Exhibit 99.1

 

KPMG Auditores, S.L.
Torre Realia

Plaça d’Europa, 41-43

08908 L’Hospitalet de Llobregat

(Barcelona)

 

Independent Auditor’s Report

 

To the shareholders of VCN Biosciences, S.L.

  

Opinion

 

We have audited the financial statements of VCN Biosciences, S.L. (the Company), which comprise the statements of financial position as of December 31, 2021 and 2020, and the related statements of profit and loss and other comprehensive income, changes in equity, and cash flows for the years then ended, and the related notes to the financial statements.

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Directors’ responsibility for the Financial Statements

 

The Directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the Directors are required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

 

 

 

 

 

 

Auditors’ Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

In performing an audit in accordance with GAAS, we:

 

-Exercise professional judgment and maintain professional skepticism throughout the audit.

 

-Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 

-Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

 

-Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by the Directors, as well as evaluate the overall presentation of the financial statements.

 

-Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

 

KPMG Auditores, S.L.

/S/ KPMG Auditores, S.L.

 

Barcelona, Spain

 

February 10, 2022

 

 

 

 

VCN Biosciences, S.L.

 

Financial Statements

 

December 31, 2021 and 2020

 

Contents

 

Statements of financial position 3
   
Statements of profit and loss and other comprehensive income 4
   
Statements of changes in equity 5
   
Cash flow statements 6
   
Notes to the financial statements 7

 

 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Statements of financial position

at December 31, 2021 and 2020

(expressed in Euros)

 

    Note     12.31.2021     12.31.2020     12.31.2019  
                           
Non-current assets                                  
Fixed assets     4       206,811       274,220       296,692  
Non-current financial investments in Group and related    companies     6       888,714       1,348,050       -  
Deferred tax assets     10       66,180       1,903,102       1,897,689  
Total non-current assets             1,161,705       3,525,372       2,194,381  
                                 
Current assets                                
Other receivables     6       5,625       21,254       2,140  
Current financial investments in Group and related     companies     6       2,068,784       1,432,706       1,393,264  
Total current assets             2,074,409       1,453,960       1,395,404  
                                 
Total assets             3,236,114       4,979,332       3,589,785  
                                 
Capital and reserves                                
Share capital     7       215,930       215,930       152,421  
Share premium             14,756,822       14,756,822       9,820,331  
Retained earnings             (14,346,764 )     (12,563,864 )     (10,675,576 )
Total equity             625,988       2,408,888       (702,824 )
                                 
Non-current liabilities                                
Non-current financial liabilities     9       1,244,677       1,660,711       1,863,731  
Non-current loans with Group and related companies             -       -       975,450  
Total non-current liabilities             1,244,677       1,660,711       2,839,181  
                                 
Current liabilities                                
Current financial liabilities     9       328,870       224,402       251,236  
Current loans with Group and related companies     9       1,779       275       4,116  
Trade and other payables     9       1,034,800       685,056       1,198,076  
Total current liabilities             1,365,449       909,733       1,453,428  
Total equity and liabilities             3,236,114       4,979,332       3,589,785  

 

 

The notes on pages 7 to 25 form part of these financial statements.

 

These financial statements were approved by the board of directors on February 9, 2022.

 

3 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Statements of profit and loss and other comprehensive income

for the years ended December 31, 2021 and 2020

(expressed in Euros)

 

   Note   2021   2020   2019 
                  
Other operating income   9    192,290    29,693    60,869 
Personnel expenses   11    (550,338)   (600,107)   (623,294)
Other operating expenses   13    (2,017,640)   (2,448,300)   (2,491,940)
Amortisation and depreciation   4    (67,409)   (64,694)   (56,246)
                     
Results from operating activities        (2,443,097)   (3,083,408)   (3,110,611)
                     
Financial income   12    45,443    4,508    10,682 
Financial expenses        (57,510)   (146,425)   (108,045)
Exchange losses        (7,259)   (2,105)   (7,831)
                     
Net financing result        (19,326)   (144,022)   (105,194)
                     
Results before tax        (2,462,423)   (3,227,430)   (3,215,805)
Income tax benefit   10    679,523    1,339,142    1,726,927 
                     
Loss for the year        (1,782,900)   (1,888,288)   (1,488,878)

 

 

All amounts relate to continuing operations.

 

There were no recognised gains or losses other than the loss for the year.

 

The total comprehensive income for the year is the same as the loss for the year.

 

 

The notes on pages 7 to 25 form part of these financial statements.

 

4 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Statements of changes in equity

for the years ended December 31, 2021 and 2020

(expressed in Euros)

 

    Share
capital
    Share
premium
    Retained
earnings
    Total
equity
 
                         
Balance as at January 1, 2019     152,421       9,820,331       (9,186,698 )     786,054  
                                 
Total comprehensive income                                
Loss of the year     -       -       (1,488,878 )     (1,488,878 )
Balance as at December 31, 2019     152,421       9,820,331       (10,675,576 )     (702,824 )
                                 
Balance as at January 1, 2020     152,421       9,820,331       (10,675,576 )     (702,824 )
                                 
Total comprehensive income                                
Loss of the year     -       -       (1,888,288 )     (1,888,288 )
                                 
Transactions with shareholders                                
Capital increase     63,509       4,936,491       -       5,000,000  
Balance as at December 31, 2020     215,930       14,756,822       (12,563,864 )     2,408,888  
                                 
                                 
Balance as at January 1, 2021     215,930       14,756,822       (12,563,864 )     2,408,888  
                                 
Total comprehensive income                                
Loss of the year     -       -       (1,782,900 )     (1,782,900 )
                                 
Balance as at December 31, 2021     215,930       14,756,822       (14,346,764 )     625,988  

 

The notes on pages 7 to 25 form part of these financial statements.

 

5 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Cash Flow Statements

for the year ended December 31, 2021 and 2020

(expressed in Euros)

 

   Note   12.31.2021   12.31.2020   12.31.2019 
                  
Cash flows from operating activities                    
                     
Results before tax        (2,462,423)   (3,227,430)   (3,215,805)
                     
Adjustments for:                    
Amortisation and depreciation   4    67,409    64,694    56,246 
Government grants   9    (192,290)   -    (57,948)
Exchange losses        7,259    2,105    7,831 
Financial income   12    (45,443)   (4,508)   (10,682)
Financial expense        57,510    146,425    108,045 
                     
Changes in operating assets and liabilities:                    
Trade and other receivables        15,629    16,159    44,014 
Current financial investments in Group companies        (33,135)   22,866    (30,511)
Trade and other payables        351,375    (510,387)   182,644 
                     
Other cash flows in operating activities:                    
Interest received        47,689    -    16,862 
Interest paid        (7,697)   (82,353)   (24,041)
Tax received        1,911,257    1,240,657    619,863 
                     
Net cash used in operating activities        (282,860)   (2,331,772)   (2,303,482)
                     
Cash flows from investing activities                    
                     
Acquisition of fixed assets   4    -    (42,222)   (54,631)
Loans to Group Companies        -    (1,348,050)   - 
Repayment of loans to Group companies        459,336    -    1,220,972 
                     
Net cash from/(used in) investing activities        459,336    (1,390,272)   1,166,341 
                     
Cash flows from financing activities                    
Proceeds from increase of capital   7    -    5,000,000    - 
Proceeds from external parties loans   9    170,127    -    454,021 
Loans from Group companies        -    -    963,236 
Repayment of loans due to Group companies        -    (975,450)   - 
Repayment of loans from external parties        (339,447)   (298,042)   (279,722)
                     
Net cash (used in)/from financing activities        (169,320)   3,726,508    1,137,535 
                     
Effect of exchange rate fluctuations on cash        (7,156)   (4,464)   (4,334)
Net increase in cash and cash equivalents        7,156    4,464    394 
Cash and cash equivalents at beginning of year        -    -    3,940 
                     
Cash and cash equivalents at end of year        -    -    - 

 

The notes on pages 7 to 25 form part of these financial statements.

 

6 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020


Notes to the financial statements

for the year ended December 31, 2021 and 2020

 

(forming part of the financial statements)

 

1. First time adoption of IFRS

 

In the context of the preparation of these financial statements, and in accordance with IFRS 1, VCN Biosciences S.L. (the “Company”) has consistently applied the accounting policies set out in note 2 in preparing the financial statements for the years ended December 31, 2021, 2020 and 2019. The Company adopted IFRS for the first time in 2020.

 

When preparing the opening statement of financial position under International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standard Board (IFRS-IASB), the Company adjusted the statement of financial position dated January 1, 2019, presented in the individual financial statements of the Company for that year, applying as described in IFRS 1 all the mandatory exceptions and some of the optional exemptions to the retrospective application of IFRS-IASB, as described below:

 

a)Exemptions to retroactive application

 

The Company has not applied any of the exemptions to the full retroactive application of IFRS-IASB.

 

b)Exceptions to retroactive application followed by the Company

 

There are no mandatory exceptions applicable to the Company.

 

2. Nature, principal activities, basis of presentation and significant accounting policies

 

The Company is a private company limited by shares which was founded in Spain in 2009. Its registered address is Avinguda de la Generalitat, 152 (Sant Cugat del Vallès) and its corporate tax residence is in Barcelona. The Company's statutory activity consists of research and experimental biotechnology development, which is also its principal activity. The Company does not have any sales income because its research and development (R&D) projects are in the early stages of development.  

 

The Company is a subsidiary of Grifols Innovation and New Technologies, Limited (see note 7). The largest group in which the results of this Company are consolidated is that headed by Grifols S.A., which is the ultimate parent company of the Company, it is listed and no one entity or individual has control. The consolidated accounts of Grifols S.A. are available to the public and may be obtained from Carrer Jesús i Maria, 6, Barcelona.  

 

On February 19, 2021 Grifols S.A. board of directors issued the consolidated annual accounts of Grifols, S.A. and subsidiaries (“the Group” or “Grifols Group”) for 2020 prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) which for Grifols Group purposes, are identical to the standards as issued by the International Accounting Standard Board (IFRS-IASB), which show consolidated profit attributable to the parent company of 618,546 thousand euros, total assets of 15,274,776 thousand euros and consolidated equity of 6,720,055 thousand euros (2019: 625,146; 15,542,611 and 6,845,768 thousand euros). The 2021 consolidated annual accounts of the Grifols Group are expected to be issued at the end of February 2022.

 

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements of VCN Biosciences S.L.

 

Basis of preparation

 

The financial statements have been prepared in accordance with applicable IFRS-IASB. The financial statements are prepared under the historical cost convention. The financial statements are presented in euros, which is the Company’s functional currency. All amounts have been rounded to the nearest unit, unless otherwise indicated.

 

The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets and liabilities affected in further periods.

 

The Company recognises deferred tax assets to the extent that it is probable that sufficient taxable income will be available against which they can be utilized, based on management estimates on amount and payments of future taxable profits.

 

The financial statements have not been prepared to comply with accounting, legal and/or tax statutory requirements, but rather in relation with the potential Company’s shares sale transaction. In this regard, the Company and its shareholders signed, on December 14, 2021, a share purchase agreement with Synthetic Biologics (the buyer) to sell all the shares of VCN Biosciences, S.L., subject to the fulfilment of certain conditions. Completion of the transaction is expected in the first quarter of 2022.

 

7 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

2. Nature, principal activities, basis of presentation and significant accounting policies (continued)

 

Going concern

 

The Company had losses in 2021 and 2020 amounting to 1,783 thousand euros and 1,888 thousand euros, respectively (1,489 thousand euros in 2019). As of December 31, 2021 and 2020, the Company’s financial statements presented a positive equity of 626 and 2,409 thousand euros, respectively (negative equity of 703 thousand euros as of December 31, 2019). In 2020 the shareholders made a capital contribution in the amount of 5 million euros in order to restore the equity and financial position of the Company.

 

As stated in note 2, the Company's statutory activity consists of research and experimental biotechnology development, and since R&D projects are in early stages of development, the Company does not have sales income. Therefore, the Company needs ongoing financial support from shareholders in order to develop its activity.

 

The Directors of the Company have prepared these financial statements following the principle of a going concern, considering

the nature of the Company and the following facts:

 

1)Although the R&D projects are still in development, the Directors of the Company believe that the value of the scientific knowledge obtained up to date from its R&D activities is significant and therefore they expect that shareholders will be able to monetize this value through the sales transaction explained in note 2 (basis of presentation).

 

2)The Company and related shareholders signed a share purchase agreement with the potential buyer related to the acquisition of the shares of the company (see note 2), subject to the completion of the transaction. In this agreement the potential buyer commits to fund VCN’s R&D activities for the following years (until 2024).

 

3)In case the transaction is not completed, the Directors expect that shareholders will continue to support the Company financially, as they believe that the scientific knowledge obtained in current stage of development of the research activities will result in income for the Company in the future once those projects are finalized or through the sale of the business to other external parties.

 

4)The finance needs of the Company will depend on the level of R&D activities/expenses to be performed in the future. The shareholders can decide this level of investment depending on the business needs.

 

 

Due to the reasons explained above, there is no significant doubt that the Company will be able to continue using the going concern principle.

 

Fixed assets

 

Fixed assets are measured at cost of acquisition or production. Depreciation is provided to write off the cost or valuation less the estimated residual value of tangible fixed assets by equal instalments over their estimated useful economic lives as follows:  
 
Equipment, furniture and fittings   3 - 15 years
Other items   4 - 10 years

 

Subsequent costs to the initial recognition of the asset are capitalized only when they increase capacity or productivity or lengthen the useful life of the asset. The carrying amount of parts that are replaced is derecognised.

 

Leases

 

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. The application is required for annual periods beginning on or after January 1, 2019.

 

IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the substance of transactions involving the legal form of a lease.

 

The Company adopted IFRS 16 for the first time on January 1, 2019 as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening statement of financial position at January 1, 2019.

 

8 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

2. Nature, principal activities, basis of presentation and significant accounting policies (continued)

 

On January 1, 2019 there was no impact in equity due to the IFRS 16 application.

 

The main policies, estimates and criteria for the application of IFRS 16 are as follows:

 

-Scope: IFRS 16 evaluation considers all the contracts in which the Company acts as lessee.

 

-Transition approach: the Company has opted to implement IFRS 16 using the modified retrospective approach, whereby the right-of-use asset is measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. When applying this modified retrospective approach, the Company does not re-express the comparative information.

 

-Discount rates: under IFRS 16, a lessee shall discount the future lease payments using the interest rate implicit in the lease if that rate can be readily determined. Otherwise, the lessee shall use the incremental borrowing rate. The Company uses the incremental borrowing rate. This is the rate that a lessee would have to pay at the commencement date of the lease for a loan over a similar term, and with similar security, to obtain an asset of a similar value to the right–of-use asset.

 

-The lease term: it is the non-cancellable period considering the initial term of each contract unless the Company has a unilateral extension or termination option and there is reasonable certainty that this option will be exercised, in which case the corresponding extension term or early termination will be considered.

 

-Accounting policies applied during transition: the Company has employed the following practical expedients when applying the simplified method to leases previously carried as operating leases under IAS 17 Leases:
§Non-application of IFRS 16 to agreements that were not previously deemed to contain a lease under IAS 17 and IFRIC 4 “Determining whether an arrangement contains a lease”.
§Exclusion of the initial direct costs from the measurement of the right-of-use asset on the date of first-time adoption.
§Exclusion of leases that expire within 12 months as from the date of first-time adoption.
§Exclusion of leases in which the underlying asset has a low value.

 

Impairment of non-financial assets subject to amortisation or depreciation

 

The Company assesses whether there are indications of possible impairment losses on non-financial assets subject to amortisation or depreciation, with the aim to verify whether the assets are carried at more than their recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use.

 

Impairment losses are recognised in the statement of profit and loss.

 

At the end of each reporting period the Company assesses whether there are any indications that an impairment loss recognised in prior periods may no longer exist or may have decreased. Impairment losses on goodwill are not reversible. Impairment losses on other assets are only reversed if there has been a change in the estimates used to calculate the recoverable amount of the asset.

 

A reversal of an impairment loss is recognised in the statement of profit and loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss may not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised.

 

After an impairment loss or reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the asset is adjusted in future periods based on its new carrying amount.

 

However, if the specific circumstances of the assets indicate an irreversible loss, this is recognised directly in losses on the disposal of fixed assets in the statement of profit and loss.

 

9 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

2. Nature, principal activities, basis of presentation and significant accounting policies (continued)

 

Financial instruments

 

- Classification of the financial instruments

 

Financial instruments are classified at the time of their initial recognition as a financial asset, a financial liability or an equity instrument, in accordance with the economic substance of the contractual agreement and with the definitions of financial assets, financial liabilities or equity instruments indicated in IAS 32 “Financial instruments: Presentation”.

 

For purposes of its measurement, the Company classifies financial instruments in the categories of financial assets and financial liabilities at fair value through profit or loss, separating those initially designated from those held for trading or mandatorily measured at fair value through profit or loss, financial assets and liabilities measured at amortized cost and financial assets measured at fair value through other comprehensive income, separating the equity instruments designated as such, from other financial assets. The classification depends on the Company’s business model to manage the financial assets and the contractual terms of the cash flows.

 

- Offsetting principles

 

A financial asset and a financial liability are offset only when the Company currently has the legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

 

- Measurement

 

At the time of initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset that is not at fair value through profit or loss, the costs of the transaction that are directly attributable to the acquisition. The transaction costs of financial assets at fair value through profit or loss are taken to results.

 

In order to determine the fair value of financial assets or liabilities, the Company uses market data as where available.

 

- Loans and receivables

 

Loans and receivables comprise trade and non-trade receivables with fixed or determinable payments that are not quoted in an active market other than those classified in other financial asset categories. These assets are initially recognised at fair value, including transaction costs, and are subsequently measured at amortised cost using the effective interest method.

 

Nevertheless, financial assets, which have no established interest rate or are expected to be received in the short term, and for which the effect of discounting is immaterial, are measured at their nominal amount.

 

- Interests

 

Interest are recognised using the effective interest method.

 

- Impairment of financial assets

 

A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and the event or events have an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

 

The Company recognises impairment of loans and receivables and debt instruments when estimated future cash flows are reduced or delayed due to debtor insolvency.

 

- Financial liabilities

 

Financial liabilities, including trade and other payables, that are not classified as held for trading or as financial liabilities at fair value through profit or loss are initially recognised at fair value less any transaction costs directly attributable to the issue of the financial liability. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

 

Nevertheless, financial liabilities which have no established interest rate, which are expected to be settled in the short term and for which the effect of discounting is immaterial, are measured at their nominal amount.

 

The Company measures financial liabilities at amortised cost provided that reliable estimates of cash flows can be made based on the contractual terms.

 

10 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

2. Nature, principal activities, basis of presentation and significant accounting policies (continued)

 

Cash and cash equivalents

 

Cash and cash equivalents include cash on hand and demand deposits in financial institutions.

 

Government grants

 

Government grants are recognised when there is reasonable assurance that they will be received and that the Company will comply with the conditions attached.

 

-Capital grants

 

Outright capital grants are initially recognised as deferred income in the statement of financial position. Income from capital grants is recognised in the statement of profit and loss in line with the depreciation of the corresponding financed assets.

 

-Operating grants

 

Operating grants received to offset expenses or losses already incurred, or to provide immediate financial support not related to future disbursements, are recognised in the statement of profit and loss.

 

-Interest rate grants

 

Financial liabilities comprising implicit assistance in the form of below-market interest rates are initially recognised at fair value. The difference between this value, adjusted where necessary for the issue costs of the financial liability and the amount received, is recognised as a government grant based on the nature of the grant awarded. The amount recognised as other operating income in the statement of profit and loss in 2021 was 192 thousand euros, which included the government grant of the interest-free loan received by the Company in 2021 (see note 9) and debt instalment forgiveness. No income was recognised as a government grant in 2020 (58 thousand euros in 2019).

 

Post-retirement benefits

 

The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The amount charged against profits represents the contributions payable to the scheme in respect of the accounting period.

 

Taxation

 

The income tax expense or tax benefit for the year comprises current tax and deferred tax.

 

Current tax is the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the year. Current tax assets or liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantially enacted at the reporting date.

 

Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences, whereas deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses, and the carryforward of unused tax credits. Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base.

 

Current and deferred tax are recognised as income or an expense and included in the profit or loss for the year, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different year, directly in equity, or from a business combination.

 

A deferred tax asset is recognised only to the extent that it is probable that tax deductions will be monetized, or future taxable profits will be available against which the temporary difference can be utilised.

 

Deferred tax assets which do not meet the above conditions are not recognised in the statement of financial position. At year end the Company assesses whether deferred tax assets which were previously not recognised now meet the conditions for recognition.

 

Since January 1, 2017 the Company files consolidated tax returns with Grifols S.A. and the rest of the Spanish subsidiaries: Instituto Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Laboratorios Grifols, S.A., Gripdan Invest S.L., Grifols Viajes, S.A., and Aigües Minerals de Vilajuïga S.A.

 

11 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

2. Nature, principal activities, basis of presentation and significant accounting policies (continued)

 

Classification of assets and liabilities as current and non-current

 

The Company classifies assets and liabilities in the statement of financial position as current and non-current. Current assets and liabilities are determined as follows:

 

- Assets are classified as current when they are expected to be realised or are intended for sale or consumption in the Company’s normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realised within twelve months after the reporting date or are cash or a cash equivalent.

 

- Liabilities are classified as current when they are expected to be settled in the Company’s normal operating cycle, they are held primarily for the purpose of trading, or they are due to be settled within twelve months after the reporting date.

 

Transactions between group companies

 

Transactions between group companies are recognised at the fair value of the consideration given or received. The difference between this value and the amount agreed is recognised in line with the underlying economic substance of the transaction.

 

Research and development expenditures

 

Any research and development expenditure incurred during the research phase of projects is recognised as an expense when incurred. Costs related with development activities are capitalized when:

 

-The Company has technical studies that demonstrate the feasibility of the production process;

 

-The Company has undertaken a commitment to complete production of the asset, to make it available for sale or internal use;

 

-The asset will generate sufficient future economic benefits;

 

-The Company has sufficient technical and financial resources to complete development of the asset and has devised budget control and cost accounting systems that enable monitoring of budgetary costs, modifications and the expenditure actually attributable to the different projects.

 

Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

 

3.Amendments to IFRS in 2021, 2020 and 2019

 

As from January 1, 2019 the Company has adopted the latest versions of all the IFRS issued by the International Accounting Standard Board (IASB) for which the mandatory effective date is January 1, 2020.

 

The Company has applied as from January 1, 2019 the following new accounting standards:

 

 

Effective date in 2019 IASB effective date  
¨ IFRS 16 - Leases January 1, 2019  
¨ IFRIC 23 - Uncertainty over Income Tax Treatments January 1, 2019  
¨ IFRS 9 - Prepayment Features with Negative Compensation January 1, 2019  
¨ IAS 28 - Long-term interests in Associates and Joint Ventures January 1, 2019  
¨ Various - Annual Improvements to IFRS Standards 2015-2017 Cycle January 1, 2019  
¨ IAS 19 - Plan Amendment, Curtailment or Settlement January 1, 2019  
¨ IFRS 17 insurance contracts. January 1, 2019  

 

12 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

Effective date in 2020 IASB effective date  
¨ IAS 1, IAS 8 - Definition of material January 1, 2020  
¨ Various - Amendments to references to the Conceptual Framework in IFRS Standards January 1, 2020  
¨ IFRS 3 - Amendment to IFRS 3: Business combinations January 1, 2020  
¨ IFRS 9, IAS 39, IFRS 7 - Interest rate benchmark reform January 1, 2020  
¨ As a consequence of the Covid 19 - Related Rent concessions January 1, 2020  

 

 

Effective date in 2021 IASB effective date  
¨ IFRS 4 - Amendments to IFRS 4 Insurance Contracts January 1, 2021  
¨ Various - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021  
¨ IFRS 9, IAS 39, IFRS 7 - Interest rate benchmark reform phase 2 January 1, 2021  
¨ Amendments to IFRS 16 - Covid 19 - Related Rent concessions January 1, 2021  

 

The application of these standards and interpretations did not have any material impacts on the financial statements for the years ended December 31, 2021, 2020 and 2019.

 

Standards issued but not effective in 2021 Mandatory application
for annual periods
beginning on or after:
 
¨  Various - Amendments on May 14, 2020 to: January 1, 2022  

-      IFRS 3 - Business combinations: references to the conceptual framework

-      IAS 16 - Property, plant and equipment: proceeds before intended use  

-      IAS 37 - Provisions, contingent liabilities and contingent assets: onerous contracts - cost of fulfilling a contract

-      Annual improvements 2018-2020: IFRS 1, IFRS 9, IFRS 16, IAS 41  

 
¨ IFRS 17 - Insurance contracts January 1, 2023  
¨ Amendment to IAS 1 - Classification of liabilities as current or non-current   January 1, 2023  
¨ Amendment to IAS 8 - Changes in Accounting estimates and errors January 1, 2023  
¨ Amendment to IAS 1 - Disclosure of Accounting policies January 1, 2023  
¨ Amendment to IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction   January 1, 2023  

 

The Directors intend to adopt these standards, where relevant and applicable, in the first accounting period after their effective date, but do not anticipate that they will have a material effect on the financial statements in the period of their initial application.

 

13 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

4.Fixed assets

 

    Equipment,
furniture
  Under   Other      
    and fittings   construction   items   Total  
             
Cost or valuation                  
At January 1, 2019   364,917   5,118   6,852   376,887  
Additions   -   54,631   -   54,631  
Transfers   59,749   (59,749)   -   -  
                   
At December 31, 2019   424,666   -   6,852   431,518  
                   
                   
At January 1, 2020   424,666   -   6,852   431,518  
Additions   42,222   -   -   42,222  
                   
At December 31, 2020   466,888   -   6,852   473,740  
                   
At January 1, 2021   466,888   -   6,852   473,740  
Additions   -   -   -   -  
                   
At December 31, 2021   466,888   -   6,852   473,740  
                   
Depreciation                  
At January 1, 2019   (72,303)   -   (6,277)   (78,580)  
Charge for year   (55,671)   -   (575)   (56,246)  
                   
At December 31, 2019   (127,974)   -   (6,852)   (134,826)  
                   
                   
At January 1, 2020   (127,974)   -   (6,852)   (134,826)  
Charge for year   (64,694)   -   -   (64,694)  
                   
At December 31, 2020   (192,668)   -   (6,852)   (199,520)  
                   
At January 1, 2021   (192,668)   -   (6,852)   (199,520)  
Charge for year   (67,409)   -   -   (67,409)  
                   
At December 31, 2021   (260,077)   -   (6,852)   (266,929)  
                   
Net book value                  
At December 31, 2021   206,811   -   -   206,811  
                   
At December 31, 2020   274,220   -   -   274,220  
                   
At December 31, 2019   296,692   -   -   296,692  

 

14 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

(a) Fully depreciated assets

 

Cost of fully depreciated property, plant and equipment in use at December 31 was as follows:

 

   2021   2020   2019 
             
Furniture and fittings   24,620    24,620    24,620 

 

(b) Insurance

 

The Company has taken out insurance policies to cover the risk of damage to its property, plant and equipment. These policies amply cover the net carrying amount of the Company’s assets.

 

 

5.Risk management policy

 

The Company’s risk management policies are established in order to identify and analyse the risks to which the Company is exposed, establish suitable risk limits and controls, and control risks and compliance with limits. Risk management procedures and policies are regularly reviewed to ensure they take into account changes in market conditions and in the Company’s activities. The Company’s management procedures and rules are designed to create a strict and constructive control environment in which all employees understand their duties and obligations.

 

-Market risk:

 

Market risk is the risk that changes in the market prices – e.g. foreign exchange rates, will affect the business income or value of its holding of financial instruments. The Company operates internationally and is therefore exposed to currency risk when operating with foreign currencies, especially with regard to the UK Sterling. The management considers that the business has no exposure to significant currency risks.

 

-Liquidity risk:

 

Liquidity risk is the risk that the Company cannot meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure where possible, that it always has sufficient liquidity to settle its obligations at the maturity date. The Company applies a prudent policy to cover its liquidity risks and manages this proactively through appropriate management of liquid funds in line with Group treasury policies. Additionally, the shareholders make capital contributions in order to restore the financial situation when required.

 

-Interest rate risk:

 

The Company’s interest rate risks arise from current and non-current borrowings. Borrowings at variable interest rates expose the Company to cash flow interest rate risks. Fixed-rate borrowings expose the Company to fair value interest rate risk. The Company policy set by the Group consists of keeping its borrowings in instruments with a variable interest rate, except for the below-market interest rates granted by governmental institutions (see note 9).

As most of the Company’s financial liabilities are fixed-rate, interest expenses would not significantly change in case of an increase/decrease of 100 basis points at December 31, 2021, 2020 and 2019.

 

-Capital management:

 

The directors’ policy is to maintain a solid capital base in order to ensure creditor and market confidence and sustain future business development.

 

15 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

6.Financial assets and trade receivables

 

(a) Classification

 

    Carrying amount  
      12.31.2021
Non-current
      12.31.2021
Current
      12.31.2020
Non-current
      12.31.2020
Current
      12.31.2019
Current
 
Loans and receivables                              
                                         
Non-current financial investments in Group and related companies     888,714       -       1,348,050       -       -  
Current financial investments in Group and related companies     -       2,068,784       -       1,432,706       1,393,264  
Other receivables     -       5,625       -       21,254       675  
                                         
Financial assets not measured at fair value     888,714       2,074,409       1,348,050       1,453,960       1,393,939  

 

(b) Financial investments in Group and related companies

 

    12.31.2021
Non-current
    12.31.2021
Current
    12.31.2020
Non-current
    12.31.2020
Current
    12.31.2019
Current
 
                               
                                         
Loans to Group companies     888,714       -       1,348,050       -       -  
Loans to Group companies (tax effect) (see note 10)     -       2,066,522       -       1,428,198       1,393,264  
Interests receivable from loans to Group companies     -       2,262       -       4,508       -  
                                         
      888,714       2,068,784       1,348,050       1,432,706       1,393,264  

 

In 2021 and 2020, the Company had a cash pooling arrangement with Grifols Worldwide Operations Limited, due by 2027. The credit limit was 2,000 million euros and the accrued interest rate was the Group's senior debt plus a spread of 0.75%. As of December 31, 2021 and 2020, the cash pooling balance amounted to 889 and 1,348 thousand euros, respectively (2019: credit balance of 975 thousand euros. See note 12).

 

The “Loans to group companies (tax effect)” refer to intercompany receivables resulting from the tax effect of filing consolidated tax returns, which comprise accrued income tax and value added tax.

 

(c) Other receivables

 

   12.31.2021  12.31.2020  12.31.2019  
        
Unrelated parties           
   Other receivables  5,625  5,414  675  
   Personnel  -  15,840  1,465  
   5,625  21,254  2,140  

 

16 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

7.Equity

 

Details of equity and changes during the year are shown in the statement of changes in equity.

 

(a) Share capital

 

         12.31.2021        12.31.2020         

12.31.2019

 
Authorised   nº of shares        nº of shares        nº of shares     
                               
 Ordinary shares of €1 each   215,930    215,930    215,930    215,930    152,421    152,421 
                               
Allotted, called up and fully paid                              
                               
 Ordinary shares of €1 each   215,930    215,930    215,930    215,930    152,421    152,421 

 

As of December 2, 2020, an increase of capital was carried out by issuing 63,509 new shares of 1 euro par value each.

 

The companies that participate directly or indirectly in the share capital of the Company in a percentage equal to or greater than 10% are as follows:

 

         12.31.2021        12.31.2020         

12.31.2019

 
    nº of shares    %    nº of shares    %    nº of shares    % 
Company:                              
Grifols Innovation and New Technologies, Limited   187,486    86.82%   187,486    86.82%   123,977    81.34%

 

The Company and its shareholders signed, on December 14, 2021, a share purchase agreement with Synthetic Biologics, Inc. (the buyer) to sell all the shares of VCN Biosciences, S.L., subject to fulfilment of certain conditions. Completion of the transaction is expected in the first quarter of 2022.

 

(b) Share premium

 

This reserve is freely distributable.

 

Dividends may not be distributed if, after the distribution, the Company’s equity is lower than the share capital.

 

As of December 2, 2020, an increase of capital was carried out by issuing 63,509 new shares with a share premium of 77.728999 euros each, which meant a total share premium of 4,936,491 euros.

 

(c) Legal reserve

 

Appropriations to the legal reserve were made in compliance with article 274 of the Spanish Companies Act, which requires that companies transfer 10% of profits for the year to a legal reserve until this reserve reaches an amount equal to 20% of the share capital.

 

The legal reserve is not distributable to shareholders and if it is used to offset losses, in the event that no other reserves are available, the reserve must be replenished with future profits.

 

8.Defined contribution pension scheme

 

The Company operates a defined contribution pension scheme for those employees who have rendered services to the Company for more than 2 years. The pension scheme is part of BancSabadell 18 Fondo de Pensiones, which is managed by BanSabadell Pensiones.

 

The pension charge for the year represents contributions payable by the Company to the fund (see note 11.c). There were no outstanding or prepaid contributions at the end of the financial year (2020: nil).

 

17 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

9.Financial liabilities and trade payables

 

(a) Classification

 

      Carrying amount  
      12.31.2021
Non-current
      12.31.2021
Current
      12.31.2020
Non-current
      12.31.2020
Current
      12.31.2019
Non-current
      12.31.2019
Current
 
Loans and payables                                    
                                                 
Loans from Group companies     -       1,779       -       275       975,450       4,116  
Financial liabilities     1,244,677       328,870       1,660,711       224,402       1,863,731       251,236  
Trade and other payables     -       994,160       -       643,134       -       1,153,945  
                                                 
      1,244,677       1,324,809       1,660,711       867,811       2,839,181       1,409,297  

  

There are no significant differences between the fair value and the carrying value of the Company’s financial liabilities.

 

(b) Loans from Group companies

 

    12.31.2021
Current
    12.31.2020
Current
    12.31.2019
Non-current
    12.31.2019
Current
 
                         
                                 
Loans from Group companies (see note 12)     -       -       975,450       -  
Other debts with Group companies (see note 12)     1,779       275       -       -  
Interests on loans from Group companies (see note 12)     -       -       -       4,116  
                                 
      1,779       275       975,450       4,116  

 

(c) Financial liabilities

 

   12.31.2021
Non-current
  12.31.2021
Current
  12.31.2020
Non-current
  12.31.2020
Current
  12.31.2019
Non-current
  12.31.2019
Current
 
              
Unrelated companies                    
   Financial liabilities  1,244,677  328,870  1,660,711  224,402  1,863,731  251,236  
                     
   1,244,677  328,870  1,660,711  224,402  1,863,731  251,236  

 

The financial liabilities amount refers entirely to interest-free or below-market interest rates loans (0% - 1%) extended by governmental institutions (Ministerio de Ciencia, Innovación y Universidades and ACC10 Generalitat de Catalunya). The maturities of these loans are between 2022 and 2029.

 

In 2021, the Company received interest-free loans that amounted 170 thousand euros (nil in 2020 and 454 thousand euros in 2019).

 

The difference between the fair value of these liabilities (when relevant conditions associated with the grants are met) and the amount received is recognised as a government grant and classified as other operating income in the statement of profit and loss (see note 2).

 

18 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

 

Classification of debts by maturity:

 

   2022  2023  2024  2025  2026  Subs.years  
              
Financial liabilities for the year ended December 31, 2021  328,870  296,694  297,826  234,260  154,980  260,917  
                     
   328,870  296,694  297,826  234,260  154,980  260,917  

 

   2021  2022  2023  2024  2025  Subs.years  
              
Financial liabilities for the year ended December 31, 2020  224,402  402,052  301,291  301,957  237,925  417,486  
                     
   224,402  402,052  301,291  301,957  237,925  417,486  

 

   2020  2021  2022  2023  2024  Subs.years  
              
Financial liabilities for the year ended December 31, 2019  251,236  303,654  333,291  301,396  302,062  623,328  
                     
   251,236  303,654  333,291  301,396  302,062  623,328  
                     

 

As these financial liabilities were booked at fair value at the date of collection with a grant being registered for the difference between the amount received and the fair value, and then booked at amortised cost, the disclosed amounts do not include the future accounting finance expenses related to these financial liabilities.

 

(d) Trade and other payables

   12.31.2021  12.31.2020  12.31.2019  
        
Group           
   Trade payables  35,701  32,503  41,515  
            
Unrelated parties           
   Trade payables  893,049  542,875  1,036,069  
   Other payables  101  83  166  
   Personnel  65,309  67,673  76,195  
   Tax authorities, other payables (see note 10)  40,640  41,922  44,131  
            
   1,034,800  685,056  1,198,076  

 

The Company filed a claim against one of its suppliers for certain manufacturing and engineering services provided in the context of the services agreement signed between the parties, due to some quality issues identified in the services provided. As at December 31, 2021, the trade payable balance with the supplier amounted to 264 thousand euros. In this regard, the Company is claiming all the amounts paid related to those services, amounting to 814 thousand euros, and entered into a negotiation process with the supplier. The Company has not recognized any income in the financial statements related to this claim as it is still a contingent asset. In addition, the purchase agreement signed with Synthetic Biologics stated that any loss or benefit related to this litigation procedure would be borne by Grifols in case the transaction is completed.

 

19 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

(e) Amounts in foreign currencies

 

The currency profile of the financial liabilities was as follows:

 

As at December 31, 2021  US dollar   Total 
         
Trade Payables and Other Payables   11,539    11,539 

 

As at December 31, 2020  Sterling pounds   Total 
         
Trade Payables and Other Payables   41,834    41,834 

  

As at December 31, 2019  Sterling pounds   Total 
         
Trade Payables and Other Payables   76,118    76,118 

 

10.Taxation

 

Details of balances with public entities were as follows:

 

 

    12.31.2021
Current
  12.31.2020
Non-current
  12.31.2020
Current
  12.31.2019
Non-current
  12.31.2019
Current
 
             
Assets                      
Deferred tax assets   66,180   1,903,102   -   1,897,689   -  
Value added tax and similar taxes (see note 6)   -   -   -   -   1,465  
    66,180   1,903,102   -   1,897,689   1,465  
                       
Liabilities                      
Social Security (see note 9)   10,752   -   11,679   -   12,837  
Withholdings (see note 9)   29,888   -   30,243   -   31,294  
    40,640   -   41,922   -   44,131  

 

Receivables and payables with Grifols S.A. resulting from the tax effect of filing consolidated tax returns were as follows:

 

 

   12.31.2021  12.31.2020  12.31.2019  
   Current  Current  Current  
        
Receivables           
Grifols S.A. (see note 6)  2,066,522  1,428,198  1,393,264  
            
   2,066,522  1,428,198  1,393,264  

 

Balances receivable as of December 31, 2021, 2020 and 2019 comprised accrued income tax and value added tax.

 

20 

 

 

VCN Biosciences, S.L.
Financial Statements
December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

The Company had the following main applicable taxes open to inspection by the Spanish taxation authorities:

    
   Years open
   to inspection
Tax   
Income tax  2017 - 2021
Value added tax  2018 - 2021
Personal income tax  2018 - 2021
Customs duties  2018 - 2021
Capital gains tax  2018 - 2021
Tax on Economic Activities  2018 - 2021
Social Security  2018 - 2021
Non-residents  2018 - 2021
    

Because of the different interpretations of the current tax legislation, additional liabilities may arise as a result of a tax inspection. Management considers that such liabilities would not significantly affect the financial statements.

 

(a) Income tax

 

Since January 1, 2017 the Company files consolidated tax returns with Grifols S.A. and the rest of the Spanish subsidiaries: Instituto Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Laboratorios Grifols, S.A., Gripdan Invest S.L., Grifols Viajes, S.A., Aigües Minerals de Vilajuïga S.A. and Araclón Biotech, S.L..

 

Analysis of tax expense in the year:

 

   2021  2020  2019  
        
Current tax           
            
Corporation tax on loss for the year  (1,426,706)  (806,858)  (803,951)  
Tax deductions from prior periods - monetization  (530,651)  (478,840)  (270,037)  
Tax deductions transferred to the Group  (559,088)  -  -  
            
Total current tax  (2,516,445)  (1,285,698)  (1,073,988)  
            
Deferred tax           
            
Temporary differences - provisions  (66,180)        
Tax deductions from prior periods - monetization  663,314  600,087  92,377  
Tax deductions of the year - generated  (302,563)  (671,138)  (727,989)  
Tax deductions of the year - applied  971,496  -  -  
Tax deductions transferred to the Group  559,088  -  -  
Tax deductions - others  11,767  17,607  (17,327)  
            
Total tax benefit  (679,523)  (1,339,142)  (1,726,927)  

 

Details of deferred tax assets by type of asset were as follows:

 

   12.31.2021  12.31.2020  12.31.2019  
        
            
DTA - Provisions  66,180  -  -  
Rights to tax deductions  -  1,903,102  1,897,689  
            
Total deferred tax assets  66,180  1,903,102  1,897,689  

 

21 

 

 

VCN Biosciences, S.L.

Financial Statements

December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

The Company did not recognise as deferred tax assets the tax effect of the unused tax loss carryforwards, which amounted to 6,260 thousand euros at December 31, 2021, 2020 and 2019. At the year-end it was not probable that future taxable profit would be available against which the Company could use the benefits therefrom (the use of tax losses in the future will depend on the success of the R&D projects of the Company).

 

Details of tax deductions were as follows:

 

       12.31.2021   12.31.2020   12.31.2019 
              
R&D tax deductions – origin year:   Maturity:                
2017   2032    -    496,088    496,088 
2018   2033    -    5,018    673,612 
2019   2034    -    727,219    727,219 
2020   2035    -    671,138    - 
                     
Other tax deductions        -    3,639    770 
Total deferred tax assets        -    1,903,102    1,897,689 

 

In 2021 the Company monetized 531 thousand euros of the deductions generated in 2019 and renounced to the 20%, which amounted to 133 thousand euros. Additionally, 971 thousand euros of tax deductions were recovered by the consolidated tax Group.

 

As a result of a Group tax credits adjustment, in 2021 the Company transferred to the Group 559 thousand euros of tax deductions.

 

In 2020 the Company monetized 480 thousand euros of the deductions generated in 2018, renounced to the 20%, which amounted to 120 thousand euros, and regularized 68 thousand euros. The remaining deductions, which amounted to 5 thousand euros, did not have a binding reasoned report, but the Company considered that the amount would be applied by the Group.

 

Tax reconciliation:  2021   2020   2019 
          
Loss before tax   (2,462,423)   (3,227,430)   (3,215,805)
Tax using the Spanish Corporation tax rate of 25%   (615,606)   (806,858)   (803,951)
                
Expenses not deductible for tax purposes               
Sanctions and fines   151    -    113 
Others   28,428    17,607    (17,439)
Deductions and allowances of the year   (302,563)   (671,138)   (727,989)
Adjustments related to monetizations of prior periods   132,660    121,247    (177,661)
Tax deductions - others   77,407    -      
Total tax benefit   (679,523)   (1,339,142)   (1,726,927)

 

22 

 

 

VCN Biosciences, S.L.

Financial Statements

December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

(b) Value added tax

 

Since January 1, 2018 the Company files consolidated tax returns with Grifols S.A. and the rest of the Spanish subsidiaries: Instituto Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Laboratorios Grifols, S.A., Diagnostic Grifols, S.A., Gripdan Invest S.L., Grifols Viajes, S.A., and Aigües Minerals de Vilajuïga S.A.

 

11. Staff numbers and costs

 

(a) The average number of persons employed by the Company during the year, analysed by category, was as follows:

 

   Number of employees 
   2021   2020 
Director   1    1 
R&D - Technical area   7    8 

 

(b) At the end of the year the distribution by gender of Company’s personnel was as follows:

 

   Number of employees 
       2021       2020 
   Female   Male   Female   Male 
Director   -    1    -    1 
R&D - Technical area   6    1    7    1 

 

(c) Personnel expenses:

 

   2021   2020   2019 
          
Wages and salaries   424,620    459,786    474,840 
Social security costs   111,512    124,393    124,653 
Pension plan costs (see note 8)   2,308    2,099    2,011 
Other expenses   11,898    13,829    21,790 
    550,338    600,107    623,294 

 

23 

 

 

VCN Biosciences, S.L.

Financial Statements

December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

12. Related party transactions

 

(a) During the year, the following related party transactions took place within the normal course of business:

 

   12.31.2021   12.31.2020   12.31.2019 
Included within assets:         
Non-current financial investments in Group and related companies               
Non-current loans to Group companies (see note 6)   888,714    1,348,050    - 
Total non-current assets   888,714    1,348,050    - 
Current financial investments in Group and related companies               
Loans to Group companies (tax effect)   1,404,750    1,271,124    1,393,264 
Other loans (*)   661,772    157,074      
Interests receivable from loans to Group companies   2,262    4,508    - 
Total current assets   2,068,784    1,432,706    1,393,264 
Included within liabilities:               
Non-current debts loans with Group and related companies               
Loans with group companies (see note 9)   -    -    975,450 
Total non-current liabilities   -    -    975,450 
Current loans with Group and related companies               
Other debts with Group companies (see note 9)   1,779    275    - 
Interests on loans from Group companies (see note 9)   -    -    4,116 
Trade and other payables               
Trade payables, Group companies   35,701    32,503    41,515 
Total current liabilities   37,480    32,778    45,631 
Included within financial income:               
Interest income   45,443    4,508    10,682 
Total financial income   45,443    4,508    10,682 
Included within expenses:               
Shared external services (see note 13)   321,872    314,138    354,264 
Other operating expenses   2,605    2,205    2,902 
Interest expenses   -    78,237    27,275 
Total expenses   324,477    394,580    384,441 

 

(*) Other loans refer to the consolidated tax amounts that Grifols S.A. has already collected from the tax authorities.

 

Related party transactions are conducted at arm’s length.

 

As of December 31, 2021, 2020 and 2019, the Company held no balances, nor transactions with the parent company.

 

24 

 

 

VCN Biosciences, S.L.

Financial Statements

December 31, 2021 and 2020

 

Notes to the financial statements (continued)

 

(b) Information on the Company's directors and senior management personnel

 

In 2021, 2020 and 2019, the members of the board of directors did not receive any remuneration in their capacity as such, nor loans or advances, and the Company did not extend any guarantees on their behalf. The Company did not extend any advances or loans to senior management personnel either. The Company has no pension or life insurance obligations with its former or current directors or senior management personnel.

 

The emoluments received by senior management personnel and those members of the board of directors who maintain a working relationship with the Company and who are part of its staff, are included in the personnel expenses caption in the statement of profit and loss. In 2021 and 2020, the aggregate of emoluments received by senior management were 106 thousand euros and 117 thousand euros, respectively (115 thousand euros in 2019).

 

13. Other operating expenses

 

   2021   2020   2019 
          
Scientific collaborations and R&D expenses   527,486    1,472,572    1,382,458 
Professional fees   633,311    271,128    227,644 
Auxiliary materials   359,018    261,547    341,501 
Shared external services with group (see note 12)   321,872    314,138    354,264 
Other expenses   175,953    128,915    186,073 
    2,017,640    2,448,300    2,491,940 

 

In January 2016, the Company signed an agreement with the group parent company Grifols S.A. for the use of the office premises and service of surveillance, cleaning of common areas, reception and messaging, maintenance and supply of water, gas and electricity. In 2021 and 2020, the amount corresponding to such contract was registered as an operating expense in the statement of profit and loss and amounted to 322 thousand euros and 314 thousand euros, respectively (354 thousand euros in 2019).

 

This contract is tacitly renewed for annual periods, and it may be terminated (short term lease) by either party at any time with a notice of 3 months. The minimum non-cancellable charge as of December 31, 2021 and 2020 amounted to 80 thousand euros and 92 thousand euros, respectively (93 thousand euros in 2019).

 

In 2021 and 2020, the cost of employees dedicated to R&D activities amounted to 444 thousand euros and 482 thousand euros, respectively (507 thousand euros in 2019) (see note 11).

 

14. Subsequent events

 

There has not been any significant subsequent event after the closing date.

 

25 

 

 

VCN Biosciences, S.L.

Financial Statements

December 31, 2021 and 2020

 

At their meeting held on February 9, 2022, the Directors of VCN Biosciences, S.L. authorized to issue the financial statements for the period ended December 31, 2021 and 2020. The financial statements comprise the documents that precede this certification.

 

/s/ Manel Cascalló Piqueras

  /s/ David Bell  /s/ Jose Terencio
Cascalló Piqueras, Manel  Bell, David  Terencio, Jose
Board member  Board member  Board member

 

 

 

/s/ , Jaume Amat 

/s/ Dirk Büscher

   
Amat, Jaume  Büscher, Dirk   
Board member  Board member