Aché Laboratórios Farmacêuticos S.A. and Subsidiaries

Transcription

(Convenience Translation into English from
the Original Previously Issued in Portuguese)
Aché Laboratórios Farmacêuticos
S.A. and Subsidiaries
Individual and Consolidated Financial
Statements for the Year Ended December 31,
2011 and Independent Auditors’ Report
Deloitte Touche Tohmatsu Auditores Independentes
Management Report
2011
To our Shareholders,
The Management of Aché Laboratórios Farmacêuticos S.A., in accordance with the terms of the
bylaws and legal requirements, submits for the appreciation of its shareholders this Management
Report and the corresponding individual and consolidated Financial Statements for the years
ended December 31, 2011 and 2010, accompanied by the independent auditor’s report on the
Financial Statements.
Message from management
In 2011 the Company harvested the fruits of investments made in recent years, successfully
building a broad and competitive pipeline. We launched 33 new products and, in addition to being
the leader in generating medical prescriptions, we also achieved leadership in demand in Brazilian
Reais in the prescription medicine segment, which accounts for over 80% of the Company’s
revenue.
In generic medicines, a highly-competitive segment, we grew once again with stronger presence in
points of sale and a portfolio that, with the addition of launches, became more complete.
Finally, in clear recognition of the Company’s soundness, the agency FitchRatings granted Aché
an investment grade rating of “BBB-”. This rating opens numerous opportunities, while reinforcing
our commitment to continuous improvements in management and governance practices that have
been implemented in recent years.
Highlights of 2011
Net revenue of R$ 1.4 billion, 10.7% more than in the previous year;
Profit for the year of R$ 380.7 million, 14.5% greater than in the previous year, accounting for
27.2% of net revenue;
Obtaining of 7 new product registrations with ANVISA (National Health Surveillance Agency) in
4Q11, of which 3 prescription medicines, 1 over-the-counter (OTC) medicine and 3 generic
medicines, totaling 31 registrations in the year, of which 14 prescription medicines, 2 OTC
medicines, 13 generic medicines and 2 medicines for export;
Obtaining of investment grade rating of “BBB-” from FitchRatings.
Management Report
2011
Main financial indicators – consolidated
(R$ million)
4Q10
4Q11
Var. (%)
2010
2011
Var. (%)
Net Revenue
341.3
378.6
10.9%
1,266.0
1,401.2
10.7%
Gross Profit
275.9
300.9
9.1%
1,014.3
1,115.1
9.9%
% of Net Revenue
80.8%
79.5%
-1.4 p.p.
80.1%
79.6%
-0.5 p.p.
Profit for the Year
133.2
143.7
7.9%
332.4
380.7
14.5%
% of Net Revenue
39.0%
38.0%
-1.1 p.p.
26.3%
27.2%
0.9 p.p.
EBITDA (adjusted)
101.8
120.8
18.7%
416.0
454.1
9.2%
% of Net Revenue
29.8%
31.9%
2.1 p.p.
32.9%
32.4%
-0.5 p.p.
I – Overview
Net revenue for 4Q11 was R$ 378.6 million, 10.9% greater than the same quarter of the previous
year. Meanwhile, EBITDA was R$ 120.8 million for 4Q11, up 18.7% from the same quarter of
2010. Consolidated net revenue for the year was R$ 1.4 billion, 10.7% higher than the
consolidated figure for the previous year, while EBITDA for 4Q11 reached R$ 454.1 million, 9.2%
higher than the previous year. EBITDA margin reached 32.4% on net revenue. Finally, profit for the
year was R$ 380.7 million, growing 14.5% from the previous year.
II – Business Context
1. Total Pharmaceutical Market (TPM)
The Brazilian pharmaceutical market expanded 18.9% in value and 13.4% in units in the period
from January to December 2011, compared to the same period of the previous year.
The prescription medicine market, which represents 54% of the TPM in value, grew 13.7% in value
compared to the accumulated figure from January to December 2010, and 7.3% in units. The overthe-counter medicine market, which accounts for 26% of the TPM in value, grew 15.2% compared
to the same period the previous year in value, and 9.3% in units. The generic medicine market,
which accounts for 20% of the TPM in value, grew 41.5% in value and 32.9% in units over this
period.
The graph below shows a comparison between the TPM’s performance and that of Aché, by
business unit.
Management Report
2011
% of Market Growth x Ache
Full-Year Jan to Dec 2011 x Full-Year Jan to Dec 2010
R$ Million
Million Units
TPM Growth
GX
583
TPM Growth
Aché Growth
+ 12.3%
+ 13.4%
32
+ 32.9%
Aché Growth
+ 17.8%
+ 18.9%
+ 21.0%
GX
8,805
437
+ 41.5%
268
22
OTC
699
+ 9.3%
RX
1,062
+ 7.3%
+ 10.7%
+ 9.5%
RX
ACHE
RX
OTC
+21.4%
11,198
+ 15.2%
1,545
77
TPM
MIP
+ 21.7%
GX
23,031
+ 13.7%
+ 16.2%
ACHE
TPM
RX
OTC
GX
Note (1): The market analyses are based on data provided by IMS. It is important to point out that, although they
are widely disseminated and serve as a reference for most of the sector, the information may lead to a distorted
image of the companies’ positioning in the ranking, in relation to the values and units. This is because the
calculation of demand takes into account total units distributed and factory price, without taking into
consideration actual sale value. The distortion is even greater in generic products, which offer significant
discounts in relation to the factory price.
2. Aché in the Total Pharmaceutical Market (TPM)
The Company’s demand reached a figure of R$ 2.2 billion from January to December 2011, 17.8%
more than the same period of 2010. In units, Aché’s demand reached 130 million, up 12.3%, in line
with the evolution of the total pharmaceutical market. This growth is mainly due to the performance
of the prescription and OTC medicine segments, which grew more than their respective markets.
In the generation of medical prescriptions, Aché’s strategic option, the company remained the
pharmaceutical market leader for the fifth consecutive year, with a market share of 6.4% in 2011.
This result was achieved once again through capillarity in doctor visits and product launches.
Management Report
2011
Prescription Medicine Business Unit:
This business unit attained net revenue of R$ 1.1 billion, growing 11.9% from the same period of
2010, accounting for 81.1% of the Company’s net revenue.
In the prescription segment, which is the Company’s natural calling, 2011’s results made Aché the
national leader in this segment in terms of demand in Brazilian Reais.
Nine new medicines were launched in this period (Montelair – which is the first similar medicine of
this molecule to hit the market, Clopin, Quetros, Neo-Decapeptyl, Glicolive, Fisioton, Eucerin
Aquaporin, Eucerin Dermodensifyer, Femme Fólico, and the Company’s own line of dermocosmetics, named Profuse).
In the table below, we highlight the prescription unit’s products with the most significant
performance in terms of demand in Brazilian Reais, comparing the accumulated figure for 2011
with that of the previous year:
Prescription Medicine - % Evolution Jan. to Dec. (2011 vs. 2010)
RK
PRODUCT
Growth (%)
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
MERITOR
BUSONID NASAL
ARTROSIL
LEUCOGEN
TOLREST
ALENIA
BIOMAG
DIOSMIN
ARTROLIVE
129.2%
54.6%
47.3%
44.4%
38.0%
37.6%
37.1%
36.8%
25.9%
This result was achieved despite decisions by ANVISA in relation to a ban on the sale of anorectic
medicines, which resulted in the loss of product registrations for some of the Company’s products,
as well as a judicial dispute involving the product Exodus, which remained off the market for more
than three months in 2011.
Over-the-Counter (OTC) Medicine Business Unit:
The OTC unit also had good performance in the year 2011, attaining net revenue of R$ 146.5
million, up 9.9% from the year 2010, accounting for 10.5% of the Company’s net revenue.
As the OTC unit’s main launch in the period (December), Inellare stands out as Aché’s first
nutraceutical medicine.
Management Report
2011
In the table below, we highlight the OTC unit’s main growths
grow s in terms of demand in Brazilian Reais
compared to the year 2010:
MIP - % Evolution Jan. to Dec (2011 vs. 2010)
RK
PRODUCT
Growth (%)
1st
2nd
3rd
4rd
5th
6th
SINTOCALMY
FLAGASS
FLOGORAL
DECONGEX PLUS
TRANSPULMIN
BIOFENAC AERO
90.0%
50.1%
33.6%
25.6%
13.0%
11.1%
Generic Medicine Business Unit:
Unit
This unit’s net revenue reached R$ 116.9
116. million, growing 7.2% from the year 2010, accounting for
8.4% of the Company’s net revenue.
revenue
Although the Company had strong positioning at points of sale over the course of 2011, and
expanded its portfolio through launches carried out in the year, these actions have not yet provided
Aché with the growth experienced by this highly-competitive
highly
market.
Nevertheless, the unit displayed a trend of growth in the year 2011. In terms of demand in Brazilian
reais, the generics unit reached R$ 437 million, growing 21.7%, while the overall market grew
41.5% in the same period.
In the last quarter of 2011, the unit’s demand in Brazilian Reais expanded 24.7%,
24.
while the overall
market grew 43.5% in the same period, as shown in the graph below:
below
(%) Growth of TPM vs. Aché - Brazilian Reais
TPM
43,5%
41,5%
37,6%
21,7%
24,7%
-3,5%
Growth 2010 vs. 2009
Growth 4Q11 vs. 4Q10
Management Report
2011
In terms of demand in units, in the year 2011 Aché’s volume reached 32.5 million,
million growing 21.0%,
against 32.9% for the overall market in the same period.
The
e generic unit’s growth trend was reinforced even more in 2011 by the fact that in the last
quarter of the year, Aché’s growth in demand in terms of units was 28.0%, while the overall market
grew 33.5%.
(%) Growth of TPM vs. Aché - Units
TPM
33,0%
Ache
33,5%
32,9%
28,0%
21,0%
-7,6%
Growth 4Q11 vs. 4Q10
In the period from January to December 2011, the unit launched 5 new molecules:
molecules montelukast,
quetiapine fumarate, clopidogrel,
clopidogrel betamethasone valerate + gentamicin sulfate + tolnaftate +
clioquinol and dexchlorpheniramine maleate + betametasone.
As a highlight among the unit’s launches in 2011, it is worth noting that montelukast is the first
generic medicine of this molecule to reach the market.
market
grow
In the table below, we point out the generic medicine unit’s main growths:
Generics - % Evolution Jan. to Dec. (2011 vs. 2010)
RK
1st
2nd
3rd
4th
5th
6th
7th
8th
PRODUCT
LOSARTAN POTAS.
OX ESCITALOPRAM
CLOR.METFORMINA
NIMESULIDA
SERTRALINA
PREDNISOLONA
ATENOLOL
LORATADINA
Growth (%)
253.1%
130.5%
118.8%
52.9%
44.8%
36.8%
35.9%
35.0%
Management Report
2011
III – Economic-Financial
Financial Performance
Consolidated Results
(R$ million)
4Q10
Net Revenue
Gross Profit
Selling and Administrative Expenses
% NR
4Q11
% NR
2010
% NR
2011
% NR
341.3 100.0%
378.6 100.0%
1,266.0 100.0%
1,401.2 100.0%
275.9 80.8%
(153.4) -44.9%
300.9 79.5%
(161.0) -42.5%
1,014.3 80.1%
(584.4) -46.2%
1,115.1 79.6%
(653.6) -46.6%
Other Operating Income (Expenses)
(16.7)
-4.9%
Operating Profit (EBIT)
105.8
31.0%
15.1
15.4
4.1%
155.3 41.0%
-3.1%
1.3
390.5
30.8%
462.8
33.0%
2.3%
44.1
3.1%
28.8
0.1%
Finance Income (Costs), Net
Profit before Income Tax and Social
Contribution
Profit for the Year
120.9
35.4%
167.7 44.3%
419.3
33.1%
506.9
36.2%
133.2
39.0%
143.7 38.0%
332.4
26.3%
380.7
27.2%
EBITDA (adjusted)
101.8
29.8%
120.8 31.9%
416.0
32.9%
454.1
32.4%
4.4%
12.4
(39.4)
3.3%
1. Net Sales Revenue
Net Sales Revenue grew 10.7% from 2010, reaching R$1,401.2 million.
For 4Q11,, net revenue came in at R$ 378.6 million, up 10.9% from the same quarter of the
previous year.
The breakdown of net revenue for the year, by business unit, was as follows: prescription 81.1%,
OTC 10.5% and generics 8.4%.
Net Revenue
R$ million
1.401,2
1.266,0
341,3
4Q10
10,9%
10,7%
378,6
4Q11
2010
2011
Management Report
2011
2. Gross Profit
The Company posted a gross profit of R$ 1,115.1 million, 9.9% greater than the figure for 2010.
In 4Q11,, gross profit came in at R$ 300.9 million, up 9.1% from the same quarter the previous
year.
Gross Profit
R$ million
1.115,1
1.014,3
9,9%
300,9
275,9
9,1%
4Q10
4Q11
2010
2011
3. Selling Expenses
For 2011,, selling expenses totaled R$ 546.7 million, equivalent to 39.0% of net revenue.
revenue For 4Q11
selling expenses came in at R$ 132,1 million, 34.9% of net revenue, as shown in the table below:
below
(R$ million)
Selling Expenses
4Q10
% NR
127.0 37.2%
4Q11
% NR
132.2 34.9%
2010
% NR
500.4 39.5%
2011
% NR
546.7 39.0%
Management Report
2011
4. General and Administrative Expenses
Due to extraordinary and non-recurring expenses related to the recognition of allowances for
obsolete inventories, general and administrative expenses totaled R$ 106.9 million for 2011,
equivalent to 7.6% of net revenue. The Company has been developing a program to reduce
inventory losses, implementing structural corrective actions for each cause of such losses.
(R$ million)
Allowance for Inventory Losses
4Q10
% NR
4Q11
% NR
2010
% NR
2011
% NR
1.6
0.5%
7.6
2.0%
5.0
0.4%
21.5
1.5%
Other General and Admin. Expenses
24.8
7.3%
21.2
5.6%
78.9
6.2%
85.5
6.1%
General and Admin. Expenses
26.4
7.7%
28.8
7.6%
84.0
6.6%
106.9
7.6%
5.
Adjusted EBITDA
Accumulated EBITDA (earnings before interest, taxes, depreciation and amortization) reached R$
454.1 million, up 9.2% from the previous year, with an EBITDA margin of 32.4% for the year 2011.
ADJUSTED EBITDA was calculated as shown below:
Adjusted EBITDA (R$ million)
Profit for the Year
Provision for Income Tax and Social
Contribution
Finance Income (Costs)
2010
2011
Var. (%)
332.4
380.7
14.5%
87.1
125.8
44.4%
(28.8)
(44.1)
53.1%
16.2
20.6
27.2%
9.1
(28.9)
-417.6%
Adjusted EBITDA
416.0
454.1
9.2%
Margin
32.9%
32.4%
-0.5 p.p
Depreciation and Amortization
Non-Recurring Expenses/Income
Management Report
2011
Adjusted EBITDA
R$ million
454,1
416,0
9,2%
18,7%
101,8
4Q10
120,8
4Q11
2011
2010
6. Finance Income
Net finance income came in with a gain of R$ 46.6 million for 2011, increasing by R$ 20.3 million
from the previous year. For 4Q11 it came in at R$ 12.9 million, with part of this gain related to the
recognition of CPC20, capitalization of interest on investments in property, plant and equipment.
equipment
(R$ million)
Finance income, net
Exchange variation
Present value adjustments
Finance income (costs)
4Q10
% NR
4Q11
% NR
2010
% NR
2011
% NR
14.7
4.3%
12.9
3.4%
26.3
2.1%
46.6
3.3%
-
0.0%
0.4
0.1%
0.5
0.0%
(1.8)
-0.1%
0.4
0.1%
(0.9)
-0.2%
2.0
0.2%
(0.7)
0.0%
15.1
4.4%
12.4
3.3%
28.8
2.3%
44.1
3.1%
7. Profit for the Year
Profit for 2011 was R$ 380.7 million,
million up 14.5% from 2010. For 4Q11 profit was R$ 143.7 million,
equivalent to 38% of net revenue.
revenue
Management Report
2011
Profit for the Year
R$ million
380,7
332,4
7,9%
14,5%
133,2
143,7
4Q10
4Q11
2011
2010
8. Net Debt
The Company ended 2011 with a net cash position of R$ 322.6 million, as
a shown in the table
below:
Balance as of
(R$ million)
million
Borrowings and financing - current
12/31/10
12/31/11
Var. (%)
71.6
78.8
10.1%
Borrowings and financing - noncurrent
175.9
157.3
-10.6%
Gross debt
Cash and cash equivalents
247.5
495.8
236.1
552.8
-4.6%
11.5%
5.2
5.9
13.5%
(253.5)
(322.6)
27.3%
Cash investments - noncurrent
Net debt
The Company’s noncurrent gross debt was R$ 157.3 million, with maturities through 2025.
Management Report
2011
9. Cash Investments
9.1 Research, Development and Innovation – RDI
In 2011 investments in RDI totaled R$ 41.0 million.
The Company is developing 4 radical innovation projects, 4 incremental innovation projects and 2
biotechnology projects, having provided the deposit for a patent.
In relation to these projects, in 2011 the Company completed the recruitment of patients for the
conclusion of phase III of the project for metabolic illness treatment, in addition to filing a request
for authorization of a phase III clinical trial for the project for vitiligo treatment.
The Company also filed a request with ANVISA to begin a phase I clinical trial for a project with an
antidiarrheal focus.
Besides the above-mentioned, there are also projects for treatment of depression, asthma and
chronic obstructive pulmonary disease, cancer, multiple sclerosis, arterial hypertension, as well as
an anxiolytic and an anti-inflammatory medicine.
In addition, the Company has 167 projects under development, which – through a disciplined and
structured methodology, conducted by its PMO (project management office) – has accelerated its
portfolio renewal.
In the period from January to December 2011, the Company obtained 31 product registrations with
ANVISA, of which 14 prescription medicines, 2 OTC medicines, 13 generic medicines and 2
medicines for export.
The Company obtained approval of an incentive line through the financial collaboration of the
Studies and Projects Financing Entity (FINEP) in the amount of R$ 76.5 million, and is in the
contracting phase for innovation financing in the amount of R$ 64.2 million from the National Bank
for Economic and Social Development (BNDES).
Of the funds approved by FINEP, R$ 38.0 million was already withdrawn over the course of the
year, and the possibility of using the remainder for new product development is ensured through
2013.
9.2 Property, plant and equipment
In 2011, investments in the new production unit in Guarulhos reached R$ 31.1 million, of which R$
20.0 million was financed by BNDES.
In adapting manufacturing facilities, which in 2011 produced 170 million units, another R$ 17.7
million was invested in machinery and equipment.
Management Report
2011
All manufacturing and packaging of liquids and semi-solids meet ANVISA’s strict standards (RDC
17). All areas are classified and have cascading pressure airlocks, in order to prevent any type of
cross contamination, ensuring product quality, safety and effectiveness.
Also in 2011, the Company began operations of the new suppository manufacturing area. For the
second half of 2012, the solids manipulation areas, weighing center and new quality control
laboratory, all located in new buildings, are estimated to start up operations.
Finally, to conclude the new production plant – scheduled for this same period – and handle the
production volumes projected for 2012 (200 million units), the Company has signed new financing
with BNDES in the amount of R$ 22.5 million.
10. Dividends
In light of the Company’s financial soundness and the strong cash generation, which is sufficient to
cover the investments for renewal of its portfolio, it is therefore not necessary to recognize new
earnings reserves for this purpose. Therefore, the Company’s management has proposed the
payment of dividends and interest on capital in the amount of R$ 374.7 million, equivalent to 98.5%
of profit for the year, to be voted upon in the Annual Shareholders’ Meeting.
Note: Forward-looking statements and information are not guarantees of future performance, as they involve
risks, uncertainties and assumptions, therefore depending on circumstances that may or may not occur. Future
results and the creation of shareholder value may differ from those expressed or suggested by forward-looking
statements.
Furthermore, some information such as market share, market demand and demand by business unit are based
on data provided by IMS; other information such as units sold by business unit, numbers and percentages of
growth by business unit, expenses on new business, revenue by business unit, number of projects under
development and new medicine registrations are based on the Company’s internal controls and, in both cases,
have not been audited by the independent auditors.
Acknowledgements
We thank our shareholders for their confidence, our employees for their commitment, our
customers and consumers for their preference, and our suppliers and partners for their support.
Management
(Convenience Translation into English from the Original Previously Issued in Portuguese)
ACHÉ LABORATÓRIOS FARMACÊUTICOS S.A. AND SUBSIDIARIES
BALANCE SHEETS AS OF DECEMBER 31, 2011 AND 2010
(In thousands of Brazilian reais - R$)
ASSETS
CURRENT ASSETS
Trade receivables
Inventories
Recoverable taxes
Dividends receivable from subsidiaries
Prepaid expenses
Other receivables
Total current assets
NONCURRENT ASSETS
Cash investments
Escrow deposits
Recoverable taxes
Deferred income tax and social contribution
Other assets
Investments
Property, plant and equipment
Intangible assets
Total noncurrent assets
TOTAL ASSETS
Note
5
6
7
8
8
9
11
12
13
Company
12/31/11
12/31/10
Consolidated
12/31/11
12/31/10
133,319
145,770
112,057
11,294
128,922
15,781
11,740
558,883
120,190
114,021
97,069
17,231
112,925
13,148
8,453
483,037
552,848
223,436
166,426
17,019
18,561
15,902
994,192
495,841
179,739
151,955
21,188
16,505
17,160
882,388
13,655
1,614
69,224
1,432
590,310
497,853
28,919
10,238
654
88,389
1,422
589,019
466,163
28,648
5,911
14,208
2,103
81,004
1,432
600,429
264,982
5,204
10,575
821
98,272
1,422
561,816
260,978
1,203,007
1,184,533
970,069
939,088
1,761,890
1,667,570
1,964,261
1,821,476
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables
Borrowings and financing
Taxes payable
Payroll and related taxes
Accounts payable
Dividends payable
Other payables
Total current liabilities
NONCURRENT LIABILITIES
Deferred income tax and social contribution
Provision for tax, civil and labor risks
Other payables
Total noncurrent liabilities
EQUITY
Share capital
Capital reserves
Revaluation reserve
Carrying value adjustment
Earnings reserves
Noncontrolling interests in
equity of subsidiaries
Total equity
TOTAL LIABILITIES AND EQUITY
Note
Company
12/31/11
12/31/10
Consolidated
12/31/11
12/31/10
14
15
16
25,504
71,262
20,529
36,381
5,835
150,000
4,182
313,693
13,720
65,356
17,390
30,274
6,605
139,792
1,231
274,368
36,005
78,802
64,051
46,255
12,995
150,000
7,891
395,999
17,508
71,598
28,954
39,607
14,668
139,792
5,255
317,382
15
9
18
135,225
70,895
71,187
15,943
293,250
153,415
65,053
130,176
15,576
364,220
157,348
153,857
80,274
17,341
408,820
175,912
138,707
136,703
17,780
469,102
20.a
20.b
407,310
174,212
6,061
177,410
389,954
407,310
174,212
6,275
179,098
262,087
407,310
174,212
6,061
177,410
389,954
407,310
174,212
6,275
179,098
262,087
1,154,947
1,028,982
4,495
1,159,442
6,010
1,034,992
1,761,890
1,667,570
1,964,261
1,821,476
20.c
The accompanying notes are an integral part of these financial statements.
3
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In thousands of Brazilian reais - R$, except earnings per share)
Company
Consolidated
Note
12/31/11
12/31/10
12/31/11
12/31/10
21
989,365
(203,086)
900,379
(180,238)
1,401,218
(286,138)
1,266,036
(251,730)
786,279
720,141
1,115,080
1,014,306
(403,031)
(81,025)
(25,213)
128,464
30,063
(362,389)
(69,768)
(23,422)
110,547
(11,131)
(546,640)
(106,935)
(29,814)
31,126
(500,483)
(83,955)
(28,189)
(11,161)
435,537
363,978
462,817
390,518
29,345
(18,512)
(1,579)
21,732
(24,223)
532
69,049
(23,173)
(1,814)
52,484
(24,214)
544
444,791
362,019
506,879
419,332
(39,111)
(25,007)
(22,460)
(7,171)
(93,420)
(32,418)
(44,032)
(43,074)
PROFIT FOR THE YEAR
380,673
332,388
381,041
332,226
ATTRIBUTABLE TO
Owners of the Company
Noncontrolling interests
380,673
-
332,388
-
380,673
368
332,388
162
5.96
5.96
5.20
5.20
5.96
5.96
5.20
5.20
NET REVENUE
Cost of sales
GROSS PROFIT
OPERATING INCOME (EXPENSES)
Selling expenses
General and administrative expenses
Employee and management profit sharing
Share of profits (losses) of subsidiaries
Other operating income (expenses), net
28
11
23
OPERATING PROFIT BEFORE FINANCE
INCOME (COSTS)
FINANCE INCOME (COSTS)
Finance income
Finance costs
Exchange rate change, net
24
24
24
PROFIT BEFORE INCOME TAX AND
SOCIAL CONTRIBUTION
INCOME TAX AND SOCIAL CONTRIBUTION
Current
Deferred
10
10
EARNINGS PER SHARE
Basic
Diluted
The statements of comprehensive income have not been presented because the Company and its subsidiaries did not have items
affecting comprehensive income in the years ended December 31, 2011 and 2010.
4
ACHÉ LABORATÓRIOS FARMACÊUTICOS S.A.
STATEMENTS OF CHANGES IN EQUITY
Capital reserves
Share
capital
Earnings reserves
Carrying value adjustment
Special
goodwill
reserve
Share
premium
reserve
Revaluation
reserve
6,488
In own
assets
Reserve for
new products
and PP&E
Reserve
for
expansion
Undistributed
profits
reserve
Reserve for
additional
dividends
proposed
-
54,395
33,650
-
-
-
289
-
-
-
129,946
-
213
1,568
(289)
(131,514)
332,388
(148,937)
(53,429)
-
43,807
289
54,395
33,650
129,946
-
-
185
-
-
-
-
214
1,688
380,673
(185)
380,673
-
120,000
-
(7,682)
(104,708)
(150,000)
(120,000)
-
(104,708)
(150,000)
-
6,445
-
-
BALANCES AS OF DECEMBER 31, 2010
407,310
167,767
6,445
-
-
-
-
-
-
-
-
-
-
-
129,946
-
-
407,310
167,767
6,445
6,061
147,156
30,254
43,807
474
184,341
33,650
Realization of revaluation reserve
Realization of adjustments to deemed cost in 2011
Profit for the year
Tax incentive reserve
Recognition of reserve for new products,
research and development and investments
in PP&E as per ASM of April 26, 2011
Recognition of undistributed profits reserve
Interest on capital paid
Dividends
Additional dividends proposed
(214)
-
147,639
(483)
-
-
43,807
167,767
-
6,275
900,772
31,703
407,310
(1,568)
-
Noncontrolling
interests
Legal
reserve
(244)
31,459
(1,205)
-
(129,946)
7,682
7,682
120,000
Retained
earnings
Equity
attributable to
owners of the
Company
In subsidiaries
Realization of revaluation reserve
Realization of adjustments to deemed cost
Recognition of undistributed profits reserve
Profit for the year
Dividends declared
(213)
-
149,207
Tax
incentive
reserve
-
-
-
(244)
(1,568)
332,388
(148,937)
(53,429)
1,028,982
1,154,947
6,010
6,010
(368)
-
(1,147)
4,495
Total
900,772
(244)
(1,568)
332,388
(148,937)
(53,429)
6,010
1,034,992
380,305
-
(104,708)
(150,000)
(1,147)
1,159,442
5
STATEMENTS OF CASH FLOWS
Note
CASH FLOW FROM OPERATING ACTIVITIES
Profit before income tax and social contribution
Adjustments to reconcile profit before income tax and social contribution
to net cash generated by operating activities:
Depreciation and amortization
Gain on sale of property, plant and equipment
Provision for tax, civil and labor risks
Allowance for inventory losses
Accrued interest, inflation adjustment and exchange rate changes
Allowance for doubtful debts
Company
12/31/11
12/31/10
Consolidated
12/31/11
12/31/10
444,791
362,019
506,879
419,332
15,348
34
(25,449)
5,957
(128,464)
17,032
85
329,334
12,493
1,017
39,499
1,648
(110,547)
19,146
(9,230)
316,045
20,584
64
(22,889)
8,798
18,621
(366)
531,691
16,176
1,361
38,351
1,613
16,690
(13,809)
479,714
Increase in operating assets:
Trade receivables
Inventories
Recoverable taxes
Prepaid expenses and other receivables
(31,834)
(19,794)
(3,618)
(10,497)
(9,156)
(15,348)
(6,613)
(14,132)
(43,332)
(21,974)
(12,164)
(5,735)
(9,103)
(14,276)
(12,644)
(14,775)
Increase (decrease) in operating liabilities:
Trade payables
Payroll and related taxes
Taxes payable
Other payables
Income tax and social contribution paid
Tax, civil and labor risks paid
Interest paid on borrowings and financing
Net cash generated by operating activities
11,784
6,107
(1,873)
2,215
(25,172)
(33,540)
(16,592)
206,520
(2,675)
1,089
4,135
8,023
(25,613)
(6,304)
(19,474)
229,977
18,497
6,648
333
192
(43,272)
(33,540)
(17,805)
379,539
(8,231)
(1,060)
3,241
9,838
(44,421)
(6,567)
(20,615)
361,101
CASH FLOW FROM INVESTING ACTIVITIES
Dividends received from subsidiaries
Acquisition of and capital contribution to subsidiaries less net cash
Decrease in interest in subsidiaries
Purchases of property, plant and equipment and intangible assets
Purchases of investments
Proceeds from sale of property, plant and equipment
Net cash generated by (used in) investing activities
112,925
(1,750)
(47,343)
63,832
110,910
(20,133)
(43,243)
40
47,574
(3,632)
(59,633)
(707)
(63,972)
(16,703)
(48,091)
(626)
281
(65,139)
52,268
(64,991)
(139,792)
(104,708)
(257,223)
24,712
(59,980)
(140,294)
(148,937)
(324,499)
(1,883)
56,253
(68,430)
(139,792)
(104,708)
(258,560)
78,432
29,720
(63,060)
(140,294)
(148,937)
(244,139)
13,129
(46,948)
57,007
51,823
120,190
133,319
167,138
120,190
495,841
552,848
444,018
495,841
13,129
(46,948)
57,007
51,823
22
11
12 e 13
CASH FLOW FROM FINANCING ACTIVITIES
Purchase of noncontrolling interests
Debentures received
New borrowings and financing
Repayment of borrowings and financing
Dividends paid
Net cash used in financing activities
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
5
5
6
STATEMENTS OF VALUE ADDED
Company
12/31/11
12/31/10
Consolidated
12/31/11
12/31/10
1,162,955
(85)
675
1,163,545
1,058,806
9,230
286
1,068,322
1,607,624
366
1,099
1,609,089
144,619
8,615
209,010
6,812
369,056
127,818
7,782
232,287
1,425
369,312
201,711
8,676
298,670
9,685
518,742
794,489
699,010
1,090,347
962,531
15,348
12,493
20,584
16,176
779,141
686,517
1,069,763
946,355
128,464
29,345
157,809
110,547
21,732
132,279
69,049
69,049
52,484
52,484
TOTAL VALUE ADDED FOR DISTRIBUTION
936,950
818,796
1,138,812
998,839
DISTRIBUTION OF VALUE ADDED
936,950
818,796
1,138,812
998,839
Personnel
Salaries
Benefits
Severance Pay Fund (FGTS)
Taxes and contributions
Federal
State
Other taxes
Lenders and lessors
Interest
Rentals
Shareholders
Dividends and interest on capital
Retained earnings for the year
234,784
202,335
19,525
12,924
278,868
180,347
97,142
1,379
42,625
20,091
22,534
380,673
254,708
125,965
-
215,860
183,107
21,028
11,725
224,697
135,331
88,156
1,210
45,851
23,691
22,160
332,388
202,365
130,023
-
309,724
266,181
26,303
17,240
392,367
255,427
134,533
2,407
55,680
24,987
30,693
381,041
254,708
125,965
368
282,853
239,251
28,201
15,401
329,769
205,615
122,167
1,987
53,667
23,670
29,997
332,550
202,365
130,023
162
Note
REVENUES
Sales of products and services
Other revenues
INPUTS PURCHASED FROM THIRD PARTIES
Raw materials consumed
Cost of sales and services
Materials, electric power, outside services and other
Impairment (recovery) of assets
GROSS VALUE ADDED
DEPRECIATION AND AMORTIZATION
22
VALUE ADDED GENERATED BY THE COMPANY
VALUE ADDED RECEIVED IN TRANSFER
Finance income
11
24
1,459,453
13,809
872
1,474,134
179,260
7,791
327,018
(2,466)
511,603
7
NOTES TO THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
1.
OPERATIONS
a) Corporate purpose
Aché Laboratórios Farmacêuticos S.A. (the “Company”) is a closely-held corporation
headquartered in Guarulhos and engaged in the manufacture, sale, import and export of
pharmaceutical products for human consumption and operating in the main pharmaceutical
segments, such as respiratory, muscular-skeletal, female health, central nervous system,
cardiology, dermatology, vitamins, oncology and cosmeceuticals, through its prescription,
hospital, generic and over-the-counter medicine business units.
The Company has direct interests in the following companies:
i.
Biosintética Farmacêutica Ltda. (“Biosintética”) - engaged in the manufacture, sale,
import and export of pharmaceutical products for human consumption and operating in
the main pharmaceutical segments, such as respiratory, central nervous system,
cardiology, dermatology and oncology through prescription, generic and over-the-counter medicine business units.
ii.
Aché International (BVI) Ltd. (“BVI”) - primarily engaged in maintaining partnerships
with other international companies for technical and operational development of its
products.
iii. Labofarma Produtos Farmacêuticos Ltda. (“Labofarma”) - mainly engaged in the
distribution and sale of medicines.
iv. Indústria Farmacêutica Melcon do Brasil S.A. (“Melcon”) - primarily engaged in the
manufacture, sale, import and export of hormones.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1.
Statement of compliance
The Company’s financial statements comprise:
The consolidated financial statements prepared in accordance with International
Financial Reporting Standards - IFRSs issued by the International Accounting Standards
Board - IASB and accounting practices adopted in Brazil, identified as Consolidated BR GAAP and IFRSs, and the individual financial statements prepared in accordance
with accounting practices adopted in Brazil, identified as Company - BR GAAP.
8
The accounting practices adopted in Brazil comprise those prescribed by the Brazilian
corporate law and the technical pronouncements, guidance and interpretations issued by
the Accounting Pronouncements Committee (CPC) and approved by the Brazilian
Securities Commission (CVM).
The individual financial statements present the measurement of investments in
subsidiaries by the equity method of accounting, in accordance with Brazilian corporate
law. Accordingly, these individual financial statements are not considered IFRSs
compliant, since IFRSs require the measurement of these investments in the parent
company’s separate financial statements at their fair value or cost.
As there is no difference between the consolidated equity and consolidated profit
attributable to owners of the Company, included in the consolidated financial statements
prepared in accordance with IFRSs and accounting practices adopted in Brazil, and the
Company’s equity and profit included in the individual financial statements prepared in
accordance with accounting practices adopted in Brazil, the Company elected to present
these individual and consolidated financial statements as a single set, side by side.
2.2.
Basis of preparation
The financial statements have been prepared on the historical cost basis, except for
certain financial instruments that are measured at fair values, as explained in the
accounting policies below. Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
The principal accounting policies applied in the preparation of these consolidated
financial statements are set out below. These practices have been consistently applied in
the prior year presented, unless otherwise stated.
2.3.
Functional and presentation currency
Items included in the Company’s financial statements and in each of the subsidiaries
included in the consolidated financial statements are measured using the currency of the
primary economic environment in which the companies operate (“functional currency”).
For purposes of the consolidated financial statements, the balance sheet and statement of
income accounts of each Group Company are translated into Brazilian reais - R$, which
is the functional and presentation currency of the Company’s financial statements.
2.4.
Basis of consolidation and investments in subsidiaries
The consolidated financial statements include the financial statements of the Company
and its subsidiaries. Control is achieved when the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
Equity interest - %
12/31/11 12/31/10
Aché International (BVI) Ltd.
Biosintética Farmacêutica Ltda.
Indústria Farmacêutica Melcon do Brasil S.A.
Labofarma Produtos Farmacêuticos Ltda.
9
100.00
99.99
50.00
99.99
100.00
99.99
50.00
99.99
The fiscal years of the subsidiaries included in consolidation coincide with those of the
parent company, and the accounting practices have been consistently applied by the
subsidiaries, in relation to those used in the prior year.
When necessary, adjustments are made to the financial statements of the subsidiaries to
bring their accounting policies into line with those used by the Company. All intra-group
transactions, balances, income and expenses are eliminated in full on consolidation.
As of December 31, 2011 and 2010, there were no unrealized intercompany profits.
The main consolidation procedures are:
 Elimination of intercompany balances.
 Elimination of shares in capital, reserves and retained earnings of subsidiaries.
 Elimination of intercompany transactions.
In the Company’s individual financial statements, the financial statements of the
subsidiaries are accounted for by the equity method of accounting.
2.5.
General principles
Assets, liabilities, revenues and expenses are determined on the accrual basis. Sales
revenue is recognized in the statement of income when the risks and rewards of
ownership of the products sold are transferred to the buyer or when the services are
rendered.
Revenue is presented net of deductions, including tax on sales.
2.6.
Include cash on hand and in banks and cash investments. Cash investments are carried at
their fair value at the end of the reporting period, with maturities of 90 days or less and
no fixed redemption date. They are readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value.
2.7.
Trade receivables and estimate of allowance for doubtful debts
Recognized at the original invoice amounts plus exchange rate changes, when
applicable. The allowance for doubtful debts is estimated based on the individual
analysis of receivables and in an amount considered by Management necessary and
sufficient to cover probable losses on their realization, which is subject to changes due to
recoveries of receivables or change in the customer financial situation.
The discount to present value of trade receivables is not material due to the short period
of its realization.
2.8.
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the
date of acquisition of the business less accumulated impairment losses, if any.
10
For purposes of impairment testing, goodwill is allocated to each of the Company’s
cash-generating units (or groups of cash-generating units) that is expected to benefit
from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment
annually, or more frequently when there is indication that the unit may be impaired. If
the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit “pro rata” based on the
carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognized directly in profit or loss in the statement of income. An impairment loss
recognized for goodwill is not reversed in subsequent years.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is
included in the determination of profit or loss on disposal.
2.9.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is reduced for estimated customer returns, rebates and other similar allowances.
2.9.1.
Sale of goods
Revenue from the sale of goods is recognized when all the following conditions are
satisfied:
 The Company has transferred to the buyer the significant risks and rewards of
ownership of the goods.
 The Company retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold.
 The amount of revenue can be measured reliably.
 It is probable that the economic benefits associated with the transaction will flow to
the Company.
 The costs incurred or to be incurred in respect of the transaction can be measured
reliably.
Specifically, revenue from product sales is recognized when products are delivered, and
the legal ownership is transferred.
2.10. Interest income
Dividend income from investments is recognized when the shareholder’s right to receive
payment has been established (provided that it is probable that the economic benefits
will flow to the Group and the amount of income can be measured reliably).
11
Interest income from a financial asset is recognized when it is probable that the economic
benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net
carrying amount on initial recognition.
2.11. Government grants
Government grants are not recognized until there is reasonable assurance that the
Company will comply with the conditions attaching to them and that the grants will be
received.
Government grants are recognized in profit or loss on a systematic basis over the years
in which the Company recognizes as expenses the related costs for which the grants are
intended to compensate and, subsequently, they are allocated to the tax incentive
reserve, in equity, as long as the conditions of CPC 07 - Government Grants and
Assistance are satisfied. While the requirements for recognition in profit or loss are not
met, the balancing item of the government grant recognized in assets is recognized in a
specific line item of liabilities.
2.12. Taxation
Income tax and social contribution expense represents the sum of current and deferred
taxes.
2.12.1. Current taxes
The provision for income tax and social contribution is based on the taxable profit for
the year. Taxable profit differs from profit as reported in the statement of income
because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The provision for income tax and social
contribution is calculated individually, based on rates in effect at the end of the reporting
period.
2.12.2. Deferred taxes
Deferred income tax and social contribution (“deferred tax”) are recognized on
temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable
profit, including the balance of tax losses, when applicable. Deferred tax liabilities are
generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary
differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
12
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in the year in which the liability is settled or the asset realized, based on tax rates and tax
laws that have been enacted or substantially enacted by the end of the reporting period.
The measurement of deferred tax assets and liabilities reflects the tax consequences that
would follow from the manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets arising from tax losses and temporary differences are recognized in
conformity with tax legislation, CPC 31 - Noncurrent Assets Held for Sale and
Discontinued Operations and CVM Instruction 371/02, and take into consideration the
history of profitability and expectation of generation of future taxable profits, based on a
technical feasibility study annually reviewed.
2.12.3. Current and deferred income tax and social contribution for the year
Current and deferred taxes are recognized in profit or loss, except when they relate to
items that are recognized in other comprehensive income or directly in equity, in which
case current and deferred taxes are also recognized in other comprehensive income or
directly in equity, respectively.
2.13. Property, plant and equipment
Are carried at cost, less depreciation. Cost of properties in the course of construction
includes professional fees and, for qualifying assets, borrowing costs capitalized in
accordance with the Company’s accounting policy. Such properties are classified to the
appropriate categories of property, plant and equipment when completed and ready for
intended use. Depreciation of these assets, on the same basis as other property assets,
commences when the assets are ready for their intended use.
Depreciation is recognized so as to write off the cost or valuation of assets (other than
land and properties under construction) less their residual values over their useful lives,
using the straight-line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in profit or loss.
Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to
get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
13
2.14. Intangible assets
2.14.1. Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost
less accumulated amortization and accumulated impairment losses. Amortization is
recognized on a straight-line basis over their estimated useful lives. The estimated useful
life and amortization method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis. Intangible
assets with indefinite useful lives that are acquired separately are carried at cost.
Additionally, trademarks and patents acquired from third parties are carried at
acquisition cost, adjusted to their recoverable amount, when applicable.
Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are
expected from use or disposal. Gains or losses arising from derecognition of an
intangible asset, measured as the difference between net disposal proceeds and the
carrying amount of the asset, are recognized in profit or loss when the asset is
derecognized.
2.14.2. Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amount of its
tangible and intangible assets to determine where there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss, if any.
When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for which a reasonable and
consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for
use are tested for impairment at least annually, and whenever there is an indication that
the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is recognized immediately in
profit or loss.
14
When an impairment loss subsequently reverses, the carrying amount of the asset (or a
cash-generating unit) is increased to the revised estimate of its recoverable amount, but
so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized
immediately in profit or loss.
2.15. Inventories
Inventories are stated at the lower of cost and net realizable value. Costs of inventories
are determined using the average cost method. When necessary, an allowance for slow-moving and/or obsolete inventories is recognized to reflect the risk of realization of
these inventories.
2.16. Provisions
Provisions are recognized when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company will be required
to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
The amount recognized as a provision is the best estimate of the consideration required
to settle the present obligation at the end of the reporting period, taking into account the
risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to
be recovered from a third party, a receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably.
2.17. Financial instruments
Financial assets and financial liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognized immediately in profit or loss.
Classification
Financial assets held by the Company and its subsidiaries are classified into the
categories below, according to the purpose for which they were acquired or contracted:
(a) Held-to-maturity financial assets
Comprise investments in certain financial assets classified at the time of their
contracting, to be held to maturity, which are measured at acquisition cost, plus
yield accrued according to contractual terms and conditions.
15
(b) Available-for-sale financial assets
When applicable, this classification includes nonderivative financial assets, such as
securities and/or shares quoted or not in active markets, but that may have their fair
values reasonably estimated. As of December 31, 2011 and 2010, the Company and
its subsidiaries did not have financial assets under this classification recognized in
the financial statements.
(c) Loans and receivables
This classification includes nonderivative financial assets and liabilities with fixed
or determinable payments that are not quoted in an active market. They are
recognized in current assets and liabilities, except for maturities greater than 12
months after the end of the reporting period, which are classified as noncurrent
assets and liabilities. As of December 31, 2011 and 2010, for the Company, this
balance includes cash and banks (Note 5), borrowings and financing (Note 15),
trade payables (Note 14) and trade receivables (Note 6).
Measurement
Regular way purchases or sales of financial assets are recognized on the trade date, that
is, the date on which the Company commits to purchase or sell the asset. Financial assets
carried at fair value through profit or loss are initially recognized at fair value, and
transaction costs are expensed in the statement of income. Loans and receivables are
carried at amortized cost.
Gains or losses arising from changes in the fair value of financial assets at fair value
through profit or loss are recognized in the statement of income under “Finance income”
or “Finance costs”, respectively, in the year in which they arise. For financial assets
classified as available-for-sale, when applicable, these changes are recognized under
“Other comprehensive income” until their settlement, when they are ultimately
reclassified to profit or loss.
Offsetting financial instruments
Financial assets and liabilities are set off and the net amount is reported in the balance
sheet when there is a legally enforceable right to set off the recognized amounts or the
entity intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
Other financial liabilities
Other financial liabilities (including borrowings) are measured at amortized cost using
the effective interest method.
The effective interest method is a method of calculating the amortized cost of a financial
liability and of allocating interest expense over the relevant year. The effective interest
rate is the rate that exactly discounts estimated future cash payments (including all fees
and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the
financial liability or, when appropriate, a shorter period, to the net carrying amount on
initial recognition.
16
2.18. Classification of assets and liabilities
Assets and liabilities are classified as current when it is probable that they will be
realized or settled in the next 12 months. Otherwise, they are stated as noncurrent.
Foreign currency denominated monetary liabilities were translated into Brazilian reais at
the exchange rate prevailing at the end of the reporting period. Exchange differences
were recognized in the statement of income.
2.19. Dividends and interest on capital
The proposal for distribution of dividends and interest on capital made by the
Management of the Company and its subsidiaries that is within the portion equivalent to
the mandatory minimum dividend is recognized in current liabilities, in line item
“Dividends and interest on capital payable”, because it is considered a legal obligation
under the Company’s bylaws; however, the portion of dividends exceeding the
mandatory minimum dividend, declared by Management after the fiscal year to which
the financial statements refer, but before the date of authorization for issue of such
financial statements, is recognized in line item “Additional dividends proposed”, in
equity.
2.20. Statement of value added (“DVA”)
The purpose of this statement is to evidence the wealth created by the Company and its
distribution during a certain period and is presented by the Company, as required by
Brazilian corporate law, as part of its individual financial statements and as supplemental
information to the consolidated financial statements, since this statement is not established
or required by IFRSs.
The DVA has been prepared based on the financial records used as a basis for the
preparation of the financial statements and according to the provisions of CPC 09 Statement of Value Added. The first part of the DVA presents the wealth created by the
Company, represented by revenues (gross sales revenue, including taxes on sales, other
revenues and the effects of the allowance for bad debts), inputs purchased from third
parties (cost of sales and purchases of materials, electric power, outside services,
including taxes levied at the time of purchase, the effects of impairment and recovery of
assets, and depreciation and amortization) and the value added received from third
parties (share of profits (losses) of subsidiaries, finance income and other income). The
second part of the DVA presents the distribution of wealth among personnel, taxes and
contributions, lenders and lessors, and shareholders.
2.21. Earnings per share
Earnings per share are presented as basic and diluted, in accordance with technical
pronouncement CPC 41/IAS 33 - Earnings per Share, as mentioned in Note 29.
17
3.
CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES
In the application of the Company’s accounting policies, which are described in Note 2,
Management is required to make judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the year in which the estimate is revised if the revision
affects only that period, or in future periods if the revision affects both current and future
periods.
Main judgments in the application of accounting policies:
a) Impairment of assets
There are specific rules for impairment testing of long-lived assets, especially property,
plant and equipment, goodwill and other intangible assets. At the end of each reporting
period, the Company performs an analysis to determine if there is evidence of impairment
of long-lived assets. At the end of the reporting period, no evidence of impairment was
identified.
The recoverable amount of an asset is the higher of: (i) an asset’s fair value less costs to
sell; and (ii) its value in use. The value in use is measured based on discounted cash flows
(pre-tax) derived from the continued use of an asset through the end of its useful life. At the
end of the reporting period, no asset presented recoverable amount higher than its residual
value.
The Company performs an annual impairment test of goodwill arising from an investment
and uses acceptable market practices, including discounted cash flows, to compare the
carrying amount of the assets with their recoverable amount.
The impairment test of goodwill is based on the analysis and identification of facts and
circumstances that may result in the need to advance the annual test. If any fact or
circumstance indicates that the goodwill is impaired, the test is advanced.
b) Allowance for doubtful debts
The Company and its subsidiaries estimate the allowance for doubtful debts in an amount
considered sufficient to cover probable losses on the realization of receivables. The
allowance for doubtful debts is estimated considering receivables past due for more than
180 days and for which collection suits have been filed, and balances of specific customers
which present risk of realization.
c) Allowance for inventory losses
The Company and its subsidiaries perform quarterly estimates of the allowance for
inventory losses, in an amount considered sufficient to cover probable losses on inventories
following the criteria below:

Products and materials expired.
18

“Original” products with expiry dates of up to 12 months.

“Free sample” products with expiry date of up to 5 months.

Products blocked due to quality.

Products returned by customers.
d) Provision for tax, civil and labor risks
The Company and its subsidiaries are parties to judicial and administrative proceedings, as
described in Note 18. Provisions are recognized for all contingencies related to proceedings
that represent probable losses and reliably estimated. The likelihood of loss is assessed
taking into account all available evidence, hierarchy of laws, established case law, most
recent court decisions and their relevance under the legal system, as well as the assessment
made by outside legal counselors. Management believes that the provisions for tax, civil
and labor risks are properly presented in the financial statements.
e) Deferred taxes
Deferred tax assets and liabilities are calculated based on a study of the expected generation
of future taxable profit, discounted to present value and deducting all temporary
differences, which is annually reviewed and approved by Management. The projections of
future profit consider the main Brazilian economy performance variables, sales volume and
price, and tax rates.
4.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO STANDARDS
a) Standards, interpretations and amendments to standards effective as of December 31, 2011
which did not have material impacts on the Group’s financial statements.
The following interpretations and amendments to existing standards have been issued and
were effective as of December 31, 2011. However, they did not have material impacts on
the Group’s financial statements:
Standard
Improvements to IFRSs - 2010
Amendments to several standards.
Amendments to IFRS 1
Limited exemption from comparative
IFRS 7 disclosures for first-time adopters.
Related-party disclosures.
Amendments to IAS 24
Amendments to IFRIC 14
IFRIC 19
19
Main requirements
Prepayments of a minimum funding
requirement.
Classification of rights issues.
Extinguishing financial liabilities with
equity instruments.
Effective date
Effective for annual periods beginning
on or after January 1, 2011.
on or after July 1, 2010.
on or after February 1, 2010.
on or after July 1, 2010.
b) Standards, interpretations and amendments to existing standards that are not yet effective
and have not been early adopted by the Group.
The following standards and amendments to existing standards have been issued and are
mandatory for periods beginning on or after December 31, 2011. However, these standards
and amendments to standards have not been early adopted by the Group.
Standard
Main requirements
Effective date
IFRS 9 (as amended in 2010)
Financial instruments.
Effective for annual periods
beginning on or after January 1,
2013.
Removal of fixed dates for first-time adopters
of IFRSs.
beginning on or after July 1, 2011.
Disclosures - transfers of financial assets.
beginning on or after July 1, 2011.
Deferred taxes - recovery of the underlying
assets when an asset is measured using the
fair value model in IAS 40.
2012.
IAS 28 (Revised in 2011) Investments in Associates and Joint
Ventures
Revision of IAS 28 to include the
amendments introduced by IFRSs 10, 11 and
12.
2013.
IAS 27 (Revised in 2011) Separate Financial
Statements
IAS 27 requirements related to consolidated
financial statements are replaced by IFRS 10.
The requirements for separate financial
statements are maintained.
2013.
IFRS 10 - Consolidated
Financial Statements
Replaces the IAS 27 requirements applicable
to consolidated financial statements and
SIC 12. IFRS 10 provides a single
consolidation model that identifies control as
the basis for consolidation for all types of
entities.
2013.
IFRS 11 - Joint
Arrangements
Eliminates the proportionate consolidation
model for joint controlled entities and
maintains equity method model only. It also
eliminates the concept of “jointly controlled
assets” and maintains only “jointly controlled
operations” and “jointly controlled entities”.
2013.
IFRS 12 - Disclosure of
Interests in Other
Entities
Expands the current disclosure requirements
in respect of entities where the company has
significant influence.
2013.
IFRS 13 - Fair Value
Measurement
Replaces and consolidates in a single
standard all the guidance and requirements in
respect of fair value measurement contained
in other IFRSs. IFRS 13 defines fair value
and provides guidance on how to measure
fair value and requirements for disclosure
relating to fair value measurement. However,
it does not introduce any new requirement or
amendment with respect to items to be
measured at fair value, which remain as
originally issued.
2013.
20
Standard
Main requirements
Effective date
Amendments to IAS 19 Employee Benefits
Eliminates the corridor approach and requires
recognition of actuarial gains or losses and
other long-term benefits in profit or loss,
when earned or incurred, among other
changes.
2013.
Amendments to IAS 1 Presentation of
Financial Statements
Introduces the requirement that all items
recognized in other comprehensive income be
separated into and totaled as items that are or
items that are not subsequently reclassified to
profit or loss.
2013.
Considering the Group’s current operations, Management does not expect that these new
standards, interpretations and amendments will have a material effect on the financial
statements as from their adoption.
The CPC has not yet issued the pronouncements and amendments related to the new and
revised IFRSs presented above. Because of the CPC’s and CVM’s commitment to keep the
set of standards issued updated based on the updates made by the IASB, these
pronouncements and amendments are expected to be issued by the CPC and approved by
the CVM through the date of their mandatory adoption.
5.
CASH AND CASH EQUIVALENTS
The balance of “Cash and cash equivalents” includes cash held by the Company and its
subsidiaries. The balance of this account at the end of the reporting period, as stated in the
statement of cash flows, can be reconciled with the related balance sheet items, as shown
below:
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Cash and banks
Cash investments
3,882
129,437
133,319
3,933
116,257
120,190
10,922
541,926
552,848
5,636
490,205
495,841
Cash investments comprise Bank Deposit Certificates (CDBs) with several financial
institutions, with yield from 100.0% to 103.0% of the Interbank Deposit Certificate (CDI) rate,
and are classified by the Company and its subsidiaries in line item “Cash and cash
equivalents”, since they are considered financial assets that can be readily converted into
known amounts of cash and subject to an insignificant risk of changes in value.
21
6.
TRADE RECEIVABLES
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Trade receivables
153,743 121,909
(7,973)
(7,888)
145,770 114,021
243,947
(20,511)
223,436
200,616
(20,877)
179,739
The aging list of trade receivables is as follows:
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Current
Past-due:
From 1 to 30 days
From 31 to 60 days
From 61 to 90 days
From 91 to 180 days
Over 180 days
135,989
111,530
208,673
176,828
11,135
955
888
318
4,458
153,743
1,574
355
47
234
8,169
121,909
16,714
1,405
914
588
15,653
243,947
1,864
512
128
411
20,873
200,616
Changes in the allowance for doubtful debts were as follows:
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Balance at the beginning of the year
Allowance
Reversal
Balance at the end of the year
7.
7,888
85
7,973
17,118
3,844
(13,074)
7,888
20,877
239
(605)
20,511
34,686
5,478
(19,287)
20,877
INVENTORIES
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Finished goods
Work in process
Raw materials
Advances to suppliers
48,818
7,308
56,616
8,629
(9,314)
112,057
40,703
4,844
51,541
4,489
(4,508)
97,069
76,279
12,763
81,251
13,376
(17,243)
166,426
71,073
11,520
70,667
8,435
(9,740)
151,955
22
Changes in the allowance for inventory losses were as follows:
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Reversal of inventory loss
8.
4,508
9,186
(4,380)
9,314
2,858
2,419
(769)
4,508
8,099
4,770
(3,129)
9,740
RECOVERABLE TAXES
Company
(BR GAAP)
12/31/11 12/31/10
9.
9,740
19,305
(11,802)
17,243
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
Social contribution on net income (CSLL)
Corporate income tax (IRPJ)
Withholding Income Tax (IRRF)
State VAT (ICMS)
Tax on revenue (COFINS)
Tax on revenue (PIS)
Federal VAT ( IPI)
Other taxes
4,928
1
4,515
2,444
633
158
229
12,908
5,056
3,940
3,297
3,385
1,605
451
81
70
17,885
4,934
11
129
6,069
3,298
848
3,481
352
19,122
5,127
3,940
3,298
4,286
2,161
609
2,433
155
22,009
Current
Noncurrent
11,294
1,614
12,908
17,231
654
17,885
17,019
2,103
19,122
21,188
821
22,009
DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
Deferred income tax and social contribution assets and liabilities arise from temporarily
nondeductible and/or nontaxable income and expenses, absorbed tax credits and tax losses, as
follows:
Company
(BR GAAP)
12/31/11 12/31/10
Assets
Deferred income tax on:
Tax losses
Temporarily nondeductible provisions:
Tax, civil and labor risks
Profit sharing
Other
23
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
-
5,434
-
5,434
36,662
4,426
1,925
2,329
3,326
48,668
48,304
3,325
1,904
1,163
1,229
61,359
38,945
4,426
5,060
4,311
4,590
57,332
49,316
3,326
5,151
2,534
2,864
68,625
Company
(BR GAAP)
12/31/11 12/31/10
Deferred social contribution on:
Tax losses
Tax, civil and labor risks
Profit sharing
Other
Current
Deferred income tax on:
Revaluation
Deemed cost of property, plant and equipment
Goodwill amortized for tax purposes
Borrowing costs
Inflation adjustment of escrow deposits
(cash basis)
Discount to present value of financial liabilities
Other
Deferred social contribution on:
Revaluation reserve
Deemed cost of property, plant and equipment
Goodwill amortized for tax purposes
Borrowing costs
Inflation adjustment of escrow deposits
(cash basis)
Discount to present value of financial liabilities
Other
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
4,323
11,048
1,593
693
838
2,061
20,556
69,224
8,188
15,238
1,197
685
419
1,303
27,030
88,389
4,323
11,869
1,593
1,822
1,552
2,513
23,672
81,004
8,188
15,603
1,197
1,854
912
1,893
29,647
98,272
2,131
29,500
2,862
5,003
2,208
29,735
2,862
2,252
2,996
32,486
53,847
5,003
3,396
32,723
46,617
2,252
12,951
52,447
11,104
48,161
12,951
4,724
1,440
113,447
11,104
4,656
1,571
102,319
334
10,620
1,030
1,801
351
10,705
1,030
810
645
11,696
19,385
1,801
779
11,781
16,782
810
4,663
18,448
70,895
3,996
16,892
65,053
4,662
1,701
520
40,410
153,857
3,996
1,676
564
36,388
138,707
The deferred tax asset recognized is limited to the amounts for which their utilization is
supported by taxable profit projections, discounted to their present value, prepared by the
Company and its subsidiaries, considering also that the utilization of tax losses is limited to
30% of the annual taxable profit determined in accordance with prevailing Brazilian tax
legislation. Such tax losses can be carried forward indefinitely.
According to projections prepared by Management and approved by the Finance Committee
and Board of Directors, deferred income tax and social contribution on tax losses are expected
to be realized in the following years:
Company
(BR GAAP)
12/31/11 12/31/10
Tax losses:
2012
2013
4,323
4,323
10,333
3,289
13,622
Consolidated
(BR GAAP and IFRSs)
12/31/11 12/31/10
4,323
4,323
10,333
3,289
13,622
24
10. RECONCILIATION OF INCOME TAX AND SOCIAL CONTRIBUTION EXPENSE
The reconciliation of income tax and social contribution expense between effective rate and
statutory rate for the years ended December 31, 2011 and 2010 is as follows:
Company
(BR GAAP)
12/31/11 12/31/10
Profit before income tax and social
contribution
Income tax and social contribution expense
at statutory rate - 34%
Reconciliation of income tax and social
contribution expense at effective rate:
Tax benefit from technology research and
development
Nondeductible expenses
Other
Income tax and social contribution expense
in the statement of income
Current
Deferred
Total
444,791
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
362,019
506,879
419,332
(151,229) (123,086)
(172,339)
(142,573)
43,229
37,586
-
-
6,520
35,601
(688)
2,449
4,576
50,639
5,120
50,639
654
7,353
35,601
(1,121)
4,668
(64,118)
(29,631)
(125,838)
(87,106)
(39,111)
(25,007)
(64,118)
(22,460)
(7,171)
(29,631)
(93,420)
(32,418)
(125,838)
(44,032)
(43,074)
(87,106)
(292)
11. INVESTMENTS
Company
(BR GAAP and IFRSs)
12/31/11
12/31/10
Investments in subsidiaries
Goodwill - Asta Médica
Goodwill - Indústria Farmacêutica Melcon do Brasil S.A.
561,330
11,446
17,534
590,310
563,671
11,446
13,901
589,019
Based on technical interpretation ICPC 09, for purposes of presentation of the individual
balance sheets, goodwill was classified as part of the investments that gave rise to them since
they are part of the investment acquired. In the consolidated balance sheet, goodwill was
reclassified to intangible assets since it refers to the expected profitability of each subsidiary
acquired, based on the valuation report prepared by experts at the time of the acquisitions,
whose assets and liabilities are consolidated into the Company’s financial statements.
25
The information on investments in subsidiaries is as follows:
Amounts at 12/31/11
Share of profits (losses)
of subsidiaries
Share of
profits
Exchange
(losses) of
rate
subsidiaries
change
Investments
Profit (loss)
for the year
Equity
interest - %
1,244
555,796
(7)
128,186
100.00
99.99
140
-
(7)
128,186
1,244
555,796
1,111
556,532
8,990
736
50.00
-
368
4,495
6,010
(205)
565,825
(223)
128,692
99.99
140
(223)
128,324
(205)
561,330
18
563,671
Subsidiaries
Equity
Aché International (BVI) Ltd.
Indústria Farmacêutica Melcon
do Brasil S.A.
Labofarma Produtos
Farmacêuticos Ltda.
12/31/11 12/31/10
Changes in investments in subsidiaries were as follows:
Subsidiaries
Aché Internacional (BVI) Ltd.
Indústria Farmacêutica Melcon
do Brasil S.A.
Labofarma Produtos
of subsidiaries
Share of
profits
Exchange
(losses) of
rate
subsidiaries
change
Dividends
Decrease in
investments
12/31/11
(7)
128,186
(128,922)
-
1,244
555,796
-
368
-
(3,633)
4,495
140
(223)
128,324
128,922
(3,633)
12/31/10
Increase
1,111
556,532
-
140
-
6,010
1,750
18
563,671
1,750
(205)
561,330
Changes in investments in subsidiaries in 2010 were as follows:
Subsidiaries
Aché Internacional (BVI) Ltd.
Indústria Farmacêutica Melcon do Brasil S.A.
Labofarma Produtos Farmacêuticos Ltda.
12/31/09
1,692
558,340
29
560,061
Increase
of subsidiaries
Share of
Exchange
profits
rate
(losses) of
change
subsidiaries
(244)
6,172
60
5,988
(72)
(72)
(509)
111,361
(162)
(71)
110,619
Dividends
12/31/10
(112,925)
112,925
1,111
556,532
6,010
18
563,671
Details on related-party transactions are provided in Note 17.
26
12. PROPERTY, PLANT AND EQUIPMENT
Average
annual
depreciation
rate - %
Land
Buildings
Facilities
Machinery and equipment
Furniture and fixtures
Vehicles
IT equipment
Other
in progress
in progress
27
Cost
Accumulated Residual
depreciation
value
Cost
12/31/10
Accumulated
depreciation
Residual
value
2.1
10
9
10
20
33
-
82,773
302,612
39,448
109,685
18,003
1,798
22,188
10,539
587,046
(96,399)
(27,465)
(72,530)
(16,595)
(1,570)
(19,358)
(6,977)
(240,894)
82,773 82,773
206,213 302,612
11,983 36,808
37,155 99,575
1,408 17,659
228
1,745
2,830 19,423
3,562 10,130
346,152 570,725
(92,072)
(25,340)
(67,852)
(15,957)
(1,484)
(18,447)
(6,373)
(227,525)
82,773
210,540
11,468
31,723
1,702
261
976
3,757
343,200
-
151,701
738,747
(240,894)
151,701 122,963
497,853 693,688
(227,525)
122,963
466,163
Average
annual
depreciation
rate - %
Land
Buildings
Facilities
Vehicles
IT equipment
Industrial dies and tools
Company (BR GAAP)
12/31/11
Consolidated (BR GAAP and IFRSs)
12/31/11
Cost
depreciation
value
Cost
12/31/10
depreciation
value
2.1
10
9
10
20
33
-
122,666
340,996
46,789
168,003
18,805
2,265
25,177
13,346
738,047
(104,480)
(32,597)
(105,431)
(16,793)
(1,897)
(21,501)
(7,614)
(290,313)
122,666
236,516
14,192
62,572
2,012
368
3,676
5,732
447,734
122,666
340,996
43,808
149,332
18,265
2,540
22,199
12,298
712,104
(99,092)
(30,152)
(98,039)
(16,090)
(2,107)
(20,998)
(6,773)
(273,251)
122,666
241,904
13,656
51,293
2,175
433
1,201
5,525
438,853
-
152,695
890,742
(290,313)
152,695 122,963
600,429 835,067
(273,251)
122,963
561,816
Changes in property, plant and equipment were as follows:
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Additions (net of transfers to projects closed):
Land
Facilities
Vehicles
IT equipment
Property, plant and equipment in progress
Industrial dies and tools
466,163
437,649
561,816
521,742
508
10,077
349
54
2,838
31,111
407
45,344
734
663
6,604
261
94
455
32,785
886
42,482
1,132
18,930
563
69
3,644
32,105
1,029
57,472
734
999
9,767
398
255
636
32,809
1,629
47,227
Balance from acquisition of Melcon
Net write-offs/transfers to intangible assets
Depreciation
(224)
(1,103)
(13,430) (12,865)
497,853 466,163
(254)
(18,605)
600,429
11,373
(1,665)
(16,861)
561,816
Assets pledged as collateral
As of December 31, 2011, the Company and its subsidiaries had property, plant and equipment
pledged as collateral for borrowings and financing as well as for lawsuits, as described in
Note 15.
Impairment test of assets
Under CPC 01 - Impairment of Assets, items of property, plant and equipment and intangible
assets that present indications of impairment are thoroughly reviewed to determine the need to
recognize an impairment provision.
All items of property, plant and equipment and intangible assets that present indications of
impairment are thoroughly reviewed to determine the need to recognize an impairment
provision.
The smallest cash-generating unit determined by the Management of the Company and its
subsidiaries to assess the impairment of tangible and intangible assets corresponds to each of
the production units. Operating and financial performance indicators were established and, for
cash-generating units, Management performed a detailed analysis of impairment for each asset
using the individual future cash flow method discounted to present value and compared with
the asset value.
As of December 31, 2011, no events indicating the impairment of property, plant and
equipment and intangible assets have been identified.
28
13. INTANGIBLE ASSETS
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Trademarks (a)
Software
Goodwill - Asta Médica Ltda. (b)
Goodwill - Biosintética Farmacêutica Ltda. (c)
Goodwill - Indústria Farmacêutica Melcon do
Brasil S.A. (d)
24,567
4,352
-
23,154
5,494
-
27,485
4,576
11,446
203,942
26,060
5,629
11,446
203,942
28,919
28,648
17,533
264,982
13,901
260,978
(a) Represented by trademarks acquired from third parties and/or acquired in acquisitions of
subsidiaries.
(b) Goodwill arising on the acquisition of subsidiary Asta Médica Ltda., merged into the
Company in 2003, amortized through December 31, 2008 based on expected future
profitability.
(c) Includes the goodwill of subsidiary Biosintética Farmacêutica Ltda., arising from the
downstream merger of the then parent company Delta Participações Ltda., on March 31,
2006, after which both companies became wholly-owned subsidiaries of the Company.
Goodwill is based on expected future profitability.
(d) Goodwill arising on the acquisition of subsidiary Indústria Farmacêutica Melcon do Brasil
S.A. in August 2010.
Changes in intangible assets were as follows:
Company
Consolidated
(BR GAAP and IFRSs)
(BR GAAP)
12/31/11 12/31/10 12/31/11
12/31/10
Balance from acquisition of subsidiaries
Additions - goodwill - Indústria Farmacêutica
Melcon do Brasil S.A. (*)
Additions - software
Transfers to property, plant and equipment in
progress
Amortization - software
28,648
-
29,844
-
260,978
-
248,243
7
1,999
761
3,632
2,161
13,901
824
190
(1,918)
28,919
46
(2,003)
28,648
190
(1,979)
264,982
66
(2,063)
260,978
(*) Adjustment of goodwill based on the Extraordinary Shareholders’ Meeting of Melcon,
held on December 20, 2010 and registered with the Division of Corporations of the State
of Goiás (JUCEG) on November 21, 2011, which approved the re-ratification of the 9th
Amendment to the Company’s Articles of Incorporation, dated August 26, 2010, changing
the number of shares originally transferred by the former shareholders to the Company,
from 7,500,000 shares to 3,867,501 shares.
29
14. TRADE PAYABLES
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Domestic suppliers
Foreign suppliers
Related parties (see Note 17)
10,846
11,520
3,138
25,504
10,313
2,589
818
13,720
16,829
19,058
118
36,005
14,067
3,435
6
17,508
15. BORROWINGS AND FINANCING
Annual charges - %
Maturity
Local currency:
PRÓ-DF (*)
FINAME
FINAME
FCO AND FOMENTAR
FINEP
BNDES
BNDES
Profarma - BNDES
25% of INPC + 2.43%
TJLP + 1.15% to 2.95%
and 4.50% to 5.50%
9.5% to 10%
4%
6%
UMBNDES + 1.5%
TJLP + 1.5% to 3%
2025
2020
2016
2018
2019
2012
2012
2016
Foreign currency
Libor + 0.95% to 2.85%
2013
Current
Noncurrent
Company
(BR GAAP)
12/31/11 12/31/10
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
1,336
4,914
38,867
154,781
199,898
6,589
206,487
1,653
211,437
213,090
5,681
218,771
18,847
1,709
5,629
3,242
38,867
1,760
172
154,806
225,032
11,118
236,150
17,517
1,970
76
2,810
4,106
333
211,494
238,306
9,204
247,510
71,262
135,225
206,487
65,356
153,415
218,771
78,802
157,348
236,150
71,598
175,912
247,510
(*) The Company has a financing from Banco de Brasília that can be utilized up to 2025 and that will be repaid in
a lump sum at the end of 15 years counting from the release date. The Company recognized the debt at its
present value and its effects on funding are recognized in operating income (expenses), whereas the
adjustments arising from the changes in interest rates and changes in the original amount are recognized in
finance income (costs). The financial adjustment is calculated considering the SELIC interest rate projected
by the Brazilian Central Bank (BACEN).
 Local currency
Represented primarily by Profarma - BNDES financing.
a) Guarantees and covenants
Company
The Profarma - BNDES financing is earmarked for the construction of the new
industrial unit in Guarulhos - SP. This financing provides for usual events of accelerated
maturity, among which the noncompliance with the following financial indices: limit its
indebtedness level equal to or lower than 0.75% of the consolidated total assets and
maintain the total net debt equal to or lower than three multiples of the consolidated
Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA. As of
December 31, 2011, the Company is compliant with such covenant.
30
Additionally, the Profarma - BNDES financing is collateralized by mortgage on
properties, machinery and equipment owned by the Company, located in Guarulhos.
Subsidiary Biosintética Farmacêutica Ltda. - agreements entered into
before its acquisition
The PRÓ-DF financing, from Banco de Brasília, is collateralized by cash investments
(CDB), which are equivalent to 10% of the financed amount. These investments are
stated in line item “Cash investments”, in noncurrent assets.
The Profarma - BNDES financing is collateralized by mortgage on properties owned by
its parent company, located in the city of Guarulhos - SP.
16. TAXES PAYABLE
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
State VAT (ICMS)
Corporate income tax (IRPJ)
Tax on revenue (COFINS)
Social contribution on net income (CSLL)
Tax on revenue (PIS)
Other
8,210
5,012
5,040
1,067
1,200
20,529
11,109
5,051
1,071
159
17,390
12,548
32,568
5,224
6,837
1,107
5,767
64,051
22,631
34
5,051
22
1,071
145
28,954
17. RELATED PARTIES
Related-party transactions and balances are as follows:
Consolidated
Company
(BR GAAP and IFRSs)
(BR GAAP)
12/31/11 12/31/10 12/31/11
12/31/10
Revenues:
Manufacturing for Biosintética Farmacêutica
Ltda. (a)
Manufacturing for Indústria Farmacêutica
Melcon S.A. (a)
PurchasesPurchases of products for Biosintética
Farmacêutica Ltda. (a)
31
32,955
24,210
-
-
186
-
-
-
8,625
7,441
-
-
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Current assets:
Receivables - Biosintética
Farmacêutica Ltda. (b)
Dividends and amounts due from related
parties - Biosintética Farmacêutica Ltda.
Receivables - Labofarma Produtos
Farmacêuticos Ltda. (b)
Advance to supplier - Farmaprod
Administração e Serviços Ltda.
Advance to supplier - Labofarma Produtos
Advance and receivables - Indústria
Farmacêutica Melcon do Brasil S.A.
Current liabilities:
Trade payables - Biosintética Farmacêutica
Ltda. (b)
Trade payables - Labofarma Produtos
Farmacêuticos Ltda. (b)
Associação Brasileira de Assistência ao
Deficiente Visual - Laramara
5,134
1,224
-
-
128,922
112,925
-
-
16
25
-
-
552
785
2,059
1,648
1,950
-
-
-
257
-
-
-
624
818
-
-
2,426
-
-
-
88
-
118
6
(a) Manufacturing of products and rendering of corporate services passed on to subsidiaries at
the cost incurred in these services.
(b) Balance of trade receivables and trade payables related to the above transactions and
reimbursement of common expenses among the companies through debit notes.
Management compensation
The compensation of the Company’s officers and Management is as follows:
Compensation
Overall Management compensation
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
5,830
7,176
In accordance with the Brazilian corporate law, contemplating the changes in accounting
practices introduced by Law 11638/07 and the Company’s bylaws, the shareholders are
responsible for setting the overall annual compensation of its officers at the General Meeting.
32
18. PROVISION FOR TAX, CIVIL AND LABOR RISKS
The Company and its subsidiaries are parties to administrative and judicial proceedings
involving tax, labor and civil matters, which are at different court levels. Management, based
on its assessment and supported by the opinions of its outside legal counselors, recognized a
provision for lawsuits for which an unfavorable outcome is considered probable.
The provisions by nature are as follows:
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11 12/31/10
Tax
Labor
Civil
101,404 157,555
44,298
37,943
5,848
2,615
151,550 198,113
(80,363) (67,937)
71,187 130,176
Escrow deposits
104,777
50,048
6,417
161,242
(80,968)
80,274
160,226
41,992
2,615
204,833
(68,130)
136,703
Inflation
adjustment
12/31/11
Movements were as follows:
Company (BR GAAP)
Tax
Labor
Civil
Escrow deposits
12/31/10
Additions
Reversals
157,555
37,943
2,615
198,113
(67,937)
130,176
18,555
15,056
3,503
37,114
(2,192)
34,922
(49,250)
(12,692)
(270)
(62,212)
210
(62,002)
12/31/10
Tax
Labor
Civil
Escrow deposits
33
160,226
41,992
2,615
204,833
(68,130)
136,703
Payments
(33,540)
(33,540)
(33,540)
8,084 101,404
3,991
44,298
5,848
12,075 151,550
(10,444) (80,363)
1,631
71,187
Consolidated (BR GAAP and IFRSs)
Inflation
Additions Reversals Payments
adjustment
52,894
19,226
4,072
76,192
(2,346)
73,846
(84,638)
(15,683)
(270)
(100,591)
256
(100,335)
(33,540)
(33,540)
(33,540)
12/31/11
9,835 104,777
4,513
50,048
6,417
14,348 161,242
(10,748) (80,968)
3,600
80,274
The main administrative and judicial proceedings involving tax matters are as follows:
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
Taxes on revenue (PIS and COFINS) (a)
Corporate income tax (IRPJ) and social contribution on net income
(CSLL) (b)
Severance Pay Fund (FGTS) (c)
State VAT (ICMS) (d)
Other
Escrow deposits
5,996
5,309
23,418
26,607
7,551
41,205
104,777
(82,437)
22,340
41,993
28,791
15,300
68,833
160,226
(76,033)
84,193
(a) Lawsuit claiming the expiration of the remaining debts from the challenging of the rate
increase, Law 9718/98.
(b) Deductibility of CSLL from taxable income, deductibility of the portion of balance sheet
inflation adjustment from taxable income and social contribution tax base, and
deductibility of interest on capital from social contribution tax base.
(c) Tax rate increase - challenge of the 0.5% increase in FGTS contribution, calculated on
employee payroll, and the 10% increase in employment termination fine.
(d) Tax collections stayed, tax assessments issued by the Finance Department of the States of
Pernambuco, Bahia, Espírito Santo and São Paulo challenging the tax substitution, official
entry in the Manaus Free Trade Zone, disallowance of credit, etc.
Management believes that the unfavorable outcome of its lawsuits, individually or in the
aggregate, will not have a material adverse effect on the Company’s financial position or
business.
When necessary, the Company makes escrow deposits not linked to the provisions for tax, civil
and labor risks, classified in a specific line item of noncurrent assets.
Lawsuits classified as risk of possible loss
Administrative Proceeding No. 16643.720001/2011-18
In May 2011, the Brazilian Federal Revenue issued a tax assessment notice against Biosintética
totaling approximately R$301,000, to require alleged debts of IRPJ and CSLL related to base
years 2006 to 2009, since it understands that Biosintética would not have fulfilled the legal
requirements for deducting the amortization charges of the goodwill paid on the acquisition of
Delta Participações Farmacêuticas S.A. (“Delta”).
34
The Company filed a motion to deny such assessment notice and, based on the opinion of the
outside legal counselors, believes that the arguments used in the defense are well grounded and
that the risk of loss, in regard to the goodwill deduction, is possible with a tendency to remote,
while, in regard to the application of the increased fine, the risk of loss is remote. For this reason,
no provision was recognized for this case since this matter should not have impact on the
financial statements as of December 31, 2011.
Public Civil Action No. 2005.01.1.063866-9
Since June 18, 2004 the Company enjoys the financial incentives offered by the Federal
District by means of the programs named PRÓ-DF and PRÓ-DF II, successively (the latter
since April 2009).
In 2011 there were some changes in the risk scenario. In June of the current year, the Federal
Supreme Court (STF) judged several Direct Unconstitutionality Actions (ADINS) involving
the tax and financial incentives granted by the States and the Federal District related to the
ICMS.
In this context, such Court judged partially with grounds ADIN No. 2549, which challenges the
constitutionality of the financial incentive named PRÓ-DF granted by the Federal District.
However, changing this unfavorable scenario, in September 2011 ICMS Agreement No. 84/11
was enacted. Such agreement was approved by the National Council of Fiscal Policy
(CONFAZ) and ratified nationwide on October 21, and for this reason the Federal District
initially suspends and subsequently grants the remission of debts related to the PRÓ-DF.
Considering that the object of the Public Civil Action is to annul the decrees that introduced the
PRÓ-DF, an understanding was consolidated, reinforced in an opinion issued by outside legal
counselors that the chances of financial burden entailing the need to maintain the provision
related to the PRÓ-DF are remote.
Regarding the PRÓ-DF II, until now the authorities have not challenged its validity. Moreover,
considering the favorable precedent occurred with the PRÓ-DF, the Company’s Management,
also supported by the opinion of its outside legal counselors, understands that the risk
assessment related to the portion of the incentives enjoyed under the second program (PRÓ-DF
II) should be classified as “possible loss”, thus not justifying the maintenance of the provision
previously recognized for this purpose.
For the reasons described above, the provisions related to the programs PRÓ-DF and PRÓ-DF
II were reversed in December of the current year, with a gain of R$31,431 recognized in the
Company’s statement of income, in line item “Other operating income (expenses)”.
As of December 31, 2011, there were other administrative proceedings and labor, civil and tax
lawsuits against the Company and its subsidiaries, for which its outside legal counselors
classified the likelihood of loss as possible, totaling R$36,802 (R$51,594 in 2010), and,
accordingly, no provision for these claims was recognized.
35
19. FINANCIAL INSTRUMENTS
The estimated realizable values of the financial assets and liabilities of the Company and its
subsidiaries were determined using information available in the market and appropriate
valuation methodologies. However, considerable Management judgment was required in the
interpretation of market data to produce the most adequate estimate of the realizable value.
Consequently, the estimates presented do not necessarily indicate the amounts that could be
realized in the current market. The use of market methodologies may produce different effects
on the estimated realizable values.
a) Capital management
The Company’s Management manages its cash in order to be able to continue as a going
concern and maximize the funds for research and development of new products, as well as
provide return to shareholders.
The Company’s capital structure consists of financial liabilities with financial institutions,
cash and cash equivalents, cash investments and equity, comprising share capital and
retained earnings.
Management periodically reviews its capital structure and its ability to settle its liabilities,
as well as timely monitors the average period of payment to suppliers in relation to the
average inventory turnover, taking the necessary actions when there is any mismatch
between assets and liabilities.
In line with others in the industry, the Company monitors capital on the basis of the gearing
ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as
total borrowings (including current and noncurrent borrowings as shown in the consolidated
balance sheet) less cash and cash equivalents. Total capital is calculated as equity as shown
in the consolidated balance sheet plus net debt.
The gearing ratios as of December 31, 2011 and 2010 can be summarized as follows:
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
Borrowings and financing (Note 15)
Cash and cash equivalents (Note 5)
Cash investments - noncurrent assets
Net debt
Equity
Total capital
Debt-equity ratio
236,150
(552,848)
(5,911)
(322,609)
247,510
(495,841)
(5,204)
(253,535)
1,159,442 1,034,992
407,310
407,310
(79.20%) (62.25%)
36
b) Categories of financial instruments
Company
(BR GAAP)
Carrying amount
and fair value
12/31/11 12/31/10
Financial assetsLoans and receivables:
Trade receivables
133,319
145,770
120,190
114,021
Other financial liabilitiesBorrowings
206,487
218,771
Consolidated
(BR GAAP and IFRSs)
Carrying amount and fair
value
12/31/11
12/31/10
Financial assets:
Held-to-maturityCash investments - CDB
Loans and receivables:
Trade receivables
5,911
5,204
552,848
223,436
495,841
179,739
Other financial liabilitiesBorrowings
236,150
247,510
The Company’s Management is of the opinion that the carrying amounts of the financial
instruments in the individual and consolidated financial statements do not significantly
differ from their fair value, since the maturity of most balances is close to the reporting
dates. The balance of “Borrowings and financing” is adjusted for inflation based on
inflation indices and variable interests in view of market conditions and, therefore, the
carrying amount at the end of the reporting period approximates the fair value.
However, since there is no active market for these instruments, differences might occur if
they were settled before the due date.
c) Fair value of financial instruments
The carrying amounts of cash and cash equivalents (cash, banks and cash investments),
trade receivables and current liabilities are equivalent to their fair value as their maturities
are close to the end of the reporting period. The balance of “Borrowings and financing” is
adjusted for inflation based on variable interests in view of market conditions and,
therefore, the debt balances at the end of the reporting period correspond to the fair value
adjusted to present value.
37
d) Interest rates
The Company entered into agreements with floating interest rates mainly linked to the
TJLP plus 3% per year on borrowings and financing denominated in Brazilian reais, and
Libor variable interest plus 0.95% per year on borrowings in foreign currency. Interest rates
on cash investments are pegged to the CDI fluctuation.
e) Concentration of credit risk
The financial instruments that expose the Company and its subsidiaries to concentration of
credit risk consist principally of banks, cash investments and trade receivables. The total
balance of trade receivables is denominated in Brazilian reais. The balance of “Trade
receivables” is distributed in several customers and no customer accounts for 10% or more
of the total net operating revenue or balance receivable. In order to reduce the credit risk the
Company has carried out individual assessments of customers, but, as a usual market
practice, it does not require prepayments or guarantees. The Company’s Management
monitors the risk related to the balance of trade receivables by assessing doubtful
receivables.
f) Exchange rate risk
This risk arises from the possibility that the Company and its subsidiaries may incur losses
due to fluctuations in exchange rates that would increase the nominal amounts payable or
funds raised in the market.
There are amounts payable denominated in foreign currencies (U.S. dollars, euros, Swiss
francs, pound sterling and yens) and which are, therefore, exposed to risks related to
exchange rate fluctuations. Total assets and liabilities subject to foreign exchange exposure
and the corresponding currencies are as follows:
Company
(BR GAAP)
12/31/11 12/31/10
In euros:
Assets
Liabilities
Net exposure
EUR
In U.S. dollars:
Assets
Liabilities
Net exposure
US$
In Swiss francs:
Assets
Liabilities
Net exposure
CHF
In pound sterling:
Liabilities
Net exposure
GBP
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
1,433
(2,396)
(963)
1,067
(373)
694
2,225
(3,982)
(1,757)
2,013
(463)
(1,550)
837
(2,845)
(2,008)
651
(878)
(227)
3,299
(4,815)
(1,516)
2,906
(1,280)
1,626
75
(168)
(93)
(157)
(157)
75
(168)
(93)
(157)
(157)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
38
Company
(BR GAAP)
12/31/11 12/31/10
In yens:
Liabilities
Net exposure
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
JPY
-
(350)
(350)
-
(350)
(350)
The main balances exposed to exchange rate fluctuations are as follows:
 Trade receivables - these assets generated exchange loss of R$36 - Company and
exchange gain of R$12 - Consolidated as of December 31, 2011 (exchange gains of R$8
- Company and R$258 - Consolidated as of December 31, 2010).
 Trade payables and advances - these liabilities generated exchange losses of R$653 Company and R$832 - Consolidated as of December 31, 2011 (exchange gain of R$296
- Company and exchange loss of R$53 - Consolidated as of December 31, 2010).
 Borrowings and financing - as described in Note 15, borrowings and financing are
increased by charges up to the end of the reporting period, totaling a liability balance of
R$7,231 - Company and R$11,954 - Consolidated as of December 31, 2011 (R$5,681 Company and R$9,204 - Consolidated as of December 31, 2010). These liabilities
generated exchange loss of R$758 - Company and exchange gain of R$1,263 Consolidated (exchange gains of R$228 - Company and R$410 - Consolidated as of
December 31, 2010).
g) Derivative financial instruments
The Company and its subsidiaries do not enter into transactions involving derivative
financial instruments.
h) Liquidity risk management
Prudent liquidity risk management involves maintaining sufficient cash and marketable
securities, availability of funds through credit facilities and ability to settle market
positions.
Management monitors liquidity of the Company and its subsidiaries, considering the
estimated cash flow and cash and cash equivalents (Note 5). Additionally, the liquidity
management policy of the Company and its subsidiaries involves cash flow projections and
considering the level of net assets necessary to meet the projections, monitoring liquidity
ratios in the balance sheet and maintaining the debt financing plan. The table below shows
the maturity of the consolidated financial liabilities contracted:
Up to
1 year
Trade payables
39
36,005
78,802
Up to
2 years
68,583
From 3 to
4 years
40,345
Over
4 years
Total
- 36,005
48,420 236,150
i) Sensitivity analysis
The Company’s financial instruments are monitored by Management, mainly those related
to changes in cash investments and borrowings. Management carried out studies involving
the sensitivity analysis of its financial instruments, considering the possible effects on profit
and equity at the end of the reporting period, as suggested by CPC 40 - Financial
Instruments: Disclosure and IFRS 7 - Financial Instruments Disclosures, and did not
identify material effects that might cause a misstatement in the financial statements taken as
a whole.
20. EQUITY
a) Share capital
As of December 31, 2011, share capital is represented by 63,900,000 common shares, all
registered and without par value, fully subscribed and paid up by the shareholders resident
in Brazil.
Shareholder
Infinity Fundo de Investimento em Participações
Lajota Fundo de Investimento em Participações
Vincitore Fundo de Investimento em Participações
Shares
Amount
21,300,000
21,300,000
21,300,000
63,900,000
135,770
135,770
135,770
407,310
b) Capital reserves
Special goodwill reserve
Share premium reserve
167,767
6,445
174,212
The special goodwill reserve refers to the balancing item of the goodwill absorbed by the
Company in prior years, less the reserve for maintenance of integrity of shareholders’
equity, whose net effect corresponds to the tax benefit to be generated on its realization and
recognized as deferred income tax asset.
c) Earnings reserves
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
Legal reserve (i)
Reserve for new products, research and development and
investments in property, plant and equipment (ii)
Reserve for expansion (iii)
Tax incentive reserve (iv)
Undistributed profits reserve
Reserve for additional dividends proposed (v)
43,807
43,807
184,341
33,650
474
7,682
120,000
389,954
54,395
33,650
289
129,946
262,087
40
(i) Calculated as 5% of annual profit, pursuant to article 193 of Law 6404/76.
(ii) Recognized to cover expenditures for launching new products, expenditures on
research and development and investments in property, plant and equipment as
established in the Company’s bylaws.
(iii) Earnings retention, pursuant to article 196 of Law 6404/76, to fund expansion plans
foreseen in the capital budget.
(iv) Government grants are recognized in profit or loss on a systematic basis over the years
in which the Company recognizes as expenses the related costs for which the grants
are intended to compensate and, subsequently, they are allocated to the tax incentive
reserve, in equity, as long as the conditions of CPC 07 - Government Grants and
Assistance are satisfied.
(v) The retention related to 2011 is based on the capital budget prepared by Management
and approved by the Board of Directors on March 1, 2012, which will be submitted to
the approval of the shareholders at the 2012 Annual General Meeting.
d) Dividend and interest on capital payment policy
The bylaws guarantee a mandatory minimum dividend of 25% of the profit for the year,
less a legal reserve of 5% of the profit, in accordance with Law 6404/76. The remaining
profit will be allocated as decided by the shareholders at the General Meeting.
The bylaws permit the payment of dividends based on semiannual or interim balance
sheets.
On May 24, 2011, the Board of Directors approved the advance payment of interest on
capital amounting to R$27,000, based on the profit for the first quarter of 2011, calculated
on the basis of the Company’s interim balance sheet as of March 31, 2011.
On November 22, 2011, the Board of Directors and the Extraordinary General Meeting
approved the advance payment of interest on capital of R$77,708 and dividends of
R$150,000, the latter for payment starting 2012, since both payments were based on the
retained earnings up to the third quarter of 2011, calculated on the basis of the Company’s
interim balance sheet as of September 30, 2011.
21. NET REVENUE
Company
(BR GAAP)
12/31/11
12/31/10
Gross sales revenue
Returns, discounts and other
Taxes on sales
41
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
1,486,294 1,334,543
2,657,876 2,281,821
(323,924) (276,200) (1,045,882) (822,840)
(173,005) (157,964)
(210,776) (192,945)
900,379
1,401,218 1,266,036
989,365
22. EXPENSES BY NATURE
Consolidated
Company
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Cost of sales and services
Material, electric power, outside services and
other
Other selling and administrative expenses
Personnel expenses
Depreciation and amortization
Cost of sales
Selling
General and administrative
153,235
135,601
210,387
187,051
209,010
74,766
234,783
15,348
687,142
232,287
16,155
215,859
12,493
612,395
298,668
100,350
309,724
20,584
939,713
327,342
22,746
282,853
16,176
836,168
203,086
403,031
81,025
687,142
180,238
362,389
69,768
612,395
286,138
546,640
106,935
939,713
251,730
500,483
83,955
836,168
23. OTHER OPERATING INCOME (EXPENSES), NET
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11
12/31/10
Integration expenses
Provision for tax, civil and labor risks (*)
Loss on sale of property, plant and equipment
PIS and COFINS on other revenues
Other
(1,683)
30,710
(34)
394
676
30,063
(1,079)
(10,049)
(1,017)
584
430
(11,131)
(1,683)
30,057
(64)
1,562
1,254
31,126
(1,572)
(10,121)
(1,361)
823
1,070
(11,161)
(*) Refers to the write-off of provisions and payments of INSS, PIS, COFINS and IRRF debts
due to the enrollment in REFIS program introduced by Law 11941, of November 30,
2009. The consolidation of the debts was concluded on June 29, 2011.
24. FINANCE INCOME (COSTS)
Company
(BR GAAP)
12/31/11 12/31/10
Interest income
Monetary gains
Other finance income
Total finance income
21,685
7,658
2
29,345
16,171
5,555
6
21,732
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
60,853
7,658
538
69,049
46,488
5,588
408
52,484
42
Company
(BR GAAP)
12/31/11 12/31/10
Interest expenses
Monetary losses
Other finance costs
Realization of discount to present value
Total finance costs
Consolidated
(BR GAAP and IFRSs)
12/31/11
12/31/10
(5,221)
(12,232)
(1,059)
(18,512)
(10,452)
(13,050)
(721)
(24,223)
(6,466)
(14,506)
(1,509)
(692)
(23,173)
(11,698)
(13,236)
(1,277)
1,997
(24,214)
(5,496)
3,917
(1,579)
9,254
(3,168)
3,700
532
(1,959)
(8,436)
6,622
(1,814)
44,062
(5,613)
6,157
544
28,814
Exchange loss
Exchange gain
Total exchange loss (gain), net
Finance income (costs), net
25. SUPPLEMENTARY PENSION PLAN
The Company sponsors a supplementary pension plan which covers all its employees. This
plan is called “Plano Gerador de Benefícios Livres - PGBL”, similar to life insurance,
administered by a private pension entity under a capitalization system. The amount of the
benefit is calculated based on the mathematical reserve for unvested benefits at the retirement
date.
The pension plan offered includes the following benefits:
 Retirement by age transferrable to a spouse.
 Retirement due to disability transferrable to a spouse.
 Survivors’ pension granted before retirement transferrable to children under 21 years old.
The risk benefits (retirement due to disability and survivors’ pension) were structured under a
defined contribution plan.
The Company does not have any liability in relation to technical risk related to survival during
the capitalization period or mortality after a participant begins to receive the benefit or
disability risk during the capitalization period.
The Company’s contributions to the supplementary pension plan for the year ended December
31, 2011 totaled R$2,569 (R$2,376 in 2010).
26. INSURANCE
The Company has an insurance policy that considers the risk concentration and its materiality,
the nature of its business, and the advice of the insurance brokers.
43
27. SUPPLEMENTAL INFORMATION - STATEMENTS OF CASH FLOWS
The Management of the Company and its subsidiaries defines as “Cash and cash equivalents”
the amounts maintained to meet short-term commitments and not for investments or other
purposes. Cash investments are immediately convertible into a known amount of cash and are
not subject to risk of significant change in value. As of December 31, 2011, the balances that
comprise this line item are presented in Note 5.
Movements not affecting the cash flows of the Company and its subsidiaries were as follows:
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRSs)
12/31/11 12/31/10 12/31/11 12/31/10
Dividends proposed
Carrying value adjustment and asset revaluation
Offset of income tax against recoverable tax
150,000
1,902
8,595
185
53,429
1,781
289
150,000
1,902
15,052
185
53,429
1,781
5,773
289
28. EMPLOYEE BENEFITS - CONSOLIDATED
The Company and its subsidiaries include in their human resources policy a profit-sharing plan
(PPR) and bonuses for officers, not covered by any other variable compensation programs
offered by these companies. Goals and criteria for defining and distributing funds awarded are
agreed to between the parties, including the unions that represent employees, with objectives of
gains in productivity and competitiveness and motivation and involvement of participants. As
of December 31, 2011, the profit-sharing plan amounted to R$29,814 (R$28,189 in 2010).
29. EARNINGS PER SHARE
As mentioned in Note 20, the Company’s share capital comprises common shares, all of them
registered and without par value. Under technical pronouncement CPC 41 - Earnings per
Share, the table below shows a reconciliation of profit for the year to the amounts used to
calculate earnings per share:
12/31/11 12/31/10
Basic and diluted numeratorAllocation of profit for the year to shareholders - R$
Basic and diluted denominatorOutstanding shares (in thousands)
Basic and diluted earnings per share - R$
380,673
332,388
63,900
5.96
63,900
5.20
44
30. APPROVAL OF FINANCIAL STATEMENTS
The current financial statements, which contemplate the subsequent events occurred after
December 31, 2011, were approved and authorized for issue at the Board of Directors’ meeting
held on March 1, 2012.
Board of Directors
Adalmiro Dellape Baptista
José Luiz Depieri
Adalberto Panzenboeck Dellape Baptista
Alexandre Gottlieb Lindenbojm
Carlos Eduardo Depieri
Jonas de Campos Siaulys
Luiz Antônio Martins Amarante
Luiz Carlos Vaini
Ricardo Panzenboeck Dellape Baptista
Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Executive Officers
José Ricardo Mendes da Silva
Carlos Alberto Melo
Celso Pereira Sustovich
Luciana Gualda
Manoel Arruda Nascimento Neto
Marcelo Néri
Sidinei Righini
Vânia de Azevedo Nogueira de A. Machado
Wilson Roberto de Farias
Accountant
Rosana de Mello Nasareth
CRC - 1 SP - 258386/O-5
2011-2788
45
Chief Executive Officer
Director of Research, Development and Innovation
Director of Business Development
Director of Legal Affairs
Director of Prescription I Business Unit
Director of Prescription II Business Unit
Chief Financial Officer
Commercial Director
Industrial Director

Aché Laboratórios Farmacêuticos S.A. and Subsidiaries

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