Zentiva S A : SCD_Zentiva_Fin report 30.06.2023-EN

S.C. ZENTIVA S.A.

Board of Directors Report

for the Ist Semester 2023

Report date:

30.06.2023

• Name of the issuer: ZENTIVA SA
• Registered office: Bd. Theodor Pallady nr.50, Bucuresti
• Phone / Fax: [phone]
• Tax identification number: RO336206
• Trade Register number: J/40/363/1991
• Regulated market on which the issued securities are traded: Bucharest Stock Exchange
• Share Capital - subscribed and paid-in: RON 69,701,704
• Class, type, no. And main characteristics of securities: 697,017,040 dematerialized class I shares
• Market value: RON 1.92 / share, represents the reference price of the last trading day from semester I 2023
• Market capitalization as at June 30, 2023: RON 1,338,272,717

1. SHARES AND SHAREHOLDERS

ZENTIVA SA (hereinafter, the "Company") was established in 1962 under the name Intreprinderea de Medicamente Bucuresti (hereinafter "IMB").

In 1990, the Company was incorporated, taking over the entire patrimony of the former IMB in accordance with the Government's Decision.

In November 1999, the majority shareholding was taken over by the group of institutional investors formed of the European Bank for Reconstruction and Development, the Post-Privatization Foundation, GED Eastern Fund, Euromerchant Balcan Fund, Black See Fund and Galenica North East via the Cypriot company Venoma Holdings Limited.

In 27 June 2002, the Extraordinary General Shareholders' Meeting approved the increase in the share capital by the amount of old Lei 277,974,100,000 (equivalent a RON 27,797,410), respectively from the value of old Lei 138,987,050,000 (equivalent of RON 13,898,705) to the value of old Lei 416,961,150,000 (equivalent of RON 41,696,115), through the granting of 2 free stocks for each stock held by the shareholders registered with the Shareholders' Register as at the reference date 30 May 2002.

In 12 October 2005, Zentiva N.V., a Dutch company seated in Amsterdam, The Netherlands, with branches in several European countries, purchased the shares of Venoma.

In October 2005, Zentiva NV made a public offer regarding the purchase of the shares of the issuer Sicomed SA, denominated afterwards Zentiva SA, for the amount of RON / share 1.37, during the period between 9.11.2005 - 12.01.2006.

In March 2009, Sanofi - Aventis Europe announced its having become the shareholder of Zentiva N.V., holding approximately 96.8% shares.

In August 2009, Sanofi-Aventis Europe made a public offer regarding the purchase of the shares of the issuer Zentiva SA, for the amount of RON/share 0.7, during the period between 12.08.2009 and 22.09.2009. Between 20 February 2018 and 5 April 2018, Sanofi-Aventis Europe, through Zentiva N.V., conducted a public purchase offer at a price of RON 3.50 per share, after which it acquired 48,216,352 shares, thus reaching a holding of 93.2295% of the share capital of the Company.

On 31 August 2018 it was registered the transfer of shares from Venoma Holdings Limited, ZENTIVA NV and Sanofi Aventis Europe to Zentiva Group a.s. Therefore, Zentiva Group a.s became shareholder of Zentiva SA (holding of 93.2295% of the share capital).

On 30 September 2018, the transfer of shares was finalized between Zentiva N.V. (100% owned and controlled by Sanofi Aventis Europe), as seller, and AI Sirona BidCo s.r.o. (100% owned and controlled by AI Sirona (Luxembourg) Acquisition S. à r.l., a company which is entirely owned by AI Sirona (Luxembourg) Subco S. à r.l. and ultimately controlled by Advent Funds GPE VIII, a fund managed by Advent International Corporation), as buyer, through which the control over Zentiva Group a.s. was transferred. On 31 December 2018, Zentiva Group a.s. held 388,730,877 shares, representing 93.2295% of the share capital of the Company.

Between 18.12.2018 - 11.01.2019, Zentiva Group a.s. conducted a mandatory public offer for buying at a price of RON 3.7472 per share, after which it acquired 200,333 shares, thus reaching a holding of 388,931,210 shares representing 93.2776% of the share capital of the Company.

Between 05.07.2019 - 05.08.2019 (subscription period), the Company carried out the operation of share capital increase by granting preferential rights, by issuing a number of 300,000,000 new shares, with a nominal value of 0.1 RON / share, which were offered for subscription to the shareholders registered in the shareholders' register of the Company held by Depozitarul Central SA, on the registration date of May 16, 2019. Following the subscriptions made, out of the total number of 300,000,000 new shares, 19,944,110 shares were not subscribed and were canceled in accordance with the provisions of the decision of the extraordinary general meeting of the shareholders of the Company dated April 30, 2019.

1. SHARES AND SHAREHOLDERS (continued)

After the share capital increase, the share capital of the Company is RON 69,701,704 (compared with RON 41,696,115 prior to the increase), being divided into 697,017,040 nominal shares with a value of 0,1 RON each, and is held as follows:

• the shareholder Zentiva Group a.s. owns 668,778,101 shares, representing 95.9486% of the Company's share capital;
• other natural and legal persons hold 28,238,939 shares, representing 4.0514% of the Company's share capital.

The synthetic shareholding structure as of June 30, 2023 remained identical to the one as of December 31, 2022 respectively:

	30 June	31 December
Shareholding structure	2023 (%)	2022 (%)
Zentiva Group a.s.*	95.9486	95.9486
Other minority shareholders	4.0514	4.0514
Total	100	100

Source: Central Depository

• On December 31, 2019, the company Zentiva Group a.s. merged with the company AI Sirona Bidco s.r.o., the latter being the sole shareholder of Zentiva Group a.s. Following the merger, the company Zentiva Group a.s. ceased to exist, its entire assets being transferred to the company AI Sirona Bidco s.r.o., which, as of December 31st, 2019, also changed its legal form from a limited liability company ("s.r.o.") to a joint stock company ("a.s." ), as well as the name from AI Sirona Bidco s.r.o. to Zentiva Group a.s.

The Company's shares have been listed on the Standard Category of the Bucharest Stock Exchange starting from 1998.

The market capitalization of Zentiva SA shares as at June 30, 2023 is in amount of RON 1,338,272,717 (December 31, 2022: 1,352,213,058).

As of June 30, 2023 the price per share amounted to RON 1.92 / share (December 31, 2022: RON 1.94 / share).

As of June 30, 2023, the Company has net assets of RON 1,071,705,802 which represents more than 50% of the share capital of RON 69,701,704 (as of December 31, 2022, the Company had net assets of RON 999,354,559 which represented more than 50% of the share capital of RON 69,701,704) which is in compliance with the requirements of Romanian Company Law (law no. 31/1990, with subsequent amendments).

2. ECONOMIC and FINANCIAL ANALYSIS

2.1 Analysis of the Financial Position (balance sheet)

The Company's patrimony, on main elements, on 30.06.2023 compared to the period ended 31.12.2022 is presented as follows:

		31 December	Variation	Variation
Balance Sheet (RON)	30 June 2023
2022		(%)
Total tangible and intangible assets	267,297,214	272,322,135	(5,024,921)	-2%
Total inventories	170,300,908	173,060,231	(2,759,323)	-2%
Total receivables	346,519,304	165,089,137	181,430,167	21%
Cash and cash equivalent	23,560,126	11,190,679	12,369,447	111%
Deposit Intercompany	565,242,353	583,511,187	(18,268,834)	-3%
Current liabilities	270,767,259	174,185,032	96,582,227	55%
Total assets less current liabilities	1,102,152,646	1,030,988,338	71,164,308	7%
Total shareholders' equity	1,071,705,802	999,354,559	72,351,244	7%

• On June 30, 2023 trade receivables increased by 21% compared to the end of the previous year mainly due to the increased turnover;
• The company's cash and cash equivalents increased by 111% as at June 30, 2023 compared to the end of the year 2022;
• Current liabilities increased on 30.06.2023 compared to the end of the previous year by 55%, due to the increase in liabilities to affiliated entities;
• Shareholders equity increased by 72.4 mil lei (+7%), representing the profit of the first semester 2023.

2.2 Analysis of the Comprehensive Income (profit & loss account)

	1 January -	1 January -
Profit & Loss Account (RON)	30 June	30 June	Variation	Variation
	(%)
	2023	2022
Net turnover	450,606,624	362,662,248	87,944,376	24%
Other operating income	356,475	7,361,377	(7,004,902)	-95%
Operating expenses - Total	385,784,085	340,676,765	45,107,320	13%
Operating profit	65,179,014	29,346,860	35,832,154	122%
Financial profit	19,982,976	7,439,432	12,543,543	169%
Gross profit	85,161,990	36,786,292	48,375,697	132%
Corporate tax	12,810,746	5,002,135	7,808,611	156%
Net profit	72,351,244	31,784,157	40,567,087	128%

2. ECONOMIC and FINANCIAL ANALYSIS (continued)

The net turnover increased by 24%, from RON 362.7 million in the first semester of 2022 to RON 450.6 million in the first semester of 2023, mainly due to a 38% increase in external sales.

Operating expenses increased by 13%, from RON 340.7 million in the first semester of 2022 to RON 385.8 million in the first semester of 2023.

The variation of operating revenues and expenditures led to a net result for the first half of 2023 of RON 72.4 million compared to RON 31.8 million in the first half of 2022.

2.3 Cash flow Statement and Liquidity Position

The cash flow statement detailing the cash flows from operating, investing and financing activities is part of the financial statements accompanying this report.

Liquidity indicators have decreased compared to the same period from last year. As of June 30, 2023, the current liquidity indicator is 4.1 (June 30, 2022: 5.9) and the immediate liquidity indicator is 3.5 (June 30, 2022: 4.9).

3. COMPANY'S ACTIVITY IN THE Ist SEMESTER of 2023

ZENTIVA S.A. reports for the first semester of 2023 a turnover of 450.6 MRON, increasing by 24% compared to the same period of the previous year, and a net profit of 72.4 MRON, increasing by 128% compared to the previous period mainly due to the increase in sales of goods (24%) and services (28%) and the increase in the financial result (169%).

In the first 6 months of 2023, the achieved production volume was higher by 6.5 million commercial units than the production volume achieved in the first 6 months of 2022, representing an increase of 9.9%.

The most important achievements of the first semester of 2023 were:

• Increase in sales of goods revenue by 24% compared to the same period of the previous year. Sales on the domestic market increased by 13% and external sales by 38% compared to the same period of the previous year.
• Investments in amount of RON 5.8 million in new production equipment and in the modernization of existing one

3.1 Reporting base

As at June 30, 2023, Zentiva SA prepared financial statements in accordance to the Order of the Ministry of Finance no. 2844/2016 approving the accounting regulations in line with the International Financial Reporting Standards, applicable for trade companies whose securities are accepted for trading on a regulated market, with all the subsequent amendments and clarifications in force.

The financial statements for the period ended June 30, 2023 are not audited.

a) Sales - Volumes and amounts

The net turnover as of June 30, 2023 is RON 450,606,624 (June 30, 2022: RON 362,662,248).