Arseus NVWaregemJahresabschluss zum 31. Dezember 2009We declare that, to the best of our knowledge, the financial statements for the year ended 31 December 2009, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and the legal and regulatory requirements applicable in Belgium, reflect a true and fair view of the equity, the financial situation and the results of the Company and the companies that are included in the consolidation scope, and that the annual report provides a true and fair view of the development and the results of the Company and of the position of the Company and the companies included in the consolidation scope, and provides a description of the main risks and uncertainties they are faced with. In the name and on behalf of the Board of Directors
15 April 2010
Ger van Jeveren, CEO Jan Peeters, CFO Contents
Consolidated income statement
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
The item "adjustments for financial items" relates to interest paid an d received and to other financial expenses an income not being cash flow such as revaluation of the financial instruments. The "total adjustments for non-cash items" particularly relates to depreciation, amortisation and changes in provisions. The item "total changes in working capital" concerns changes in the stock, trade debtors and creditors, other receivables and debts, and all other balance sheet elements that form part of the working capital. Aforementioned changes are adjusted as appropriate for non-cash flow as presented above and conversion differences and changes in the consolidation scope. Report of the Board of Directors on the consolidated financial statements1.1. Consolidated income statement The operating income increased 9.7% from € 35.66 million in 200 to € 393.624 million in 2009. The net turnover represents 99.4% of the operating income and increased 10.4% from € 354.506 million to € 391.315 million in 2009. Organic growth was 4.1% in 2009. The acquisitions in 200 combined with the acquisitions in 2009 of the Dutch compounding pharmacy within the Fagron division and the Belgian Duo-Med within the Arseus Medical division, together form the main components of external growth in 2009. The turnover evolved in a different pattern for each division. The Fagron Group experienced 10.1% turnover growth in 2009. Organic growth was 5.5%. This result reaffirms the success of Fagron's key values: innovation, quality and solution-driven. Consistently focused on the development and introduction of innovative concepts and products, Fagron enhanced its market position in all countries where it operates. The greenfield activities in France and the United Kingdom developed positively, whereby the United Kingdom has already in 2009 exhibited a positive result. Furthermore, in 2009, a greenfield was started in Poland. At the beginning of December, Fagron concluded an agreement with the Lipis company to launch the Fagron product range on the Slovenian market. As the only multinational one-stop-shop for products, services and concepts for pharmaceutical compounding in Europe, Fagron currently operates in 17 European countries. In December 2009 thirteen hypermodern GMP clean rooms for the conditioning of pharmaceutical raw materials were completed at Fagron Services in Uitgeest, the Netherlands. These clean rooms have now been examined and approved by the relevant inspectorates and other government bodies. This addition means the capacity of Fagron Services had increased by 25% to 1.5 million units per annum and that its production facilities are absolutely state of the art. Arseus Dental experienced 11% turnover growth in 2009. Organic growth was 3.1%. This is lower than projected due to the reduced demand for precision components for the dental orthopaedic industry. As a result, the turnover of Swiss Hader decreased approximately 25% in 2009. Furthermore, dental laboratories in 2009 were affected by a reduced demand for expensive, often non-reimbursable, prostheses. The annual trade fair of the Association Dentaire Française (ADF) was held in Paris in November. For the Arseus Dental in accordance with the slogan 'one team, one company'. Julie-Owandy's intra-oral sensor Visteo was awarded the Professional Innovation Prize 2009 at the ADF fair. The Visteo is a revolutionary sensor. It is the first sensor where signal transmission takes place electro-magnetically by induction. This enables the dentist to view the radiological image directly on the computer screen and also means a significant reduction in the emission of X-rays. Arseus Medical's turnover grew by 7.0% in 2009, of which 2.0% was organic growth. Good progress was made in 2009 with the implementation of Arseus Medical's growth strategy, introduced at the beginning of 2009, whereby the focus lies on providing total solutions with substantial added-value to the healthcare sector. As part of the new strategy, the products being offered were subjected to a critical review. Activities with low gross margins, such as the sale of hospital beds, were wound down. New added-value exclusive distributions were added to the product range to compensate for the activities that were phased out. Corilus experienced 9.9% turnover growth in 2009. Organic growth was 6.3%. Corilus had an excellent year due to new customers, an increase in the number of maintenance contracts, the launch of innovative software packages and the rollout of software packages in Europe. The gross margin (the difference between turnover on the one hand and trade goods, raw and auxiliary materials on the other) amounts to € 15.914 million. This represents 47.5% of the turnover. The gross margin in 200.... was 46.7%. This improvement is the result of Arseus' strategy of focusing on total solutions with substantial added value to the healthcare sector. The total operating expenses, defined as services and other goods, employee benefit expenses and other operating expenses minus other operating income, amounts to € 143.39 million, increasing by € 17.051 million against 2008. The cost coverage, defined as operating expenses versus gross margin, was 77.1% in 2009 against 76.3% in 200.... Depreciation and amortisation amounts to € 11.93 million against € 9.269 million in 200... . The operating profit amounts to € 30.542 million or 7.8% of turnover. In 2008, operating profit amounted to € 30.033 million or 5% of turnover. The financial result amounts to € -7.436 million against € -12.046 million in 200.... . The improvement in the financial result is due to a further decrease in interest rates in 2009 and a limited increase in the net financial debt. Furthermore, the lower revaluation of financial derivatives in 2009 (€ -1.351 million) against 200... (€ -3.961 million) led to further improvement. This revaluation relates to the decrease in market value of the interest rate hedges that do not qualify for hedge accounting in accordance with IAS 39. This brings profit before income taxes to € 23.107 million. The taxes amounts to € 3.46 million or 15.0% of the profit before taxes versus 17.2% in 2008. Profit after income tax amounts to € 19.639 million, an increase of 31.8% in comparison to 2008. The non-controlling interest amounts to € 0.05 million and concerns Tamda, making the share of Arseus € 19.553 million. 1.2. Consolidated balance sheet The consolidated balance sheet total increased by 13.0% from € 417.733 million in 200 to € 472.160 million in 2009. Assets Total non-current assets amount to € 29.532 million. This represents an increase of € 35.317 million over 2008. The intangible assets increased by € 2.32 million. This increase is caused mainly by the recognition of goodwill and other intangible assets relating to acquisitions and the R&D activities of Corilus and Owandy. Property, plant and equipment increased by € 4.15 million, which was caused by the assets of acquisitions and by investments in IT as well as in Fagron's production facilities in the Netherlands. Net operating capital expenditures amount to € 16.322 million or 4.2% of turnover. Of these investments approximately 65% is expansion capex. Arseus decided to continue investing in the organisation during the economic crisis. In 2009 additional investments were made in the European rollout of the central ERP system. Furthermore, there was targeted investment in areas that Arseus expects to grow substantially in the years ahead, such as clean rooms, R&D, software and wheelchairs. Arseus estimates operational expenditures of around 4% of turnover again in 2010. Financial assets amount to € 1.22 million. Deferred tax assets amount to € 19.205 million. They are mainly related to tax losses carried forward, which are likely to be appropriated in the future. The other non-current assets (€ 1.014 million) are mainly security deposits. Total current assets amount to € 12.62 million compared to € 163.51 million in 200.... , an increase of € 19.110 million. The most important changes were the decrease in stock by € 2.037 million or -3.2%, the increase in trade receivables by € 4.195 million or 6.4%, and the increase in cash and cash equivalents by € 15.70 million or 5.3%. Equity and Liabilities Total equity amounts to € 196.352 million. This represents an increase of € 10.22 million in comparison to 200... . Total liabilities increased from € 232.203 million in 200... to € 275.0 million in 2009. This represents an increase of € 43.605 million. Provisions increased by € 0.046 million. Pension obligations amounts to € 3.365 million, an increase of 10.5% in comparison to 200.... . Deferred tax liabilities relate among other things to temporary differences between reporting an fiscal accounting at the local entities. These amounted to € 4.232 million in 2009 against 4.941 million in 200... . Non current interest-bearing financial liabilities (long-term borrowings) amount to 146.305 million, an increase of 25.429 million against 200 ..... Current interest-bearing financial liabilities (short-term borrowings) amount to € 1.902 million, a decrease of € 0.116 million against 200... . As at 31 December 2009, net financial debt (total current and non current interest-bearing financial liabilities plus other long-term liabilities less cash and cash equivalents) amounts to € 113.923 million versus € 104.391 million at the end of 2008. Due to the significant improvement of the operating cash flow, it was possible to almost completely autonomously finance acquisitions, investments and the payment of the dividend in 2009. At the end of 2009, the net financial debt/annualised REBITDA ratio was 2.19, which is fully in compliance with the covenant of the credit facility which allows a ratio up to 3.25. Trade payables are € 2.91 million higher (+4.6%) than in 200... at € 67.605 million. This limited increase is related to the evolution of the operating working capital, defined as stocks plus trade receivables less trade payables, from € 64.159 million in 200... to € 63.336 million in 2009. This therefore represents a 1.3% decrease in spite of a 10.3% increase in turnover. This structural improvement is primarily due to a persistent focus on strict stock control and debtor management. Taxes, remuneration and social security amount to € 24.337 million, an increase of € 3.590 million in comparison to 200.. . Other current payables amount to € 21.93 million versus € 11.12 million in 200.. . Of the other current payables in 2009, € 9 million pertains to the amount payable related to the acquisition for a Dutch compounding pharmacy within the Fagron division. 1.3. Consolidated cash flow statement The consolidated cash flow statement takes as its starting point the profit before income taxes of € 23.107 million, as reported in the consolidated income statement. From this amount are deducted the outgoing cash flows for paid taxes, being € 5.436 million. This amount includes all income taxes effectively paid during 2009. Then the elements from operating activities not having a cash flow effect or not directly related to operating activities are reintroduced. This represents a total of € 19.098 million. A significant portion relates to paid interest (5.922 million) recognized as cash flow from financing activities (see below) and the revaluation of financial derivatives (€ 1.351 million). In this context, depreciations and amortisations on tangible and intangible assets and changes in provisions and deferred taxes are significant non-cash elements as well. The next step is to set off the changes in working capital in the cash flow statement (positive effect of € 2.727 million). Total cash flow from investment activities resulted in an outflow of € 32.14 million relating to capital expenditures in the amount of € 16.322 million and investments in existing shareholdings (subsequent payments) and in new holdings in the amount of € 15.62 million. Total financing activities represent an inflow of € 447 million. The Company did not purchase any treasury shares in 2009. Arseus paid out 9.073 million in dividends. Payment of interest on loans and other financial elements such as financial discounts produced an outflow of € 5.992 million; the new borrowings an € 26.031 million. This is offset by reimbursement of borrowings in the amount of € 2.59 million. In the reporting period, total cash and cash equivalents increased by € 15.75 million: from € 1.503 million at the start of the reporting period to € 34.24 million at the end of the reporting period. The minor difference relates to losses on exchange on liquid assets. Notes to the consolidated1. General information Arseus NV (the'Company') and its subsidiaries (collectively: the 'Group') are suppliers of products and services with high added value to European healthcare professionals and institutions. Arseus has activities in ten European countries. The Company is a public limited liability company, incorporated and domiciled in Belgium, with its registered office at Textielstraat 24, 8790 Waregern. The company registration number is BE 0 90 535 026. The operational activities of the Arseus group are driven by the Dutch company Arseus BV. The head office of Arseus BV is located in Rotterdam. The shares of Arseus are listed on the regulated markets of NYSE Euronext Brussels and NYSE Euronext Amsterdam. The Board of Directors approved the publication of these consolidated financial statements on 7 April 2010. 2. Financial reporting principles The principal accounting policies applied in preparing these consolidated financial statements are detailed below. These policies have been consistently applied by all consolidated entities, including subsidiaries, to all years presented, unless stated otherwise. IFRS developments The consolidated financial statements of Arseus have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The consolidated financial statements have been prepared on the basis of the historical cost convention, with the exception of financial assets and liabilities (including derivative instruments), which are stated at fair value. a) New and revised standards and interpretations of existing standards applied by the Group in 2009.
b) The following standards and interpretations of existing standards were published, but are only effective on 1 January 20 10 or later:
Except for the changes resulting from the application of IFRS 3 (revised) and IAS 27 (revised), it is expected that the implementation of the changes identified under point b will not have any impact on financial reporting. Consolidation criteria Subsidiaries are entities where Arseus can control some financial and operational policies and in which it generally has a shareholding in excess of 50% of voting rights. Subsidiaries are fully consolidated as from the date that control is transferred to Arseus. They are deconsolidated as from the date that control by Arseus ceases. An acquisition is recognized using the purchase method. The cost price of an acquisition is measured as the fair value of the assets given, the shares issued and the liabilities assumed on the date of the exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired an liabilities and contingencies assumed in a business combination are initially set at heir fair value on acquisition date. The positive balance between cost price of the acquisition and the fair value of the share of Arseus in the acquired identifiable net assets is recognized as goodwill. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated while being regarded as impairment indicator of exceptional loss of value. Where required, financial reporting principles of subsidiaries have been amended policies adopted by Arseus. Foreign currency translation Items included in the financial statements of all entities of Arseus are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in euros, the functional and presentation currency of Arseus. To consolidate Arseus and each of its subsidiaries, the respective financial statements are converted as follows:
Exchange rate differences arising from the translation of the net investment in foreign subsidiaries at year-end exchange rate are recognized as shareholders' equity elements at "cumulative currency translation differences". Transactions in foreign currencies Transactions in foreign currencies are translated to the functional currency using the exchange rates on the transaction date. Profits and losses from exchange rate differences resulting from settling these transactions and from the conversion of monetary assets and liabilities into foreign currencies at exchange rates valid at year end, are recognized in the income statement. Property, plant and equipment Property, plant and equipment are valued at the acquisition value or the production cost plus allocated costs where appropriate. Depreciation is calculated pro rata temporis on the basis of the useful life of the asset, in accordance with the following depreciation parameters:
Virtually all assets are depreciated on a straight-line basis. To the extent residual values are taken into account for calculating the depreciations, those residual values are reviewed annually. Assets acquired under finance leasing arrangements are depreciated over their economic life, which may exceed the lease term if it's reasonably certain that ownership will be obtained at the end of the lease term. Intangible assets Goodwill Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the share of Arseus in the net identifiable assets of the acquired subsidiary on acquisition date. Goodwill on acquisitions of subsidiaries is recognized under intangible assets. Goodwill is tested for impairment at least once a year, but also when there is a triggering event. Goodwill is recognized at cost price less accumulated impairment losses. Impairment losses on goodwill are never reversed. Gains and losses on the disposal of an entity include the book value in goodwill relating to the entity sold. Brands, licences, patents and other Intangible assets are capitalized at cost, provided this cost is not higher than the economic value and the cost price is not higher than the recoverable value. No intangible assets with an unlimited useful life were identified. The costs of brands with a definite useful life are capitalized and generally amortized on a straight-line basis over a period of 20 years. Research and development Research costs related to the prospect of gaining new scientific or technological knowledge an understanding are recognized as costs as at the moment they are incurred. Development cost are defined as costs incurred for the design of new or substantially improved products and for the processes preceding commercial production or use. They are capitalized if, among other things, the following criteria are met:
Development costs are amortized using the straight-line method over the period of their expected benefit, currently not exceeding fife years. Amortization starts as from the moment that these assets are ready for use. Software Acquired software is capitalized at cost price and then valued at cost price less accumulated depreciations and exceptional losses of value. Unique software developed in-house that Arseus controls and expects to generate future economic benefits is capitalized at the cost directly related to the production. The software is depreciated over its useful life, which is currently estimated at 2.5 to 5 years. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and in-use value. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized costs; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities, unless, Arseus has an unconditional right to defer settlement of the liability for at least 12 months after balance sheet date. Financial assets Arseus classifies its financial assets into the following categories: loans and receivables, and financial assets available for sale. Management determines its investment classifications at initial recognition, evaluating them at each reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments, which are not quoted in an active market and that are not intended for trading. They are included in current assets, except for maturities exceeding 12 months after balance sheet date. Loans and receivables are carried at amortized cost using the effective-interest method. Available for sale financial assets Available for sale financial assets are non-derivatives that are classified either in this category or not in any of he other categories. They are recognized at non-current assets, unless management intends to dispose of the investment within 12 months upon balance sheet date. Available for sale financial assets are initially valued at fair value except where such a fair value cannot be reliably determined, in which case they are valued at cost. Unrealised gains and losses arising from changes in the value are recognized in equity. When the related assets are sold are recognized in the income statement. Any events or changes in circumstances indicating a decrease in the recoverable amount are monitored closely. Impairment losses are recognized in the income statement as and when required. Lease contracts – Operating leases Leases in which a significant portion of the risk an benefits of ownership are retained by the lessor are classified as operating leases. Payments under operating leases are made on a straigt-line basis over the life of the operating lease. Lease contracts – Finance leases Lease contracts regarding property, plant and equipment whereby Arseus retains virtually all risks and benefits of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease contract at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between liability and financing charges, so as to achieve a constant amount on the outstanding financing balance. The corresponding rental obligations, net of financing charges, are recognized at non current (payable after 1 year) and current (payable within the year) borrowings. The interest component of the financing charges is recognized in the income statement over the lease period, so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the useful life of the asset, which may exceed the lease term if it is reasonably certain that ownership will be obtained at the end of the lease term. Inventories Raw materials, auxiliary materials and trade goods are valued at the acquisition value using the FIFO method or using the net realisable value (NRV) at balance sheet date, whichever is lower. Work in progress and finished products are valued at production cost. In addition to purchasing costs of raw materials and auxiliary materials, production costs include production costs and production overhead costs directly attributable to the individual product or the individual product group. Trade receivables Trade receivables are initially valued at fair value. A provision for impairment loss relating to trade receivables is created when there is objective evidence that Arseus will not be able to collect all amounts due. Significant financial difficulties of the debtor the probability of the debtor becoming insolvent or undergoing financial restructuring, and non or overdue payments are regarded as indicators for recognizing an impairment loss for the trade receivable in question. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and are valued at acquisition at fair value and recognized at cost. Adjustments to the carrying amounts are made when at balance sheet date realisation value is lower than the book value. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognized in the equity as a deduction, net of taxes, from the proceeds. If a company of Arseus purchases share capital of Arseus (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the shareholders of Arseus until the shares are cancelled, reissued of disposed of. If such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and related income tax effects, is included in equity attributable to the equity holders of Arseus. Provisions Provisions for restructuring costs, legal claims, risk of losses or costs potentially arising from personal securities or collateral constituted as guarantees for creditors or commitments to third parties, from obligations to buy or sell non-current assets, from the fulfilment of completed or received order, technical guarantees associated with turnover or services already completed by Arseus, unresolved disputes, fines and penalties related to taxes, or compensation for dismissal are recognized when: Arseus 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 has been reliably estimated. Provisions for restructuring cost comprise lease termination penalties and employee termination payments. Provision are not recognized for future operating losses. Provisions are recognized based on management's best estimate of the expenditure required to settle the present obligation at balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. Derivative financial instruments Arseus utilizes derivative financial instruments to limit risk relating to unfavourable fluctuations in interest rates. No derivatives are employed for trade purposes. Derivative financial instruments are initially valued at cost. After initial valuation, these instruments are stated in the balance sheet at fair value. As the derivatives contracts of Arseus do not fulfil the criteria set in IAS 39 to be regarded as hedging instruments, changes in fair value of derivatives are recognized in the income statement. Employee benefit expenses Pension obligations The companies of Arseus operate various pension schemes. The pension schemes are funded through payments to insurance companies, determined by periodic actuarial calculations. Arseus has both defined benefit and defined contribution plans. The liability recognized in the balance sheet in respect of defined benefit plans is the present value of the future defined benefit obligations less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service pension costs. The defined benefit obligation is calculated periodically by independent actuaries using the projected-unit-obligation is determined by discounting the estimated corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses arising from empirical adjustments and changes in actuarial assumptions in excess of the greater of 10% of the defined benefit obligation are spread in the income statement over the employees' expected average remaining employment periods. For defined contribution plans, Arseus pays contributions to insurance companies. Once the contributions have been paid, Arseus cease to have any liabilities. Contributions to defined contribution plans are recognized as costs in the income statement at the moment they are made. Share-based payments Arseus operates an equity-settled, warrants-based compensation plan. The total amount to be recognized as costs over the vesting period is determined by reference to the fair value of the warrants granted, excluding the impact of any nonmarket vesting conditions (for example, profitability and turnover growth targets). Non-market vesting conditions are included in the assumptions about the number of warrants expected to become exercisable. At each balance sheet date, Arseus revises its estimates of the number of warrants expected to become exercisable. Arseus recognizes any impact of the revision of original estimates in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the warrants are exercised. Income taxes Income taxes as recognized in the income statement includes current income taxes and deferred taxes. Current income taxes include the expected tax liabilities on the taxable income of Arseus for the financial year, based on the applicable tax rates at balance sheet date, and any adjustments of previous years. Deferred taxes are recognized using the balance sheet liability method and are calculated on the basis of the temporary differences between the carrying amount and the tax base. This method is applied to all temporary differences arising from investments in subsidiaries and associates, except for differences whereby the timing of reversing the temporary difference is controlled by Arseus and whereby the temporary difference is not likely to be reversed in the near future. The calculation is based on the tax rates as enacted or substantially enacted at balance sheet date and expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Under this calculation method, Arseus is also required to account for deferred taxes relating to any difference between the fair value of the net acquired assets and their fiscal book value resulting from any acquisitions. Deferred tax assets are recognized in so far as the tax losses carried forward are likely to be utilized in the foreseeable future. Deferred income tax receivables are fully written down when it ceases to be likely that the corresponding tax benefit will be realized. Revenue recognition Turnover of goods are recognized as at the moment that delivery of the products has been made to the customer, that the customer has accepted the products, and that the related receivables are likely to be collected. Turnover of services are recognized in the accounting period in which the services have been provided. The turnover of software suites from stock are recognized as revenue at the time of delivery. The revenues relating to software service contracts are recognized over the term of the contract. Segment reporting An operating segment is a group of assets and activities engaged in providing products or services that are the basis of the internal reporting to the Executive Committee. Dividend distribution Dividend distribution to the shareholders of Arseus is recognized as a liability in the financial statements of Arseus in the period in which the dividends are approved by the shareholders of Arseus. 3. Risk Management The policy of Arseus is to focus on identifying all major risks, on developing plans to prevent and manage these risks, and on putting in place measures to contain the consequences should such risks effectively occur. Still, Arseus cannot conclusively guarantee that said risks will not occur or that there will be no consequences when they occur. Investing in the shares of Arseus therefore entails specific risks that potential investors should take into consideration, including but not limited to the following risks, which are listed in no particular order: Strategic risk related to market and growth The strategic risk concerns the circumstance whereby Arseus may face an unfavourable market situation or adversely evolving competition. Another possibility is bad strategic decisions taken by the Company. Such as: technological advances enabling the development of competitive alternative products, the possibility that success of a new product fails to materialize, ineffective configuration of the pipeline, scarcity of pharmaceutical raw materials, a drop in demand in the markets where Arseus is active as a result of new regulations and/or legislation, events affecting the purchasing patterns of our key customers, or a disturbed balance between demand and supply in the markets where Arseus is active. Risks related to regulations The professional healthcare sector is subject to close regulatory control at both national and European level. Though Arseus has in place strictly defined operating procedures and policies to ensure compliance with the rules imposed by national and European authorities, the chance remains that risks related to applicable legislation or the regulatory framework, should they materialize, might prove to have an adverse effect on Arseus. Inventory risks As a distributor and producer, Arseus maintains inventories of (elements of) its product portfolio. Maintaining inventories however entails the risk of full or partial nonmarketability of products and the risk of price drops. The policy Arseus has initiated to optimise the supply-chain and to reduce operational working capital is expected to lead to a decrease in inventory levels. Product liability risk The product portfolio of the four divisions of Arseus comes with potential product liability risks. In its efforts to protect itself against these risks, Arseus has in place high standards of quality in terms of products and processes and continuously endeavours to assure that all business units comply with both internal and external regulations. Product liability issues, however, cannot be entirely precluded. Arseus has effected a product liability insurance within reasonable constraints. Cyclical and seasonal nature of operating activities Decisions to purchase investment goods (involving a large capital outlay) tend to some degree to be linked to the overall economic climate. The introduction of government healthcare refunding measures also has a potential impact on the timing of the customer's purchase decisions. Dental equipment in particular proves to be subject to seasonal effects. ICT related risk To limit potential ICT related risks, Arseus uses the most recent hardware and software solutions with a proven track record. Though Arseus has taken rigorous precautions to assure the security and reliability of its IT systems, incidents may occur involving backup recovery, viruses and international network links with potentially significant implications for the operating activities of Arseus. Financial risks In addition to aforementioned strategic and operational risks, Arseus is also subject to various financial risks. Arseus has at its disposal ample credit facilities to sustain its day to day operations. Its key credit facility of € 200 million has a duration of 5 years. At the end of 2009, the Company's net financial debt/annualised recurrent EBITDA ratio was 2.19, thus amply satisfying the maximum 3.25% debt ratio at 31 December 2009 as agreed to in the credit contract. Credit risk Operating an active credit policy, Arseus has in place strict procedures to manage and limit credit risks. No individual customers make up a substantial part of either turnover or outstanding receivables. Moreover, as part of its objective to reduce operating working capital Arseus consistently works to reduce its debtor's exposure. Interest risk Arseus regularly assesses the mix of financial debts with fixed and variable interest rates. At this time, financing is largely based on a syndicated loan in euros with a variable interest rate of 1 to 6 months. A higher Euribor rate by 10 base points would have adversely affected the variable interest charges in the amount of some 140 (thousand) euro. A € 70 million financing risk due to the variable interest rate is covered by financial derivatives. Exchange rate risk Arseus reports its financial results in euro and is, because of the international distribution of its activities, subject to the potential impact of currencies on its profits. Exchange rate risk is the result on the one hand of several entities of Arseus operating in a functional currency other than euros and on the other and of the circumstance that purchasing and retail prices of Arseus have foreign currencies as reference. The risk entailed in entities of Arseus operating in a functional currency other than euros is relatively limited. The entities concerned operate in Czech krona, Swiss frank, British pound, Danish krona and Polish zloty. These entities collectively represent less than 6% of the consolidated turnover and less than 3% of the profit of Arseus. The risk of purchasing and retail prices of Arseus having foreign currencies as reference mainly concerns the exchange rate ratios between the euro and the US dollar, and the Japanese yen and the UK pound. Exchange rate risks associated with investment in offshore participations are usually not covered. Fair value risk Arseus utilizes financial derivatives to cover its interest risks. Arseus covered a € 70 million financing risk due to the variable interest rate. In accordance with IFRS, all financial derivatives are recognized either as assets or as liabilities. In accordance with IAS 39, financial derivatives are recognized at fair value. Changes in fair value are recognized by Arseus directly in the income statement because these are financial derivatives that do not qualify as cash flow hedging instrument. At the end of 2009, the cumulative revaluation of financial derivatives amounted to € -5.3 million whereby this is treated as a non-cash item. 4. Summary of significant accounting policies Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are deemed reasonable given the circumstances. Critical assessments and judgements Arseus makes assessments and assumptions concerning the future. The resulting estimates will, by definition, rarely match the related actual results. Those estimates and assumptions which entail a significant risk of causing the need for a material adjustment of the carrying amounts of assets and liabilities within the next financial year are discussed below. Estimated impairment loss of goodwill and intangible assets Arseus performs annual goodwill impairment tests in accordance with the IFRS specified in note 2. The recoverable amount of cash flow generating units is determined on the basis of value-in-use calculations. These calculations require the application of estimates. The book value of goodwill as at 31 December 2009 was € 199.25 million. Pension obligations The present value of the pension obligations is derived from a number of actuarially determined factors based on assumptions. The assumptions applied to determine net cost (income) for pensions include expected log-term rate of return of the relevant pension plan assets and the discount rate. Any changes in these assumptions will impact the book value of pension obligations. The gross defined benefit obligation is calculated periodically by independent actuaries. The book value of pension obligations as at 31 December 2009 was € 3.365 million. Provisions for disputes As stated, provisions are valued at present value of the best estimate by management of the expenditure required to settle the existing obligation at balance sheet date. Provisions for disputes require significant professional judgement in terms of the ultimate outcome of administrative law rulings or court judgments. Estimates are always based on all available information at the moment the financial statements are prepared. However, the need for significant adjustments cannot be absolutely precluded if ruling or judgement proves not as expected. Hypotheses and assessments are continuously evaluated on the basis of empirical facts and other factors including projected development of future events regarded as reasonable given the circumstances. 5. Segment information All activities of Arseus relate to products and services in professional healthcare and are divided into four main operational segments: Fagron, Arseus Dental, Arseus Medical, and Corilus. In accordance with IFRS, the operational segments were determined on the basis of the components that the Executive Committee applies to assess the performance of the operational activities and on which the decisions are based. Arseus is organized on the basis of four main operational segments:
The segment results for the reporting period ending 31 December 2009 are as follows:
The segment results for the reporting period ending 31 December 200 are as follows:
Other segmented items recognized in the income statement are as follows:
As at 31 December 2009 the assets and liabilities, and the capital expenditures for the reporting period ending on this date, are as follows:
As at 31 December 200 the assets and liabilities, and the capital expenditures for the reporting period ending on this date, are as follows:
Segment assets consist primarily of property, plant and equipment, intangible assets, stock, receivables and cash from operations. They exclude deferred tax assets related to the IFRS revaluation of the investments. Segment liabilities comprise operational liabilities but exclude such element as corporate borrowings. Turnover of Arseus in 2009 and 200 by geographical segments is as follows:
Arseus has a broad-based customer portfolio in which no one customer accounts for more than 10% of revenue. 6. Turnover
7. Other operating income
8. Employee benefit expenses
At 31 December 2009, Arseus' workforce (fully consolidated companies) comprised 1,764 persons or 1,655.4 fulltime equivalents. Of these, 573.2 fulltime equivalents are attributable to Fagron, 669.4 to Arseus Dental, 166.0 to Arseus Medical, 197.1 to Corilus and 49. to Arseus Corporate. 9. Depreciation and amortisation
10. Other operating expenses
The item other operating expenses relates mainly to taxes and levies not being income taxes. Non-recurring costs are not recognized as other operating expenses but are presented in their originating cost category. Total non-recurring costs covered by EBIT are € 4.4 million and mainly comprise restructuring costs at Arseus Medical and Arseus Dental, as well as post-acquisition integration costs. Furthermore, an additional provision of € 0.750 million was made due to a dispute with a customer dating from 2002, concerning the payment of delivered products. Moreover, the revaluation of the financial derivatives constitutes a non-recurring result of € -1.351 million in the financial result. Total non-recurring costs after taxes are calculated by multiplying the grand total of non-recurring costs by the weighted average effective tax rate, thus resulting in € 4.963 million. 11. Financial result
Approximately half of the financial expenses relate to the revaluation of financial derivatives € -1.351 million). This revaluation relates to the decrease in market value of the interest rate hedges that do not qualify for hedge acconting in accordance with IAS 39 and is not a cash flow. To value the hedging instruments, the mixed instruments were split into their components and valued on the basis of valuation models, discounted cash flows, and Black & Scholes, as appropriate. The parameters used for these models are those valid as at year end. The item interest-coverage concerns € 70 million of the total financing. 12. Income tax expenses
In the item 'other' an amount of € 0.6 million concerns taxes paid over dividend flows within Arseus. 13. Earnings per share
*
See note 10 for definition and calculation of the non-recurring items (after tax). 14. Intangible assets
Goodwill Goodwill is tested at least annually for impairment and consistently when a trigger event occurs. Goodwill is recognized at cost price less accumulated impairment losses. Goodwill impairment test Goodwill is allocated to the cash flow generating units of Arseus, i.e. the four divisions of Arseus:
The goodwill allocation per division (in million euros) was as follows:
The recoverable amount of a cash flow generating unit is determined on the basis of value-in-use calculations. These calculation use cash flow projections with a five-year forecast horizon based on detailed financial budgets approved by management for the first year. The year-one budget figures are extrapolated for years two through five, taking into account an internal growth rate and a budgeted gross margin. In addition to these rates, the model uses assumptions such as the rate of perpetual growth and a pre-tax discount rate. Below are specified the key assumptions for the value-in-use calculations. Management determined gross margin and growth rates based on past performance and its market development expectations.
Above assumptions were subjected to a sensitivity analysis confirming that for 2009 no impairment of goodwill was required. The value per cash flow generating unit as per aforementioned value-in-use calculations is compared with the net book values of the non-current assets of the relevant cash flow generating unit. For all cash flow generating units, value-in-use exceeds net book value. 15. Property, plant and equipment
'Other movements' concern mainly assets under construction that became available for use in the course of 2009. A contractual obligation was entered into in 2009 for an amount of € 7.90 million for the construction of a building for Fagron Nederland. 16. Financial assets and other non-current assets
An analysis of the assets mentioned above showed that none of these need to undergo an extraordinary impairment in 2009. Other fixed assets concern receivables with different due dates. The real value approximates the book value. 17. Taxes, remuneration and social security
a) Deferred tax assets
b) Deferred tax liabilities
18. Stock
19. Trade and other current assets
There is no concentration of credit risk with respect to trade receivables as the majority of Arseus' customers are internationally dispersed. There were no indications at the end of the reporting period that debtors of trade receivables not yet due would not fulfil their payment obligations. Provisions were made for known exposures. The item other current assets mainly concerns taxes to be refunded over the reporting period and value added tax. A 750 (thousand) euros provision was made for a single debtor in the other current assets item concerning a dispute dating back to 2002. Management is satisfied that this sufficiently covers the exposure, but cannot preclude the possibility that an additional provision will have to be made in 2010 for the remaining amount.
Cash and cash equivalents, trade receivables and other receivables usually have due dates that are close to each other. Therefore, their book value approximates the real value. 20. Equity Authorized capital By resolution adopted by the Extraordinary General Meeting of 7 September 2007, the Board of Directors was granted the power to increase the capital in one or more instalments by a maximum amount of € 319, 10,475.00 by means and on terms to be decided by the Board of Directors, such within a period of five years as from publication date of said resolution in the Annexes of the Belgian Bulletin of Acts, Orders and Decrees. A at 31 December 2009, the Board of Directors is still authorized to increase the capital by a maximum amount of € 319, 10,475.00. If the capital is increased within the limits of the authorized capital then the Board of Directors will be competent to request payment of a share premium. If the Board of Directors adopts this decision then this share premium will be deposited into a blocked account the balance of which can only be reduced or transferred in whole on the basis of a resolution adopted by a General Meeting of Shareholders in accordance with the clauses governing an amendment of the articles of association. This power of the Board of Directors will apply to capital increases that are subscribed to in cash or in kind, or that result from capitalization of reserves with or without the issue of new Shares. The Board of Directors is permitted to issue convertible bonds or warrants within the limits of the authorized capital. Statement of changes in the capital and in the number of shares No changes occurred in the third financial year of Arseus NV. Warrant plan of the Offer As proposed by the Board of Directors, the Extraordinary General Meeting of Shareholders of 7 September 2007 approved the 'Warrant plan of the Offer'. This plan concerned the creation of no more than 6,550,699 warrants, each entitling the holder to subscribe to one share, to be offered to existing shareholders of Omega Pharma NV who obtained Arseus NV shares. At the adoption of the realized capital increase on 9 October 2007, the exact number of warrants issued proved to be 3,650,575. These warrants are exercisable from 17 to 2 January 2011 at an exercise price of € 14.50 (140% of € 10.25, which is the price set at the moment of the IPO). No warrants were therefore exercised. Share-based payments On 6 September 2007, the Board of Directors approved two warrant plans for the benefit of the employees, directors and consultants of the Company and/or subsidiaries (Warrant Plan 1 and Warrant Plan 2). The warrants granted under Warrant Plan 1 (for employees) have a lifetime of years as of the date on which they are granted. For employees (Warrant Plan 1) the warrants are exercisable in annual instalments of 25%, in May of the fourth, fifth, sixth an seventh calendar year after the calendar year in which the Warrants are offered. Pursuant to a decision taken by the Board of Directors dated 11 May 2009, held in the presence of the notary Mr Dirk van Haesebrouck, the period during which the warrants granted to beneficiaries prior to 31 August 2008 in the context of Warrant Plan 1 are exercisable, was extended by 5 years to 17 December 2020, in accordance with the Amendment Act (Herstelwet). The warrants granted under Warrant Plan 2 (for directors and consultants) have a lifetime of 5 years as of the date of issue. For directors and consultants (Warrant Plan 2) the warrants are exercisable, pursuant to a decision of the relevant body, after granting of the warrants, (i) in annual instalments of 50% in May of the third and fourth calendar years after the calendar year in which the warrants are offered, or (ii) in annual instalments of 25% in May of any calendar year after the calendar year in which the warrants are offered. These alternatives depend on the holder's contribution paid for the warrants. This is 7.5% for (i) or 15% for (ii). Pursuant to a decision of the Board of Directors dated 13 July 2009 it was decided, subject to the resolutive condition of any decision to the contrary taken by the General Meeting, to extend the period for exercising the rights granted to beneficiaries prior to 31 August 2008 under Warrant Plan 2 by five years to 17 December 2017, on the understanding that beneficiaries exercising their rights following the expiry of the initial period (exercising of rights after 17 December 2012) will solely be entitled to acquire existing, instead of new, shares in the Company. The Board of Directors will submit the proposed extension to the 2010 Annual General Meeting. The condition for vesting warrants is for employees that they still have an employment contract with the Company and for directors and consultants that their relationship with the Company has not been terminated. The cost of the warrants is determined at the warrant's fair value on grant date and is spread over the vesting period of the warrants. The cost is recognized at the item other employee benefit expenses at an amount of 144 (thousand) euros for financial year 2009. With regard to the change in the exercise periods stated above, the actual value of the warrants, without taking into account the change, was compared at the time of the change with the actual value after the change. There were no additional costs that needed to be recognised. Movements in the number of outstanding warrants and their related weighted average exercise prices are as follows:
No warrants were exercised in 2009. The related weighted average exercise price per share at year end 2009 was € 10.11. As at 31 March 2009, the total number of outstanding warrants potentially resulting in the issue of as many shares of the Company was € 1,249,750. Their average exercise price is € 10.11. Outstanding warrants at year end 2009 have the following expiry dates and exercise prices:
Fair value The fair value of the warrants granted under Warrant Plan 1 and Warrant Plan 2 was determined using the 'Black and Scholes' valuation model and was 10 thousand euros for the warrants granted in 2009. The main inputs into the model were the share price at grant date, the abovementioned exercise price, the standard deviation of expected Dividend A dividend of 9,073 (thousand) euros was paid over 200... , this is € 0.30 per share. At the General Shareholders Meeting of 10 May 2010, a dividend for 2009 will be proposed of € 0.36 per share, which comes to a total dividend of 10,879 (thousand) euros. This dividend due is not recongnized in these financial statements. 21. Provisions
22. Pension obligations The amounts recognized in the balance sheet are established as follows:
All defined benefit plans are final salary pension plans. The amounts pertaining to postemployment medical plans are included in the liability but are not significant. There are no informal constructive obligations. The assets comprise qualifying insurance policies and are not part of the in-house financial instruments of Arseus. The amounts recognized in the income statement are as follows:
Movements in net liability:
In the Netherlands, Arseus has two defined benefit plans. The principal actuarial assumptions used were as follows:
23. Financial debts and financial instruments
a. Bank borrowings The book value of the bank borrowings is expressed in euro. The effective interest rate at balance sheet date on 31 December 2009 was 2.932%. The principal source of financing of Arseus is a credit facility of € 200 million with a 5-year duration. As at end 2009, an amount of € 141 million had been withdrawn. This amount is presented as a long-term bank loan. This is a loan with a variable interest rate of 1 to 6 months. The interest risk relating to € 70 million of this loan was covered with financial derivatives. The fair value of these financial derivatives at year-end 2009 was € 5.313 million, € 2.339 million of which were presented as long-term liability and 2,974 million as short-term liability. The full movement in fair value in 2009 was charged to the result. Arseus has no other financial derivatives. As do the borrowing companies, Arseus NV and Arseus Capital NV, the following companies serve as guarantors for the bank loan concluded by Arseus: Company name
b. Finance leases Property, plant and equipment include the following amounts where Arseus is a lessee under a finance lease.
The net amount of the finance leases concern the following investments:
Finance lease liabilities - minimum lease payments:
c. Operating leases Operating lease liabilities - minimum lease payments:
The fair values of the bank borrowings and financial leasing liabilities are calculated based on the present value of the future payments associated with the debt. 24. Other current payables
Trade payables and other commitments generally have due dates that are close to each other. The reported values approximate the real values. 25. Contingencies Arseus is involved in a number of claims, disputes and legal proceedings within the normal conduct of its business. Management believes that these claims, disputes and legal proceedings will not, in the aggregate, have a materially adverse impact on the financial condition of Arseus. Nevertheless, due to their individual significance the contingencies below require disclosure. One the date of these financial statements, Arseus was involved in the following material disputes, it being understood that the term 'material' shall be interpreted as referring to disputes with a financial risk exceeding € 0.750 million:
26. Related parties The overall remuneration package for members of the Executive Committee and the CEO individually, as well as the non-executive directors, for the financial years 2008 and 2009 was as follows:
(1)
Costs for Arseus, i.e. the gross amount including any social security contributions. The remuneration policy for non-executive directors and for members of the Executive Committee is described in the Corporate Governance Statement, which is an integral part of the 2009 annual report (page 60). The members of the Executive Committee, in its composition at 31 December 2009, collectively hold 00,000 warrants. The CEO rents out buildings to group companies for an amount of € 237,000. The Board of Directors is of the opinion that rental occurs on normal market conditions. Moreover, the rental agreements are due to expire. 27. Business combinations Arseus completed a number of acquisitions in the financial year 2009. As the acquired activities were immediately – in their entirety or to a significant degree – integrated in existing of Arseus, their respective contributions to the profit of Arseus have not been reported separately. Moreover, the scale of these acquisitions was relatively limited in proportion to the size of the entire Group. In 2009, in the area of pharmaceutical products, a compounding pharmacy was acquired in the Netherlands (recognised in the consolidated financial statements as of October 2009). The acquisition price was approximately € 9 million excluding acquisition expenses, representing an increase in goodwill of € 7.667 million. This goodwill was fully allocated to the Fagron operating business segment. The compounding pharmacy realised a turnover of approximately € 5 million in 200.... Furthermore, Duo-Med was acquired in 2009 in the area of medical technological activities (recognised in the consolidated financial statements as of September 2009). The acquisition price was approximately € 9 million excluding acquisition expenses, representing an increase in goodwill of .593 million. This goodwill was fully allocated to the Arseus Medical operating business segment. Duo-Med realised a turnover of approximately € 6 million in 200.... In relation to the acquisition of Tamda in 2008, a final assignment of the purchase price, representing an increase of € 0.043 million in goodwill, was effected in June 2009. The fair value of the acquired assets and liabilities is detailed below: Fair value of the acquired assets and liabilities of Tamda
In relation to the acquisition of Julie-Owandy in 2008, a final assignment of the purchase price of the acquisition, representing an increase of € 1.205 million in goodwill, was effected in June 2009. The fair value of the acquired assets and liabilities is detailed below: Fair value of the acquired assets and liabilities of Julie-Owandy
A number of smaller companies and operations were furthermore acquired in 2009, for a total purchase price of € 9.11 million. The total net assets acquired prior to the allocation of the purchase price related to these smaller companies and operations amounted to € 0.766 million. The assigned expenses were € 0.339 million. For a number of acquired operations, the fair value of the acquired assets and liabilities was established on an interim basis. In addition, the total goodwill declined by € 0.221 million due to exchange rate differences. The total represents an increase in goodwill in the amount of € 26.040 million, of which € 7.5 million is allocated to the Fagron operating segment, € 7.540 million to Arseus Dental, € .593 million to Arseus Medical and € 2.049 million to Corilus. 28. Information on the Statutory Auditor, his remuneration and related services The Company's Statutory Auditor is PricewaterhouseCoopers Bedrijfsrevisoren BCVBA, represented by Lieven Adams and Peter Opsomer.
The item other engagements, i.e. strictly financial auditing work, relates mainly to due diligence work. 29. Significant events after balance sheet date No significant events occurred after balance sheet date. 30. Additional notes 1. Off balance sheet rights and liabilities - collateral: One of the entities of Arseus, Hader SA, has granted mortgage registration in the amount of € 0.957 million as part of its financing. 2. Arseus NV has signed a liability statement on behalf of a number of Dutch subsidiaries. These are:
3. Arseus NV has signed a liability statement on behalf of a German subsidiary.
Fagron GmbH & Co KG in Barsbüttel (Germany) is exempt from the duty according § 264 b German commercial code to set up, audit and publish the financial statement and the financial report by the German commercial code as per applicable regulations for corporate enterprises. 31. List of the consolidated companies
STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS' MEETING ON THE CONSOLIDATED ACCOUNTS OF THE COMPANY ARSEUS NV AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2009As required by law and the company's articles of association, we report to you in the context of our appointment as the company's statutory auditor. This report includes our opinion on the consolidated accounts and the required additional disclosure. Unqualified opinion on the consolidated accounts We have audited the consolidated accounts of Arseus NV and its subsidiaries (the "Group") as of and for the year ended 31 December 2009, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated accounts comprise the consolidated balance sheet as of 31 December 2009, the consolidated statements of income, changes in shareholders' equity and cash flows for the year then ended, as well as the summary of significant accounting policies an other explanatory notes. The total of the consolidated balance sheet amounts to EUR (000) 472,160 and the consolidated statement of income shows a result for the year, group share, of EUR (000) 19,553. The company's board of directors is responsible for the preparation of the consolidated accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these consolidated accounts based on our audit. We conducted our audit in accordance with the legal requirements applicable in Belgium and with Belgian auditing standards, as issued by the "Institut des Reviseurs d'Entreprises/ Instituut der Bedrijfsrevisoren". Those auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated accounts are free of material misstatement. In accordance with the auditing standards referred to above, we have carried out procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts. The selection of these procedures is a matter for our judgment, as is the assessment of the risk that the consolidated accounts contain material misstatements, whether due to fraud or error. In making those risk assessments, we have considered the Group's internal control relating to the preparation and fair presentation of the consolidated accounts, in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. We have also evaluated the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as the presentation of the consolidated accounts taken as a whole. Finally, we have obtained from the board of directors and Group officials the explanations and information necessary for our audit. We believe that the audit evidence we have obtained provides a reasonable basis for our opinion. In our opinion, the consolidated accounts give a true and fair view of the Group's net worth and financial position as of 31 December 2009 and of its results and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. Additional remark The company's board of directors is responsible for the preparation and content of the management report on the consolidated accounts. Our responsibility is to include in our report the following additional remark, which does not have any effect on our opinion on the consolidated accounts:
Gent, 15 April 2010 The statutory auditor Lieven Adams, Bedrijfsrevisor Peter Opsomer, Bedrijfsrevisor Statutory financial statementsCondensed stand-alone income statement Arseus NV
Condensed stand-alone balance sheet Arseus NV
Appropriation of profits Arseus NV
Accounting policies The accounting policies used for the stand-alone statutory financial statements of Arseus NV are in accordance with the KB of 31.01.2001 implementing the Belgian Companies Code. Statutory financial statements of Arseus NV As required by article 105, Belgian Companies Code, this annual report contains a condensed version of the statutory financial statements of Arseus NV. The annual report and the Statutory Auditor's report will be filed an will be available for inspection at the company's registered seat. The Statutory Auditor expressed his unqualified opinion on the statutory financial statements of Arseus NV over financial year 2009. Alphabetical terminology listIn addition to the terms as defined in IFRS, this annual report also includes other terms. These 'alternative performance indicators' are defined below. The IFRS terminology is in italics.
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