expense has been calculated based on these specific purpose carve-out profit before tax adjusted
for permanent differences attributable to the Acquired Interest.
Deferred tax assets have been calculated based on the temporary differences on property plant equipment
instruments in the Acquired Interest.
9
Note 2 Summary of significant accounting policies
Invested Capital (Equity):
The Acquired Interest did not exist as a separate legal entity controlled by a separate legal entity, and had no
defined capital structure. Therefore, it is not meaningful to show share capital or an analysis of reserves.
Invested capital represents the difference between the cumulative investment in the interest in the assets and
liabilities, which form the Acquired Interest.
Segment reporting
The Acquired Interest has organised its activities in one operating unit, B2B (business-to-business), which
includes both production and sale of API and the production and sale of finished dose tablets to other
pharmaceutical companies.
Foreign currency translation
Functional and presentational currency
The Acquired Interest's presentational and functional currency is NOK.
Transactions and balances
Foreign currency transactions are translated into the functional currency of the Acquired Interest using the
exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions are recognised in the specific purpose carve-out statement of profit and
loss. Monetary assets and liabilities are translated at the closing rate at the reporting date.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts
receivable for goods supplied, stated net of discounts, returns and value added taxes. The Acquired Interest
recognises revenue when the amount of revenue can be reliably measured; when it is probable that future
economic benefits will flow to the entity; and when specific criteria have been met, as described below.
Sales of goods
The Acquired Interest manufactures and sells a range of pharmaceutical products to the consumer and
industrial markets. Revenue from the sale of goods is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, usually on delivery of goods and when there is no unfulfilled
obligation that could affect the customer's acceptance of the products. Delivery is governed by the sales
contacts, but usually occurs when the products have been shipped from the warehouse. However, in some
instances, at the request of customers, goods are invoiced and held in the Acquired Interest's warehouse, at
the customers' risk, for shipment at a later date.
Balance sheet classification
The Acquired Interest presents assets and liabilities in specific purpose carve-out statement of financial
position on current/non-current classification. An asset is current when it is expected to be realised or
intended to sold or consumed in normal operating cycle, held primarily for the purpose of trading, expected to
be realised within twelve months after the reporting period, or cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least twelve months after the reporting period. All other
assets are classified as non-current. A liability is current when it is expected to settle in normal operating
cycle, it is held for primarily for the purpose of trading, it is due to be settled within twelve months after the
reporting period, or there is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
10
Note 2 Summary of significant accounting policies
Property, plant and equipment
Land, buildings and fixtures comprise mainly of production facilities in Kragerø.
Other equipment is mainly made up of machines used in production, as well as office related equipment and
vehicles.
Property, plant and equipment is stated at historical cost, less depreciation and/or impairment losses, if any.
Such cost includes expenditures that are directly attributable to the acquisition of the items. Costs accrued
for major replacements and upgrades to equipment are added to cost if it is probable that the costs will
generate future economic benefits and if the costs can be reliably measured. All other repairs and
maintenance are charged to the income statement when incurred.
Land is not depreciated. Depreciation on other assets is calculated on a straight-line method to allocate their
cost to their residual values over their estimated useful lives as follows:
Buildings and fixtures: 20 - 25 years
Vehicles and machinery: 7 - 10 years
Furniture, fittings and equipment: 3 - 7 years
The residual values, useful lives and methods of depreciation of production and lab equipment and other
equipment are reviewed at each financial year-end and adjusted, if appropriate.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. The recoverable amount is the higher of an asset's
net sales value and its value in use.
An item of equipment and any significant part initially recognised is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the income statement when the asset is derecognised.
Financial assets
Classification
Financial assets within the scope of IAS 39 have been classified as financial assets at fair value through profit
and loss or loans and receivables. The Acquired Interest determines the classification of its financial assets at
initial recognition. The Acquired Interest's financial assets include trade and other receivables.
The Acquired Interest's financial assets have mainly been classified as loans and receivables. These are non-
derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities greater than 12 months after the end of the reporting
period. These are classified as non-current assets.
Financial assets at fair value through profit or loss would include financial assets held for trading. Financial
assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the
short term. Assets in this category are classified as current assets if expected to be settled within 12
months, otherwise they are classified as non-current.
11
Note 2 Summary of significant accounting policies
Recognition and measurement
All financial assets are initially recognised at fair value plus transaction costs, except financial assets carried
at fair value through profit and loss. Financial assets carried at fair value through profit and loss are initially
recognised at fair value, and transaction costs are expensed in the income statement.
Financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and
receivables are after initial measurement carried at amortised cost using the effective interest rate method,
less impairment. The effective interest rate amortisation is included in finance income in the income
statement. The losses arising from impairment are recognised in the income statement as finance cost for
loans and in other operating expenses for receivables.
Impairment of financial assets
The Acquired Interest assesses at the end of each reporting period whether there is objective evidence that a
financial asset or group of financial assets is impaired
For loans and receivables category, the amount of the loss is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows discounted at the financial asset's
original effective interest rate. The loss is recognised in the specific purpose carve-out income statements.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Gains or losses on financial instruments not designated as a hedging instrument is recognised in the income
statement. The Acquired Interest has no financial instruments designated as hedging instruments for the
current financial year.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in-first-
out (FIFO) method. The cost of finished goods and work in progress comprises materials, direct labour, other
direct costs and related production overheads (based on normal operating capacity). Net realisable value is
the estimated selling price in the ordinary course of business, less variable selling expenses.
Trade receivables
Trade receivables are amounts due from customers for products sold in the ordinary course of business. If
collection is expected in one year or less, they are classified as current assets. If not, they are presented as
non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Financial liabilities - recognition and subsequent measurement
Financial liabilities within the scope of IAS 39 have been classified as financial liabilities measured at
amortised cost using the effective interest method. The Acquired Interest determines the classification of its
financial liability at initial recognition. All financial liabilities are recognised initially at fair value and, in the case
of loans and borrowings, net of direct attributable transactions costs. The Acquired Interest's financial
liabilities include trade and other payables and currency swap derivatives. Financial liabilities are
derecognised when the obligation under the liability is discharged or cancelled or expires.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities.
Trade payables are recognised initially at the original invoice amount, with the addition of any accrued
interest.
12
Note 2 Summary of significant accounting policies
Current and deferred income tax
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred
income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to
set off current tax assets against current income tax liabilities and the deferred income taxes relate to the
same taxable entity or taxation authority.
Employee benefits
Pension obligation
The Acquired Interest has defined contribution plans for all employees. In addition, they operate unfunded
defined benefit plans for a one employee.
A defined contribution plan is a pension plan under which the Acquired Interest pays fixed contributions to
pension insurance plans. The Acquired Interest has no legal or constructive obligations to pay further
contributions in the fund does not hold sufficient assets to pay all employees the benefit relating to employee
service in the current and prior periods. The contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in
future payments is available.
Defined benefit plans typically defines an amount of pension benefit that an employee will receive on
retirement, usually dependent on one or more factors such as age, years of service and compensation. The
liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the
defined benefit obligation at the end of the reporting period less the fair value of plan assets. As the Acquired
Interest operates an unfunded defined benefit plan, they have no plan assets. The pension obligation is funded
through the Acquired Interests operations.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit
method.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit
expense, reflects the increase in the defined benefit obligation resulting from employee service in the current
year, benefit changes and curtailments and settlements.
Past service costs are recognised immediately in the statement of profit and loss.
The interest cost is calculated by applying the discount rate to the balance of the defined benefit obligation.
This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
charged or credited to OCI in other comprehensive income in the period in which they arise.
13
Note 2 Summary of significant accounting policies
Share-based compensation
The Acquired Interest operates an equity-settled compensation plan, under which the entity receives services
from employees as consideration for equity instruments (options) of the Acquired Interest. The fair value of the
employee services received in exchange for the grant of the option is recognised as an expense (payroll
expenses) over the vesting period. The total amount to be expensed is determined by reference to the fair
value of the options granted:
- Including any market performance conditions (e.g., an entity's share price).
- Excluding the impact of any service and non-market performance vesting conditions.
- Including the impact of any non-vesting conditions.
At the end of each reporting period, the Acquired Interest revises its estimates of the number of options that
are expected to vest based on the non-market vesting conditions and service conditions. It recognises the
impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment
to equity. The fair value of the options have been estimated at grant date and is not subsequently changed.
When the options are exercised, and the Acquired Interest elects to issue new shares, the proceeds received
net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium.
Provisions and contingent liabilities
General
Provisions are recognised when the Acquired Interest has a present legal or constructive obligation as a result
of past events, it is more likely than not that an outflow of resources will be required to settle the obligation
and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments
of the time value of the money and the risks specific to the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
Restructuring provisions
Restructuring provisions are recognised only when the recognition criteria for provisions are fulfilled. The
Acquired Interest has a constructive obligation when a detailed formal plan identifies the activities concerned,
the location and number of employees affected, a detailed estimate of the associated costs, and an
appropriate timeline. Furthermore, the employees affected have been notified of the plans main features.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the income statement on a straight-line-basis over the period of the lease.
Events after the balance sheet date
New information on the Acquired Interest's positions at the balance sheet date is taken into account in the
annual financial statements. Events after the balance sheet date that do not affect the Acquired Interest's
position at the balance sheet date, but which will affect the Acquired Interest's position in the future, are
stated if significant.
14
Note 2 Summary of significant accounting policies
Changes in accounting policies and disclosures
New standards, amendments and interpretations adopted by the group
The following standards have been adopted by the Acquired Interest for the first time for the financial year
beginning on or after 1 January 2014:
IAS 36 Impairment of assets
The amendments removed certain disclosures of the recoverable amount of CGUs which had been included in
IAS 36 by the issue of IFRS 13. The amendments will only affect the presentation and disclosure, and has no
effect on the Acquired Interest's financial position or profit or loss.
IFRS 10 Consolidated Financial Statements
IFRS 10 replaced the portion of IAS 27 Consolidated and Separate Financial Statements that addressed the
consolidated financial statements. The changes introduced by IFRS 10 require management to exercise
significant judgement to determine which entities are controlled, and therefore are required to be
consolidated by a parent, compared with the requirements that were in IAS 27. The implementation of IFRS
10 did not have any effect for the Acquired Interest.
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial
statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28 Investments
in Associates and Joint Ventures. These disclosures relate to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. The implementation of IFRS 12 will only affect the
presentation and disclosure, and has no effect on the Acquired Interest's financial position or profit or loss.
New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2014, and have not been applied in preparing these specific purpose carve-out
financial statements. None of these are expected to have a significant effect on the specific purpose carve-out
financial statements of the Acquired Interest, except the following set out below:
IFRS 8 Operating segments
The standard is amended to require disclosure of the judgements made by management in aggregating
operating segments. It is also amended to require a reconciliation of segment assets to the entity's assets
when segment assets are reported.
IFRS 9 Financial instruments
The new standard addresses the classification, measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that
relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed
measurement model and establishes three primary measurement categories for financial assets: amortised
cost, fair value through OCI and fair value through P&L. The standard is effective for accounting periods
beginning on or after 1 January 2018. Early adoption is permitted.
IFRS 15 Revenue from contracts with customers
The standard deals with revenue recognition and establishes principles for reporting useful information to users
of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good
or service and thus has the ability to direct the use and obtain the benefits from the good or service. The
standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The
standard is effective for annual periods beginning on or after 1 January 2017. The Acquired Interest is
assessing the impact of IFRS 15.
IAS 19 Employee benefits
The amendment supplies to contributions from employees or third parties to defined benefit plans and clarifies
the treatment of such contributions. The amendment distinguished between contributions that are linked to
service only in the period in which they arise and those linked to service in more than one period. The
amendment is effective for annual periods beginning on or after 1 July 2014.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a
material impact on the Acquired Interest.
15
Year ended 31 December 2014
(NOK 000's)
On
demand
Less
than 3
months
3 to 12
months
1 to 5
years
>5 years Total
Trade payables - 39 104 - - - 39 104
Other liabilities - 16 354 10 913 - - 27 267
Total - 55 458 10 913 - - 66 371
Year ended 31 December 2013
(NOK 000's)
On
demand
Less
than 3
months
3 to 12
months
1 to 5
years
>5 years Total
Trade payables - 33 593 - - - 33 593
Other liabilities - 22 498 9 318 - - 31 816
Total - 56 091 9 318 - - 65 409
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign currency rates. The Acquired Interest's exposure to the risk of changes in foreign exchange rates relates primarily the
Acquired Interest's operating activities (when revenue or expense is denominated in a different currency from the Acquired Interest's
presentation currency).
The Acquired Interest's currency risk mainly relates to the Acquired Interest's B2B operations, where sales and raw material
purchases are denominated primarily in USD and EUR. The Acquired Interest uses hedging instruments to manage the foreign
currency risk related to future foreign currency denominated cash flows and foreign currency denominated trade receivables and
trade payables. As of 31 December 2014 the Acquired Interest had one hedging contract outstanding for the sale of EUR 200k per
month for the next 12 months. At 31 December 2014 the Acquired Interest had trade receivables of NOK 20.8 million and trade
payables of NOK 27.2 million denominated in foreign currencies, principally USD and EUR.
The primary objective of the Acquired Interest’s capital management is to ensure that the Acquired Interest maintains a solid capital
structure enabling it to develop and build its business to maximise shareholder value. The Acquired Interest’s objective is to
maintain a balance of financial assets that reflects the cash requirement of its operations and investments for at least the next 12 -
24 months and also going forward. No changes were made in the objectives, policies or process for managing capital during the
year ended 31 December 2014.
Note 3: Financial risk management objectives and policies
Interest rate risk
Credit risk
Liquidity risk
Capital management
Foreign currency risk
The Acquired Interest's principal financial liabilities comprise trade and other payables. The Acquired Interest has trade and other
receivables. The main risks arising from the Acquired Interest’s financial instruments are interest rate risk, credit risk, foreign
currency risk and liquidity risk. The Acquired Interest's senior management oversees the management of these risks, which is being
reviewed by the Board of Directors.
The Acquired Interest’s exposure to the risk of changes to market interest is minimal as it does not have interest bearing debt.
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. The Acquired Interest is exposed to credit risk from its operating activities (primarily trade receivables).
Customer credit risk is managed by management, subject to established policy, procedures and control relating to customer credit
risk management. Credit quality of a customer is assessed on an individual basis, and outstanding customer receivables are
regularly monitored. The requirement for an impairment is analysed at each reporting date on an individual basis for major
customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. At
December 2014 the Acquired Interest had total trade receivables of NOK 47.7 million (2013: NOK 45.1 million), which were owed by
33 customers. Six of these customers owed the Acquired Interest more than NOK 2,7 million each, accounting for approx. 70% of
total trade receivables at year-end (see note 13 for further information).
Liquidity risk is the potential loss arising from the Acquired Interest's inability to meet its contractual obligations when due. The
Acquired Interest monitors its risk to a shortage of funds using cash flow forecasts. The Acquired Interest generates a positive
operating cash flow. The Acquired Interest had cash and cash equivalents of NOK 0.0 million at 31 December 2014 (2013: 0.0
million). Following the carve-out the Acquired Interest will received additional funds through a share issue in Vistin Pharma ASA in
May 2015, which will give the Acquired Interest a cash balance of approx. NOK 41 million (after transactions costs relating to the
equity issue).
The table below summarises the maturity profile of the Acquired Interest’s financial liabilities based on contractual undiscounted
payments:
16
Note 4 Critical accounting estimates and judgements in terms of accounting policies
The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the Acquired
Interesting disclosures, and the disclosures of contingent liabilities. It also requires management to exercise its judgement in
the process of applying the group's accounting policies. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
The Acquired Interest makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The Acquired Interest based its assumptions and estimates on parameters
available when the specific purpose carve-out financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising beyond the control of the
Acquired Interest. Such changes are reflected in the assumptions when they occur. The estimates and assumptions that have
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are addresses below.
Deferred tax assets
Deferred tax assets are recognised for unused tax losses only to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and the level of future taxable profits, and deferred tax assets have
been recognised in the balance sheet. This judgement is based on the 5 year CMO agreement with New Weifa AS for the
production and supply of finished dose tablets currently produced by the Acquired Interest and the strategic plan for the
Acquired Interest in the period 2015-17. The recognised amount is most sensitive to expected future taxable profits.
Impairment of property, plant and equipment
The management assess whether there are any indicators of impairment to property, plant and equipment. Through this
assessment the management has identifies such indicators and an impairment loss have been booked to property, plant and
equipment based on significant management judgement. See note 10 for further details.
Note 5 Segment Information
Geographic information
(NOK 000's) 2014 2013
Norway 119 229 118 373
Germany 77 954 63 298
Algeria 61 081 45 191
Switzerland 31 597 28 167
Great Britain 22 297 25 626
Other countries 49 302 66 598
Total revenue 361 461 347 253
For management purposes, the Acquired Interest, is organised as one business unit and the internal reporting is structured
accordingly. The Acquired Interest is currently organised as one operating segment. The Acquired Interest has no single
external customers which constitutes 10 % or more of the total revenue. Going forward New Weifa AS will constitute for more
then 10 % of the total revenue.
17
Note 6: Revenue
(NOK 000's) 2014 2013
Revenue from external customers 242 231 228 880
Revenue from New Weifa AS* 119 229 118 373
Total revenue 361 461 347 253
* See note 2 under section "Basis for allocation" and note 20 for further details
Note 7: Other operating expenses
(NOK 000's) 2014 2013
Marketing and advertising expenses 362 621
Direct and indirect production costs 56 930 51 956
General & admin. expenses 13 078 12 686
Other operating expenses 70 369 65 263
Note 8: Payroll expenses
(NOK 000's) 2014 2013
Salaries 81 885 85 734
Bonus 2 550 1 636
Payroll tax 12 752 13 081
Estimated value of share options granted to employees 1 671 -
Pension costs - defined contribution plans 5 329 -7 611
Pension costs - defined benefit plans 1 349 11 006
Other social costs 3 058 3 026
Total payroll and payroll related costs 108 594 106 872
Average number of man-years: 145 140
Note 9: Financial items
(NOK 000's) 2014 2013
Realised foreign currency gain - 1 365
Unrealised foreign currency gain - -
Total finance income - 1 365
Realised foreign currency loss 1 835 -
Unrealised foreign currency loss 245 -
Total finance costs 2 080 -
Net finance -2 080 1 365
18
Note 10: Tax
Income tax calculation:
(NOK 000's) 2014 2013
Profit/(Loss) before taxes -84 383 12 393
Changes in temporary differences 90 503 1 438
Basis for income tax (P&L) 6 120 13 831
Effect of allocation of basis for income tax to New Weifa AS -6 120 -13 831
Basis for income tax (BS) - -
Income tax payable
Income tax expense (P&L) 1 652 3 873
Income tax expense effect of change in net deferred income tax liability/asset -25 125 6 849
Tax effect of permanent differences recognized to OCI 689 -6 714
Income tax expense -22 784 4 008
Reconciliation of income tax
(NOK 000's) 2014 2013
Profit before tax -84 383 12 393
Tax assessed at the expected tax rate -22 784 3 470
Effect of change in tax rate - 538
Income tax expense -22 784 4 008
Temporary differences
(NOK 000's) 2014 2013
Non-current assets -112 342 -23 256
Current assets -292 -
Non-current liabilities -9 325 -5 648
Net income tax reduction temporary differences -121 959 -28 904
Net deferred tax asset -32 929 -7 804
Deferred tax assets capitalised -32 929 -7 804
Tax losses are not time limited, and corporate tax rates used for calculation of net deferred tax assets capitalised are 27 %.
Deferred tax assets on tax losses have been recognised based on expected future taxable profits. The assessment is based on the
estimated future taxable income in Weifa AS, considering a long history of significant earnings related to the Acquired Interests.
The deferred tax asset of NOK 32.9 million as of December 31, 2014 has been calculated based on timing differences between tax
and book values of the assets being carved out. These timing differences are directly linked to the special purpose carve-out financial
statements but will not be available to Vistin Pharma going forward, as it cannot be transferred as a part of the net asset transaction
of the Acquired Interests taking place in 2015. Vistin Pharma will therefore be in an immediate taxable position if it generates taxable
income in its first year of operation.
19
Note 11: Property, plant and equipment
Land, buildings
and fixtures
Vehicles and
machinery
Furniture, fittings
and equipmentTotal
(NOK 000's)
Cost
Cost at 1 January 2013 231 330 121 338 7 942 360 609
Additions 1 831 4 520 1 846 8 197
Impairment loss - - -415 -415
Cost at 31 December 2013 233 161 125 858 9 372 368 392
Depreciation and impairment
Accumulated depreciation at 1 January 110 039 107 917 5 004 222 960
Depreciation charge for the year 9 734 4 785 1 338 15 857
Accumulated depreciation at 31 December 119 773 112 702 6 342 238 817
Net book value 113 388 13 157 3 030 129 575
(NOK 000's)
Cost
Cost at 1 January 2014 233 161 125 858 9 372 368 392
Additions 1 581 2 078 5 137 8 797
At 31 December 234 742 127 937 14 510 377 188
Depreciation and impairment
Accumulated depreciation at 1 January 119 773 112 702 6 342 238 817
Depreciation charge for the year 9 194 5 004 1 671 15 869
Impairment loss 81 547 7 322 5 355 94 224
Accumulated depreciation and impairment at 31 December 210 514 125 027 13 368 348 910
Net book value 24 228 2 909 1 141 28 278
Useful life 20-25 years 7-10 years 3-7 years
Land is not depreciated
The measurement of impairment loss recognized in 2014 on property, plant and equipment, has been done based on a value in use assessment. This
include cash flow projection based on budgets, strategic plans and expectations about market developments, and a discount rate of 12,6 %. Expected
useful life for these property, plant and equipment has not been changed.The value in use of these assets are in line with the value of the assets in the
sale to Vistin Pharma AS.
20
(NOK 000's) Category 2014 2013 2014 2013
Financial assets
Trade receivables Loans and receivables 47 660 45 128 47 660 45 128
Other receivables Loans and receivables 2 732 - 2 732 0
Total 50 391 45 128 50 391 45 128
Financial liabilities
Trade payables*
Other financial liabilities
at amortised cost 39 104 33 593 39 104 33 593
Currency swaps Level 2
Financial liabilities at
fair value through profit
and loss 1 506 998 1 506 998
Other payables*
Other financial liabilities
at amortised cost 25 761 30 819 25 761 30 819
Total 66 371 65 409 66 371 65 409
The Acquired Interest uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant affect on the recorded fair value are observable, either directly or
indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
Note 12: Financial assets by category
Set out below is a comparison by class of carrying amounts and fair values of all financial instruments that are carried in the financial
statements:
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate
the fair values:
- Trade and other current receivables and trade and other current payables approximate their carrying amounts due to the short-terms
maturities of these instruments.
- Currency swaps are measured based on observable market prices for similar derivatives with the same time to maturity.
Carrying amount Fair valueFair value
hierarchy level
* Fair value of these instruments are estimated to have immaterial difference from it's carrying amount
21
(NOK 000's) 2014 2013
Trade receivables 47 785 45 254
Provision for impairment of trade receivables -126 -126
Trade receivables (net) 47 660 45 128
Trade receivables are non-interest-bearing and are generally on terms of 30 to 45 days.
As at 31 December, the ageing analysis of trade receivables based on actual age is, as follows
Ageing Current < 30 days 30-60 days 60- 90 days > 90 days
2014 41 512 2 038 1 572 749 1 789
2013 40 998 3 069 887 174 -
For Ageing, less than 3 banking days are defined as current
(NOK 000's) 2014 2013
Prepayments 1 334 -
Other receivables 1 397 -
Total other receivables 2 732 -
No trade receivables relating to the sale of finished goods from Acquired Interest to New Weifa AS have been included, as no balances
relating to these transactions existed as 31 December 2013 and 2014. Had such balances been included the trade receivables due from
New Weifa AS would have been approx. NOK 3.1 million at year-end 2014 and 2013.
Note 13: Trade and other receivables
See note 3 on credit risk of trade receivables, which explains how the Acquired Interest manages credit risk.
Note 14: Inventories
(NOK 000's) 2014 2013
Raw materials 61 013 49 707
Purchased finished goods - -
Produced finished goods 31 062 38 621
Total 92 074 88 328
Obsolescence write-down -167 -
Note 15: Financial assets at fair value through profit and loss
(NOK 000's) 2014 2013
Currency swaps - not designated as hedging instruments -1 506 -998
Total -1 506 -998
Financial assets at fair value through profit and loss are presented within operating activities as part of changes in working capital in
the statement of cash flows.
Changes in fair values of financial assets at fair value through profit and loss are recorded in financial items - net in the income
statement.
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Note 16: Trade and other payables
(NOK 000's) 2014 2013
Trade payables 39 104 33 593
Withholding tax 3 985 3 442
Social security taxes 3 333 3 241
Allowance for holiday pay 9 569 8 167
Deferred revenue - -
Accrued expenses 4 079 16 943
Other liabilities 6 301 23
Total trade and other payables 66 371 65 409
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Note 17: Post-employment benefits
(NOK 000's) 31 Dec 2014 31 Dec 2013
Present value of funded obligations - -
Fair value of plan assets - -
Deficit of funded plans - -
Present value of unfunded obligations 9 325 5 648
Total deficit of defined benefit pension plans 9 325 5 648
Liability in the balance sheet (including local tax) 9 325 5 648
(NOK 000's)Present value of
obligation
Fair value of
plan asset Total
At 1 January 2014 5 648 - -5 648
Current service cost 979 - -979
Local tax 139 - -139
Interest expense/(income) 203 - -203
6 969 - -6 969
Remeasurements: -
(Gain)/Loss from change in financial assumptions 2 552 - -2 552
2 552 - -2 552
Contributions:
Employers
Plan participants
Payments from plans:
Benefit payments -196 - 196
At 31 December 2014 9 325 - -9 325
(NOK 000's)Present value of
obligation
Fair value of
plan asset Total
At 1 January 2013 125 310 94 362 -30 948
Current service cost 7 753 - -7 753
Local tax -53 - 53
Interest expense/(income) 5 102 3 963 -1 139
138 112 98 326 -39 786
Remeasurements: -
(Gain)/Loss from change in financial assumptions -129 399 -104 531 24 868
-129 399 -104 531 24 868
Contributions:
Employers - 6 205 -6 205
Plan participants - - -
Payments from plans:
Benefit payments -3 065 - 3 065
Settlements
At 31 December 2013 5 648 0 -5 648
The movement in the defined benefit liability over the year is as follows:
The amounts recognised in the balance sheet are determined as follows:
The Acquired Interest operates unfunded defined benefit pension plans for a few management employees. The plans are final salary
pension plans, which provide benefits to employees in the form of a guaranteed level of pension payable for life. The level of benefits
provided depends on employees' length of service and their salary in the final years leading up to retirement. The pension plan is
funded through the Acquired Interest's operations, which means that the Acquired Interest meets the benefit payment obligation as it
falls due. Defined benefit pension plans for all employees was terminated as at end of 2013.
The present value of the defined benefit obligation was comprised of approximately NOK 9,235k relating to active employees.
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Note 17: Post-employment benefits
2014 2013
Discount rate 3,00 % 4,10 %
Inflation 1,75 % 1,50 %
Salary growth rate 3,25 % 3,75 %
Pension growth rate 2,25 % 3,50 %
2014 2013
Retiring at the end of the reporting period:
Male - -
Female - -
Retiring 20 years after the end of the reporting period
Male 1 1
Female - -
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience. These
assumptions translate into an average life expectancy in years for a pensioner retiring at age 67.
The significant actuarial assumptions were as follows:
Note 18: Commitments and contingencies
Operating lease commitments
Lease commitments 2014 (NOK 000's)
Next 1 year 1 455
1 to 5 years 3 479
After 5 years 3 550
Future minimum lease payments 8 484
Lease commitments 2013 (NOK 000's)
Next 1 year 1 591
1 to 5 years 3 418
After 5 years 3 550
Future minimum lease payments 8 559
The Acquired Interest leases vehicles under non-cancellable operating lease agreements. The lease terms are
between 3 and 5 years, and the majority of lease agreements are renewable at the end of the lease period. The
Acquired Interest leases office space with a contract which expires in 2023. The future aggregate minimum lease
payments under non-cancellable operating leases are as follows:
Note 19: Transactions with related parties
Related party relationships are those involving control, joint control or significant influence. Related parties are in a position to enter into
transactions with the Acquired Interest that would not be undertaken between unrelated parties.
Recognised sales between the Acquired Interest and New Weifa AS are for 2014 and 2013 NOK 119.2 million and MNOK 118.4 million
respectively.
The specific purpose carve-out financial statements are based on the sale and purchase agreement for the Acquired Interests entered into
between Weifa AS and Vistin Pharma AS. At the time of entered into these contracts both companies were owned by the same ultimate
holding company, Weifa ASA. All the contracts were entered into on normal market terms.
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Note 20: Events after the reporting period
In an Extraordinary General Meeting held on 16 April 2015, the share holders of Weifa ASA approved the sale of Weifa AS' B2B business
and tablet production to Vistin Pharma AS, a newly established subsidiary of Weifa ASA. A new Norwegian public limited liability
company, Vistin Pharma ASA ("Vistin Pharma"), has been established for the purpose of being the holding company for Vistin Pharma
AS, and will apply for listing of its shares on Oslo Axess. To finance the acquisition of Weifa’s B2B operations and secure working capital
and funds for future growth initiatives, Vistin Pharma will conduct an equity issue of approximately NOK 170 million, which will result in net
proceeds of approximately NOK 161 million. Approximately NOK 120 million of the net proceeds from the Equity Issue will be paid to Weifa
AS, as consideration for the B2B business. Approximately NOK 41 million will remain in Vistin Pharma following the transaction. The
Equity Issue is fully guaranteed primarily by large existing shareholders of Weifa ASA. The sale of the B2B business and tablet production
is expected to be carried out on 29 May 2015.
Weifa ASA
Østensjøveien 27
Postboks 6733 Etterstad
N-0609 Oslo
Norway
Telephone: +47 22 99 86 00
www.weifa.no