Annual Report 2002 - curasan€¦ · GROUP MANAGEMENT REPORT AND MANAGEMENT REPORT CONSOLIDATED...
Transcript of Annual Report 2002 - curasan€¦ · GROUP MANAGEMENT REPORT AND MANAGEMENT REPORT CONSOLIDATED...
Specialists in regenerative Medicine
Annual Report 2002
* in TEUR 2002 2001 Difference %
Total revenue* 14,714 12,104 + 21.6
Revenue Pharmaceuticals* 9,890 7,232 + 36.8
Revenue Biomaterials* 4,824 4,872 – 1.0
Earnings before interest and taxes* (3,368) (4,715) + 28.6
Financial earnings* (164) (133) – 23.3
Net profit/(loss) for the year* (2,280) (2,873) + 20.6
Earnings before taxes, in accordance with
DVFA/SG* (1,130) (1,196) + 5.5
Cash flow, in accordance with DVFA/SG* (2,526) (4,060) + 37.8
Earnings per share (IAS) (0.46) (0.57) + 19.3
Equity* 14,986 17,266 – 13.2
Total assets* 20,874 23,203 – 10.0
Number of employees (full-time) 100 116 – 13.8
Equity ratio (in %) 71.8 74.4
Return on sales (in %) (15.5) (23.7)
Revenue per employee* 147 104 + 41.3
EBIT per employee* (34) (41) + 17.1
ROI (in %) (15.2) (16.6)
FACTS & FIGURES FOR THE GROUP
FACT
S &
FIG
URE
S
Contents
1
LETTER TO SHAREHOLDERS
COMMITTED TO SCIENCE AND
PRACTICAL APPLICATION
THE BUSINESS UNITS
curasan SHARE PERFORMANCE
GROUP MANAGEMENT REPORT
AND MANAGEMENT REPORT
CONSOLIDATED FINANCIAL
STATEMENTS OF curasan AG (IAS)
FINANCIAL STATEMENTS OF
curasan AG (HGB)
REPORT OF THE SUPERVISORY BOARD
BOARD MEMBERS OF THE COMPANY
GLOSSARY
FINANCIAL CALENDAR / IMPRINT
02
04
06
06 Biomaterials
07 Pharmaceuticals
08
08 Stockmarkets in 2002
08 Performance of curasan shares
08 Financial communication
10
18
19 Consolidated Balance Sheet
20 Consolidated Income Statement
21 Statement of Changes in Equity
21 Cash Flow Statement
22 Notes to the Consolidated Financial Statements
34 Consolidated Fixed Assets Schedule
36 Auditor's Report
37
38 Balance Sheet
40 Income Statement
41 Notes
47 Auditor's Report
48 Fixed Assets Schedule
50
51
52
53
CONTENTS
For most of us, the 2002 financial year proved to be a dis-
appointing one. Factors such as the weak state of the
economy, the threat of military conflict, the lack of political
stimulus and a major loss of confidence in shares as an
investment instrument had an adverse effect on the overall
mood of investors and consumers.
curasan AG was only partially successful in avoiding this
trend. On the one hand, we can take great pride in having
increased Group revenues by 22% to Euro 14.7 million (FY
2001: Euro 12.1 million) in this difficult economic climate.
Our rate of expansion far exceeded the average growth
rates of the markets in which we operate. And yet these
results fell short of the expectations we had at the
beginning of the year. Against the backdrop of economic
and political volatility, we were unable to generate the
revenues of Euro 15.8 million previously targeted.
Despite this setback, we can be pleased with the way the
year progressed. We managed to sustain the expansion of
our product portfolio, obtain US regulatory approval for
Cerasorb®, launch our Cerasorb® block forms on the Euro-
pean market and pursue promising international business
opportunities, especially in the US and China.
But the highlight was perhaps the work we put into pre-
paring distribution agreements with two US organisations
for Cerasorb™ ORTHO. Our efforts led to the successful
conclusion of negotiations with CryoLife Inc. of Kennesaw,
Georgia, and Spinal Concepts Inc. of Austin, Texas, at the
beginning of February 2003 – an encouraging sign that the
world’s biggest market for pharmaceutical products and
biomaterials will help boost demand for our products, es-
pecially the Cerasorb® lead product. We are therefore looking
ahead with confidence to the remainder of the current
financial year.
The extensive cost-cutting programme implemented in the
last financial year, coupled with the increase in sales, has
resulted in a clear improvement in earnings. The Group's
loss before interest and tax fell by around Euro 1.3 million
to Euro 3.4 million (FY 2001: Euro 4.7 million), while our
quarterly results indicate that the cost-cutting measures
are continuing to have a positive effect.
We therefore remain optimistic that the growth we fore-
cast a year ago can be accomplished. We believe we can
break even in the current financial year and that a revenue
increase of around 20% is possible, provided that the
economic situation does not worsen.
The market development of our Pharmaceuticals business
unit is extremely encouraging, with about 67% share of
total sales. Growth rates here are considerably higher than
Letter to Shareholders
2
DEAR SHAREHOLDERS, LADIES AND GENTLEMEN,
those of the overall market expansion, while the constant
enhancement of our product portfolio guarantees increased
revenues. Our strategy of securing curasan AG’s core
business by delivering above-average growth rates in the
pharmaceuticals market is paying off.
Parts of the market for biomaterials have proved to be less
dynamic than we expected. The subdued level of demand
for these products can only be explained by a lack of infor-
mation on the benefits of biomaterials and a preference to
follow established practices for ordering and applying
materials. However, views are slowly changing and interest
in regenerative medicine products is increasing. In total,
we generated revenues of Euro 4,8 million in this highly
innovative business unit.
An increasingly important factor in the successful marke-
ting of biomaterials is the ability to persuade users of the
benefits of such products. Comprehensive empirical studies,
scientific research and practical knowledge transfer in the
form of seminars, conferences and meetings are all essen-
tial to achieving market penetration in the fields of bone
defect treatment, bone regeneration and tissue regenera-
tion. curasan AG has therefore decided to further extend
the broad training programme established over the last year,
as well as intensify its collaboration with research insti-
tutions.
We would like to take this opportunity to thank our em-
ployees for their commitment and loyalty, and express our
gratitude to our customers, business associates and share-
holders for their continued trust.
Hans Dieter Rössler Helmut Trahmer
Letter to Shareholders
3
Hans Dieter Rössler, CEO; Helmut Trahmer, CFO
curasan sets great store by its intensive collaboration with
scientific institutions and the close links it enjoys with
users and practitioners, which together make a significant
contribution to the company’s performance. From the
moment the product is conceived, to its regulatory approval
and ultimate market launch, curasan is in constant dia-
logue with researchers, experts, opinion formers and
practitioners as it strives to establish itself as a successful
and forward-looking company in its chosen field.
Working directly with doctors and universities gives curasan
a knowledge advantage over its competitors, while its on-
going exchange of information with scientists and research-
ers has triggered numerous ideas for products, particularly
in the field of regenerative medicine.
After a product idea has taken shape and prior to the launch
of the product, intensive research and development work
is required. This is where the excellent know-how and vast
experience of curasan's employees in this field come into
play. For instance, in the segment bone regeneration mate-
rial of our R & D department, three generations of experts
are at work on the improvement of Cerasorb® and the
development of new products. Through the intensive ex-
change of views and ideas with scientists and users, a
product's advantages are established before the initiation
of material evaluations, trials and tests.
When regulatory approval has been granted, it can be
generally assumed that the initial demand for the new
product in the conservative pharmaceuticals market will
be relatively low. At this stage, the main challenge is to
convince those responsible for providing the treatment
and employing the new product of the benefits. It falls to
the scientific institutions, however, to present and
validate these benefits in an objective manner. curasan
supports this process by organising scientific tests.
∇ A product of the collaboration between curasan and
various research institutes over the last financial year
was the "curasan Special Pocket Atlas: Bones”. This hand-
book, published by Thieme Verlag, summarises the current
level of knowledge on osteology. The range of subjects
includes the basic principles of bone formation, bone
metabolism, the interdisciplinary treatment of the most
important bones diseases, and the very latest bone re-
generation techniques. With this atlas, curasan builds a
link between biologists and surgeons.
∇ On 15 June 2002, curasan organised the sixth FIT in
Munich, a symposium that dealt with current develop-
ments in bone regeneration from both a scientific and
a medical perspective. Renowned experts from university
departments presented the results of their extensive
studies to around 160 participants, the topics ranging
from basic research to oral, maxillofacial and spinal
Committed to Science and Practical Application
4
COMMITTED TO SCIENCE AND PRACTICAL APPLICATION
surgery and tissue engineering. The main focus, however,
was on the use of Cerasorb® as a bone regeneration
material.
curasan’s close cooperation with the professionals who use
its products as its key to success within the marketplace,
as experts are needed to point out any deficiencies in the
treatment, processes and materials used. They include
hospital surgeons and anaesthetists, along with private
specialists like orthopaedists, traumatologists, plastic
surgeons, oral and maxillofacial surgeons, dentists and
anaesthetists. For many users, curasan is the only contact
partner qualified to solve problems in both biomaterials
and pharmaceuticals. This status gives us a valuable insight
into the needs of our users, allowing us to study their situ-
ation and deliver improvements through innovative products.
Such close collaboration with users is vital if we are to
achieve market penetration. New products often necessi-
tate a change in working practices and approaches. These
must be presented to users and explained in practical
terms – mere verbal or written descriptions of new products
do not, in general, bring success. curasan offers a range of
workshops for this purpose.
The following workshops were highlights of the past year:
∇ Augmentative surgery workshops: A programme of be-
ginners and advanced courses on the basic principles of
augmentative surgery. Topics included controlled bone
and tissue regeneration, incision/suture techniques,
membrane technology and defect filling. In total, 50
workshops were held throughout Germany, with over
500 participants.
∇ Practical seminars on implantology treatments. Two-
day training events were held in March and September
covering augmentations, laser surgery, sinus floor eleva-
tions and membrane technology. Each seminar had a
theoretical and a practical session.
∇ Special events, e.g. "The changing face of dentistry –
periodontology and implantology as part of everyday
practice”.
Over the course of the 2003 financial year, we will build
on our successful event programme with the following:
∇ Numerous workshops throughout Germany on augmen-
tative surgery
∇ Several workshops on odontoscopy
∇ Seventh FIT: "Tradition and Innovation”
curasan will also be involved in the following events:
This is just a selection of events. For a complete list of
congresses in which curasan is participating, please visit
our homepage.
Committed to Science and Practical Application
5
23-25 January 2003 FDM Forum Dental Mediterráneo, Barcelona
13-15 March 2003 14th German Convention on Pain, Frankfurt
25-29 March 2003 IDS 2003, Cologne
9-13 April 2003 German Anaesthesia Conference, Munich
22-24 May 2003 10th IEC, Berlin
19-21 June 2003 1st International Endoscopy Symposium, Göttingen
19-21 June 2003 Europerio, Berlin
6-11 September 2003 Anaesthesia Week, Sylt
8-12 October 2003 German Conference on Pain, Münster
9-12 October 2003 12th EAO, Vienna
14-15 November 2003 Periodontology Power Weekend, Düsseldorf
Every year, millions of bone surgery operations are per-
formed worldwide in the fields of dental medicine, acci-
dent surgery, joint replacement, spinal cord regeneration
and plastic surgery. The bone replacement materials used
in these operations are principally autogenous bones, fol-
lowed by animal and cadaver bones. The disadvantage of
this practice is that not only do patients have to undergo
an additional operation in order to obtain the bone replace-
ment materials, complications at the donor site can occur,
and a comparatively long regeneration time may have to
be expected. In addition, such operations tend to be relative-
ly time-consuming and expensive. What’s more, there is a
limited availability of autogenous bone, since it is virtually
impossible to build up a suitable repository. Where animal
and cadaver bones are concerned, there is a risk of infection
as well as the possibility that the body will reject the foreign
body. Besides that, they remain in the patient's organism
or take very long to be resorbed.
With its lead product Cerasorb®, curasan AG offers a bone
regeneration material that eliminates the need for
autogenous, animal and cadaver bone transplants and thus
has none of the disadvantages or risks associated with
such procedures. Cerasorb® is an implantable, fully resorb-
able, pure-phase beta-tricalcium phosphate in granulate
form. The synthetic material is implanted directly in the
bone defect and, thanks to its special structure, is fully
resorbed by the body as the new bone grows. Cerasorb® is
therefore capable of setting new standards in the treat-
ment of bone defects.
Due to the enormous market potential for bone transplanta-
tions, curasan AG has become a specialist in Germany in
the development and distribution of pharmaceuticals and
medical products in the field of regenerative medicine. The
company has developed a range of biomaterials to
complement Cerasorb®, covering areas such as bone
regeneration, dentistry, orthopaedics/traumatology and
accelerated tissue regeneration. Together, these products
constitute the Biomaterials offering.
curasan AG’s second product group consists of so-called
AIEP products (i.e. anaesthesia, intensive care, emergency
medicine and pain therapy) and anti-infectives, which form
the Pharmaceuticals business unit. Virtually all of these
products are generic drugs or what are known in Germany
as "generics plus” (generic drugs offering added benefits).
Distributed to hospitals and specialists alike, they are used
in the fields of anaesthetics, pain therapy and surgery.
By focusing business activities on selected applications and
specialising in regenerative medicine, curasan AG is striv-
ing to occupy niche markets with an attractive market
volume and a high growth potential. Working directly and
intensively with our customers helps us identify new appli-
cation areas and market potential. Consequently, we are
constantly extending our product range to ensure our
long-term growth.
BIOMATERIALS
While the above-average growth rates of the Pharma-
ceuticals business unit are responsible for securing
curasan’s core business, the future undoubtedly lies in the
dynamic sector of Biomaterials. These products focus on
bone defect treatment, bone regeneration and tissue
engineering. Among the most important products in this
division are Cerasorb®, stypro®, Hy-GAG®, the PRP Kit, the
Ti-System and the Augmentation Kit.
It is widely expected that biotechnology will become the
biggest growth market in the health sector. curasan in-
tends to exploit this huge market potential by creating the
broadest possible portfolio of intelligent products based
around the Cerasorb® bone regeneration material. This will
be accompanied by an even higher national market pen-
etration and an intensification of global sales activities.
In the financial year under review, curasan reached several
significant milestones:
The Business Units
6
THE BUSINESS UNITS
∇ In March, curasan received 510k approval from the
Food and Drug Administration (FDA) for Cerasorb® for
use in the skeletal system. This approval is enabling the
company to tap into the world’s biggest market for
bone replacement and bone regeneration materials,
with a total value of around $400 million. This market
segment will be covered through two distribution part-
nerships.
∇ curasan has acquired the FDA approval for Augmen®
and Peri-Oss® as PMA (pre-marketing approval) products.
These products are related to the bone reconstruction
material Cerasorb® and will enable curasan to gain a
foothold in the market for oral surgery applications in
the US. As soon as the approval is transferred to
Cerasorb®, we will extend our product offering to this
lucrative market.
∇ We initiated studies and organised conferences and
symposia in China as part of pre-marketing activities
for the distribution of Cerasorb®. Distribution in this
important growth market is due to start in 2004.
∇ The product range for dental surgery was extended by
the addition of the "Safescraper” and "HurriSeal”. The
Safescraper is a disposable instrument that allows quick
and easy harvesting of autogenous bone grafts. It is
used to scrape, collect and transplant autogenous bone,
rendering superfluous the instruments normally required
for such procedures, such as bone filters, trepan burs,
saws and bone mills. HurriSeal is used to desensitise
sensitive teeth and tooth necks.
∇ In October, curasan received pan-European regulatory
approval for Cerasorb® block forms. Available in various
shapes and sizes, they offer stable, perfect-fit applica-
tion and simple handling. They are ideally suited to the
remedy of larger defects in weight-bearing areas, es-
pecially in the fields of traumatology, orthopaedics and
sports medicine.
PHARMACEUTICALS
In recent years, the proportion of total sales of generic
drugs within the pharmaceuticals market has risen steadily.
This is largely attributable to the proliferation of success-
ful drugs that are not subject to patent protection, ac-
companied by an increasing cost consciousness in the health
care sector. Generics enable cost savings to be made with-
out sacrificing the quality of medical care.
curasan’s sales in this business unit continue to grow, and
in 2002 the company ranked number 47 in Germany's 300
best-performing pharmaceuticals companies. The focus is
on AIEP products (anaesthesia, intensive care, emergency
medicine and pain therapy) and anti-infectives. The
success of the Pharmaceuticals unit has been driven by a
number of factors: a broad product range, the sales skills
of curasan employees, direct contact with the customer,
and additional intelligent product benefits, such as different
presentations, longer shelf life and improved tolerability.
Of all the events that have taken place during the past
twelve months, the highlight has been the inclusion of
sufentanil, from the group of opioids, in the curasan offer-
ing. Sufentanil is 1,000 times stronger than morphine and
is used principally as an analgesic and sedative during
surgery.
The Business Units
7
STOCK MARKETS IN 2002
The Deutsche Aktienindex (DAX) suffered its third loss in
succession in the financial year 2002. Following annual
declines of 7.5 per cent in 2000 and 19.8 per cent in 2001,
the DAX plunged by a staggering 43.9 per cent in the
financial year under review, a dismal performance which
no one could have expected at the beginning of 2002.
Sluggish economic growth, major accounting scandals in
Germany and abroad, and the increasing likelihood of
military conflict in the Gulf region prompted private and
institutional investors to choose the relative safety provid-
ed by other financial instruments.
The average decline in value of companies listed within
Germany's Neuer Markt segment (NEMAX-ALL-SHARE) was
a disappointing 63.2 per cent. The NEMAX-50, which com-
prises the Neuer Markt's largest companies in terms of
trading volume and market capitalisation, dropped by 69
per cent to 356 points. Indeed, it soon became apparent
that the Neuer Markt segment had been home to several
companies with unsuitable business models. The segment
also had to contend with a number of domestic and
international accounting scandals. In order to regain the
trust of investors and restructure the entire stock market,
Deutsche Börse decided to dispense with the Neuer
Market segment altogether. Plans for restructuring were
announced in the second half of the year under review.
PERFORMANCE OF curasan SHARES
At the beginning of 2002, curasan's share price stood at
Euro 3.00. The Company's share performance in the first
half of the year was adversely affected not only by the
general malaise witnessed throughout stock markets but
also by the disinvestment of a venture capital enterprise.
The aforementioned enterprise used the increase in
curasan's share price, on the back of favourable corporate
data in March 2002, to place several sizeable blocks of
shares, and, as a result, our shares were unable to maintain
the level they had previously reached. Indeed, outper-
formance of the NEMAX-ALL-SHARE proved extremely
difficult under these circumstances and was short-lived.
At the end of October, the announcement of pan-European
approval for Cerasorb® block forms propelled curasan's
share price upwards, with a threefold increase recorded
over a period of just two days. In the ensuing days the
price for curasan shares stabilised just above the two-euro
mark. At the end of the year, curasan's share price stood
at Euro 2.05.
In the first three months of 2003, our shares managed to
extricate themselves from the general level of volatility
witnessed throughout the stock markets. In fact, in January
curasan's share price climbed by around 16 per cent. In
February, reports on the launch of Cerasorb® in the United
States triggered an increase in curasan's share price to a
level of Euro 2.90. curasan's shares have been performing
solidly since the end of October 2002, displaying a notice-
able upward trend.
FINANCIAL COMMUNICATION
In the interest of its shareholders, curasan AG has decided
to list its shares within the Prime Standard established by
Deutsche Börse. As a result, the line of communication
between the Company and its shareholders remains as
solid as ever. As in the past, we remain committed to
publishing quarterly reports, holding analyst meetings and
press conferences, and disclosing ad hoc announcements
in German and English.
With regard to Corporate Governance, curasan AG
established far-reaching principles as early as December
2001. Towards the end of the financial year under review,
these were adapted to meet the requirements of the new
German Corporate Governance Code. Deviations from the
curasan Share Performance
8
curasan SHARE PERFORMANCE
curasan SHARE PERFORMANCE
curasan shares, indexed Nemax All Share, indexed
curasan Share Performance
9
above-mentioned Code merely relate to the age limits
specified for members of the boards, the establishment of
qualified committees, and the performance-oriented
remuneration of Supervisory Board members. Detailed
information regarding curasan's Corporate Governance
Principles, together with share-related data, is available
on our website (www.curasan.de).
FUNDAMENTALS
WKN / ISIN / Symbol 549 453 / DE 000 549 453 8 / CUR
Type of stock No-par-value common stock
Share volume 5.0 million
Free float 53.74%
Closing price 1/1/2002 / Closing price 31/12/2002 (Xetra) Euro 3.00 / Euro 2.05
High / Low (closing price Xetra) Euro 4.00 / Euro 0.48
Trading volume Xetra and Frankfurt (1/1/2002 – 31/12/2002) Euro 16.2 million
Market capitalisation, year end Euro 10.25 million
Free float factor acc. to Deutsche Börse AG 0.5374
Free float market capitalisation, year end Euro 5.5 million
150 %
120 %
90 %
60 %
30 %
0 %
| JANUARY 2002 | APRIL 2002 | JULY 2002 | OCTOBER 2002
I. SECTOR DEVELOPMENT
In the financial year under review, we witnessed an ex-
tremely diverse range of trends within the world's major
pharmaceutical markets. In North America (United States
and Canada), for instance, the market for pharmaceuticals
grew by 16 per cent. The key European markets were able
to keep pace to a certain extent, registering growth rates
of 10 to 12 per cent. Japan proved to be sluggish in terms
of growth, while South America had to contend with severe
declines in many areas. According to a study published by
IMS Health, the global pharmaceutical market is expected
to grow by an average rate of 9% per annum in the period
up to 2005. Therefore, this market continues to be a high-
growth segment.
Compared with its international rivals, the German market
is considered to be relatively mediocre in terms of growth.
Having said this, figures published by Germany's Federal
Association of the Pharmaceutical Industry (BPI) are above-
average and extremely encouraging considering the current
economic climate: 10 per cent growth within the pharmacy
sector, which is now estimated to be worth Euro 17.1 billion,
and 7.6 per cent growth in the hospital sector, taking the
overall figure in this area to Euro 2.7 billion.
II. BUSINESS REVIEW
The financial year 2002 was one dominated by consolida-
tion. As planned, the purchase of the two medical products
Augmen™ and Peri Oss™, both of which are registered in
the US for use in the field of dental surgery, marked the
successful culmination of our investment activities. These
transactions were completed in the spring of 2002. In the
following months, we made a concerted effort to prepare
all products already in our regulatory and distribution
pipeline for rollout; they were launched on the basis of a
step-by-step marketing plan. Some of the key milestones
within this area were the US approval of Cerasorb™
ORTHO for use in the skeletal system and the pan-European
approval granted for Cerasorb® block forms. In the course
of the financial year under review, we intensified our
business relations with two US sales partners, who were
eager to commence distribution in their respective target
markets. Both enterprises were particularly impressed with
the quality of our lead product, Cerasorb®. In the second
half of the year, we were forced to rein back spending in
order to secure cash resources. We downsized our work-
force as part of these incisive cost reduction measures. In
terms of revenues generated, the end of the financial year
proved to be our most buoyant quarter since our IPO.
III. SALES AND EARNINGS
(1) Group/AG
Consolidated revenues generated in the financial year
2002 amounted to Euro 14.7 million (AG Euro 14.3 mil-
lion). We fell short of our own revenue expectations by
roughly Euro 1.1 million. In eleven months of the financial
year under review, we managed to generate revenues that
were above those recorded in the equivalent months of
the preceding year. The first and fourth quarter of the
financial year proved to be particularly successful.
Quarter am 2002 2001 Diff.
I 3.5 2.8 25 %
II 3.7 3.2 16 %
III 3.6 3.2 13 %
IV 3.9 2.9 34 %
Total 14.7 12.1 22 %
Management Report
10
GROUP MANAGEMENT REPORT AND MANAGEMENT REPORT
Antibiotics provided considerable impetus in terms of growth,
as did our comprehensive range of anaesthetics. There can
be no doubt at all that our previous investments within the
area of pharmaceuticals are now bearing fruit. Licences pur-
chased by the Company are gradually being translated into
fully-fledged products fit for market rollout. Our pharma-
ceuticals unit is responsible for roughly two thirds of con-
solidated revenues. As a result of formidable revenue growth,
curasan AG succeeded in assuming a position among the top
50 suppliers to German hospitals in 2002.
The apparent level of stagnation in revenues with regard to
our biomaterials is the result of two trends, both of which
have cancelled each other out. While Cerasorb® and associ-
ated products for dental and traumatology-related applica-
tions were able to record growth despite the current
economic malaise, Hy-Gag®, a hyaluronic acid used for the
treatment of arthrosis, was faced with a decline in revenues.
This decline is the direct result of changes to the system of
medical reimbursements in Germany and increased compe-
tition.
Products am 2002 2001 Diff.
Biomaterials 4.8 4.8 0 %
Pharmaceuticals 9.9 7.3 36 %
of which anaesthetics 4.6 3.6 28 %
of which anti-infectives 4.5 2.9 55 %
of which miscellaneous 0.8 0.8 0 %
Total 14.7 12.1 22 %
In total, 15.5 per cent of our consolidated revenues were
generated outside Germany, in the form of export activi-
ties conducted by curasan AG or – consolidated – external
sales via our subsidiary curasan Benelux BV. Although the
share of foreign sales revenues rose by approximately two
percentage points year on year, there is still room for
improvement compared with other players within this
sector. In view of the accelerated sales activities in the
United States and progress made with regard to approval
in China, we are confident that the Company will achieve
sustainable growth in the future. The Netherlands, Belgium,
Austria, and France, i.e. international markets which are
served directly by curasan AG or its Dutch subsidiary, ac-
count for roughly fifty per cent of our overall foreign sales.
Regions am 2002 2001 Diff.
Europe 13.8 11.4 21 %
Middle East 0.5 0.5 0 %
Asia 0.3 0.1 200 %
South America 0.1 0.1 0 %
Total 14.7 12.1 22 %
The cost of materials within the Group amounted to Euro
6.9 million in 2002, compared with Euro 4.9 million a year
ago (AG Euro 7.0 million; FY 2001: Euro 4.9 million). In
relation to revenues, this equates to a figure of 46.7 per
cent in 2002, after a ratio of 40.8 per cent in 2001 (AG
49.2 per cent; FY 2001: 41.0 per cent). The increase in the
cost of sales in relation to revenues is attributable to
curasan's new product mix, to increased expenses for inven-
tories as a constituent element of the cost of sales, and
write-downs carried out in the previous financial year in
connection with merchandise inventory.
Staff costs within the Group remained relatively stable,
rising from just under Euro 6.2 million to just over Euro
6.2 million in the financial year under review (AG Euro
5.1 million; FY 2001: Euro 5.2 million). Lower staffing
levels implemented towards the end of the financial year
2002 will not show their full monetary effect until the
coming year. The reduction in special payments for Novem-
ber to a basic level of Euro 250.00 per employee contri-
buted to the success of our cost-reduction measures.
Depreciation and amortisation expense comprises the de-
preciable amount allocated to assets over their useful lives
and is attributable to investments in non-current assets
carried out in the year under review, as well as amortisa-
tion of goodwill within the Group. In contrast to the
financial year 2001, no impairment losses were recognised
in connection with current assets.
The cost management programme announced for the
financial year 2002 resulted in stable "other operating
Management Report
11
expenses" of Euro 5.6 million for the Group (AG Euro 5.6 mil-
lion; FY 2001: Euro 5.4 million). Savings achieved in a num-
ber of areas were offset by increased expenses directly
associated with higher volumes in sales and production in
the area of distribution and manufacturing.
Within the Group, interest income for the financial year
2002 was close to break even, after a figure of Euro 0.3
million posted in the previous year. Interest income
generated by the parent company curasan AG is attribu-
table to interest paid on intragroup clearing accounts,
which was offset accordingly as part of Group consoli-
(2) Subsidiary companies
Our sales team at curasan Benelux BV, now responsible for
the distribution of Streptase, was able to double sales
revenues to Euro 0.8 million within the year under review.
The operating loss – before interest and intragroup clearing
accounts – was 30% lower than in the financial year 2001.
Sales revenues are expected to increase in the course of
the financial year 2003. If this is achieved, we believe that
above-par earnings and a certain degree of financial inde-
pendence from curasan AG are possible in the ensuing years.
dation. Prior to the final disposal of financial instruments,
impairment losses were recognised in connection with
participation interests in investment funds.
Taking into account deferred assets, the consolidated net
loss for the financial year 2002 amounted to Euro 2.3
million, compared with Euro 2.9 million in 2001. Mainly as
a result of lower-than-expected revenues and a higher
cost-of-sale ratio, we failed to meet our earnings target
by roughly Euro 0.9 million. For curasan AG itself, the net
loss for the financial year 2002 amounted to Euro 2.9
million, compared with Euro 4.3 million in 2001.
Our highly specialised team at GerontoCare GmbH is re-
sponsible for managing the Group's national and inter-
national regulatory affairs. In the financial year 2002,
approvals worth a total of Euro 1.4 million were sold to
the parent company curasan AG. GerontoCare GmbH is
linked to curasan GmbH by means of a profit transfer
agreement and remitted profits of Euro 0.2 million in the
year under review.
Focusing on the sale of company-produced titanium
instruments (membranes and instruments for the dental
Management Report
12
Earnings DVFA/SG a '000 2002 2001
Consolidated loss (2,280) (2,873)
Depreciation and amortisation of non-current assets 983 768
Write-down of securities and inventories 166 909
Consolidated loss DVFA/SG (1,131) (1,196)
Number of shares ('000) 5,000 5,000
Loss per share (in €) (0.23) (0.24)
Cash Earnings DVFA/SG a 000 2002 2001
Consolidated loss (2,280) (2,873)
Depreciation and amortisation of non-current assets 983 768
Change in long-term provisions 21 20
Deferred taxes 1,251 1,975
Cash earnings ( 2,527) (4,060)
Number of shares ('000) 5,000 5,000
Loss per share (in €) (0.51) (0.81)
market), which are subsequently marketed by the parent
company, Titanium Innovations GmbH succeeded in match-
ing last year's revenue performance. The subsidiary posted
slightly below-par earnings. Relocation of our production
facilities to curasan AG's Frankfurt plant, previously planned
to commence in the financial year under review, had to be
postponed due to preparations for the audit announced by
the US Food and Drug Administration (FDA). A concerted
effort by all available members of staff was needed within
this area.
Production activities regarding our haemostatic sponge
stypro® by Pro-tec Medizinische Produkte GmbH proved
to be very solid. Indeed, in the year under review production
levels were increased to generate a figure of almost Euro
0.5 million and the net loss for the period was lowered.
Sales within the main target markets have produced re-
spectable growth, albeit at a relatively low base level. As
part of our downsizing efforts in the area of personnel
towards the end of the financial year, we managed to cut
staffing levels within the subsidiary. Our plan is to increase
production levels slightly in the medium term. On comple-
tion of our current international approval activities and
the successful penetration of the entire German market, we
are confident that export sales will show palpable growth.
Supported by continued revenue growth, the earnings
contribution by stypro® will be improved in a manner that
is sustainable. We are also confident that delays with
regard to establishing production facilities and sales markets
will be overcome as time progresses. In view of the fact
that Pro-tec Medizinische Produkte GmbH only sells its
products to curasan AG, the degree of financial dependence
on the parent company will remain.
IV. BALANCE SHEET AND CASH FLOW
Aided by thorough inventory management, we were able to
reduce stock levels in the financial year under review, while
maintaining full delivery capabilities. It should also be noted
that this was achieved against the background of ac-
celerated business activities. In contrast to the previous
year, there were no write-downs exceeding the corpora-
tion's usual depreciation and amortisation. The level of
receivables due from customers is slightly higher than in
the financial year 2001. Due to the exchange rates recorded
at the balance sheet date, adjustments were necessary in
the case of receivables denominated in foreign currencies.
Individually identifiable risks were accounted for by write-
downs on an item-by-item basis.
The portfolio of securities held as current assets was
disposed of in the year under review. Due to the perform-
ance of participation interests in investment funds, the
Company had to perform remeasurements to fair value in
the course of the financial year up to the date of disposal.
The level of cash and cash equivalents declined only
slightly in the two last quarters of the financial year.
Net additions to non-current assets were only recorded
within the area of intangible assets. These are mainly
related to drug approval licences generated by GerontoCare
GmbH.
Due to the end-of-period adjustment process, the level of
short-term borrowings from banks and invoices not yet
received, as accounted for in provisions, was lower than in
the previous year. This resulted in higher trade accounts
payable.
There were no changes to equity, apart from accounting
for the net loss for the financial year. The equity ratio for
the Group stands at 71.8 per cent (FY 2001: 74.4 per cent)
and 71.0 per cent for the AG (FY 2001: 75.6 per cent).
In the financial year under review, negative cash flow within
the Group was reduced noticeably. Cash outflow with
regard to operating activities and investments was reduced
substantially in the financial year 2002. As planned, there
was an increase in the level of cash used for the repayment
of debt.
Management Report
13
a m (Group) 2002 2001
Cash flows from
operating activities (1.0) (3.1)
Cash flows from
investing activities (1.6) (3.5)
Cash flows from
financing activities (0.9) (0.2)
Other changes in cash
and cash equivalents (0.2) (0.4)
Cash and cash equivalents 1.3 5.2
V. EMPLOYEES
Yet again, our team of employees reacted to the ever-chang-
ing requirements of a fast-track economy and delivered
outstanding results. Unfortunately, we were also faced
with a number of difficult decisions within the area of hu-
man resources. The termination of several contracts towards
the end of the financial year was unavoidable. Under-
standably, there were misgivings about these measures,
and as a result the level of staff fluctuation was higher than
in previous years. However, it is down to the team spirit
and solidarity displayed within the Group that the inevitable
unrest and uncertainty could be alleviated with a trans-
parent information policy. Both the Supervisory Board and
the Management Board would like to thank all employees
for their committed contributions and sense of loyalty.
As at the balance sheet date, curasan AG and its subsidiaries
had 109 employees in total, around 15 of whom had part-
time contracts. Calculated on the basis of full-time employ-
ment, this corresponds to a workforce of 100 (FY 2001: 116).
Employees (full-time) 2002 2001
Marketing/Sales 49 58
Operations 24 28
Research/Regulatory affairs 13 13
Finance/Controlling 7 8
Administration 7 9
Total 100 116
VI. RESEARCH, DEVELOPMENT ANDREGULATORY AFFAIRS
We pressed ahead with several regulatory approval projects
in the year under review – e.g. Cerasorb® block forms, ortho-
paedics in the US, dental in the US, and China. As one can
imagine, this required a concerted effort from our entire
team. Despite the pressure, we were able to continue as
planned with our ongoing R&D work. The manufacture of
block forms has now reached full-scale production levels.
Furthermore, we have optimised processes to manufacture
different types of Cerasorb® with improved resorption prop-
erties. It seems likely that products and processes will be
protected by patents.
Development projects related to bone adhesives were con-
tinued in the year under review. Patent protection for one
of the processes has already been applied for. Comprehensive
clinical studies are currently being conducted for a second
process. The initial findings of this study have been very en-
couraging.
Alongside large-scale R&D projects, a number of well-known
specialists from international universities and research facili-
ties were also involved in clinical studies.
In the financial year under review, Euro 0.4 million was
allocated to direct internal and external research and de-
velopment activities. Expenditure on regulatory affairs and
maintenance of drug and product licences amounted to
Euro 0.6 million in the period under review.
VII. RISK REPORT AND EVALUATION OFRISKS TO FUTURE DEVELOPMENT
The Group, which in its entirety is subject to legally binding
quality assurance regulations with regard to drugs and
medical products, is committed to maintaining the requisite
quality management systems within the respective areas
of its business. These systems have been certified by inde-
pendent specialists. As regards the ongoing activities of
Management Report
14
the Company, there were no problems or indications of
significant risks relating to the organisation of these
systems or emanating from the systems in the financial
year just ended.
Owing to the current size of the Group, it is not necessary
to manage the required commercial risk-controlling activi-
ties within a separate staff unit. Therefore, risk manage-
ment lies mainly within the sphere of responsibility of the
Management Board; as part of the rules of procedure of
the Management Board, risk management is also conduct-
ed by the Supervisory Board, and the rules of procedure
established for senior management define the risk manage-
ment duties of the heads of the business units within the
Company. The Management Board reports to the Super-
visory Board, on a regular basis, any information regarding
latent risk and provides details of appropriate measures
taken to avoid such risks. As regards insurable risks, the
Company has established a sufficient and appropriate level
of insurance protection to satisfy legal regulations and to
meet the requirements of an enterprise of this size. An inde-
pendent expert is regularly consulted for the purpose of
evaluating the efficacy and appropriateness of the afore-
mentioned insurance cover. The specialist area of company
liability was reviewed at the end of the financial year 2002.
In view of the more substantial level of business activities,
responsibility for this area was transferred to an insurance
company with the appropriate resources and capacities.
In the financial year 2002, individual areas of risk were
subjected to thorough investigation and assessment. As
part of this procedure, we compiled an organisational
manual, as well as guidelines on inventory-related
processes, inventory management, and measurement of
inventories. Both of these manuals outline the manage-
ment of specific risk-related events in the form of clearly
defined organisational procedures. Security with regard to
the Company's IT network was increased, thus further
minimising the risks associated with unauthorised access.
The reputation of curasan AG and its subsidiaries is of
immense importance when it comes to attracting new
investors, business associates, and employees in a fast-
track environment. In order to prevent internal misunder-
standings, the Supervisory Board and the Management
Board voluntarily decided to follow the principles of the
German Corporate Governance Code as early as 2001. In
the meantime, the details of corporate governance have
been reviewed and documented in a code of conduct that
is generally binding. The official declaration of conformity
as regards the German Corporate Governance Code, as well
as the Company Code derived from the aforementioned
principles, can be accessed via our corporate website.
In order to achieve revenue growth, the Company will have
to apply the full range of sales and marketing-related
measures available. If extended terms of payment are
negotiated, the Company is exposed to the risk of interest
losses or bad-debt losses. The creditworthiness and average
distribution of accounts receivable domestically – uni-
versity clinics, hospitals, pharmaceutical wholesalers as
well as several thousand dentists and pharmacies – repre-
sent a solid basis for ensuring that no significant bad debt
can arise within this area. Risks associated with
international business activities are addressed by imple-
menting appropriate internal accounting and organisa-
tional measures. Within this context, for instance, we regu-
larly check the accounts receivable of international
customers before executing delivery orders that exceed a
specific level. Moreover, prior to engaging in business with
new accounts, we conduct independent credit investiga-
tions. Deliveries to customers from specific countries are
only executed once we have received the invoiced amount
in advance.
In the financial year under review, the Company used more
cash and cash equivalents than were generated by oper-
ating activities. The Management Board is committed to
controlling this situation by means of cost reductions and
stringent cost management within the area of working
capital and non-current assets. The net outflow of cash
and cash equivalents will continue for several months in
the coming financial year. Any deviations from the
financial targets already in place and authorised, e.g. as a
Management Report
15
result of unforeseen external influences, could adversely
affect the progression of business and, under extreme
circumstances, jeopardise the future existence of the Group.
In view of the fact that the procurement of additional
capital is limited or only possible under unfavourable
terms and conditions, the existing financial resources will
have to suffice until break even has been achieved. At this
moment in time, no additional reductions in staffing
levels have been planned. If further downsizing became
necessary, this would lead to a situation in which the
Group's corporate development may be adversely affected.
The employees within our Group are highly qualified
specialists within their respective fields of expertise.
Owing to the specific character and size of our organisation,
in some areas we are dependent on certain employees with
specialist qualifications. Within this respect, it is the responsi-
bility of the Management Board members and senior
managers to ensure that the level of expertise and the
experience needed to perform certain tasks is distributed
as evenly as possible across the entire workforce.
The Company is exposed to the normal range of risks
evident in the pharmaceuticals industry, particularly as
regards unforeseen changes to legislation aimed at
reducing government expenditure on the treatment of
diseases. Other uncertainties with which this industry is
confronted relate to the legal frameworks in place for
national and international regulatory approval, as well as
the decisions taken by regulatory authorities. Bearing this
in mind, forecasts regarding revenues, business develop-
ment, and project-related progress can only be provided
based on the knowledge available to the Company at that
moment in time. We cannot exclude the possibility that
new targets will have to be defined if parameters change.
In future, risk controlling is to become even more firmly
established on a management level. The existing control
mechanisms are to be refined, both in terms of their
practical deployment within the Company and their
significance as a basis for decision-making. In the long
term, our main focus will be on achieving consistent
identification and analysis of external events and circum-
stances posing a risk to the Company
VIII. OUTLOOK
The financial targets presented to and authorised by the
Supervisory Board specify revenue growth that is compa-
rable to that achieved in the financial year under review.
These targets are to be met by taking advantage of the
continued dynamic growth displayed in the area of
Pharmaceuticals, which has benefited from sustained
demand for generic drugs. On the other hand, sales
activities in the US and distribution of block forms are to
propel the Biomaterials unit onwards and upwards. The
budgets of the respective divisions have been calculated
extremely conservatively, and there are only likely to be
limited changes within the area of human resources.
Investment activities with regard to new non-current
assets will be subject to a close assessment of financing
capabilities. The continued financing of the Group's activi-
ties, taking into account the parameters targeted in terms
of revenue growth, purchase prices, costs, as well as
interest rates and exchange rates, is achievable in the
short term if the capital expenditure plans for current and
non-current assets are observed. In order to secure
resources, the Company is currently discussing alternatives
to traditional financing of operations.
in am 2002 Actual 2003 Target
Sales revenues 14.7 18.1
EBIT (3.4) 0
Net loss for the period (2.3) 0
Equity 15.0 15.0
Cash and cash equivalents 1.3 1.0
Management Report
16
IX. SIGNIFICANT EVENTS AFTER THEBALANCE SHEET DATE
curasan AG has signed agreements with the two US-based
companies CryoLife Inc., Kennesaw/USA, and Spinal
Concepts Inc., Austin/USA. The agreements cover the distri-
bution of Cerasorb™ ORTHO within the medical field of
orthopaedics. They contain exclusive sales rights for the
synthetic, fully resorbable bone regeneration material
Cerasorb™ ORTHO within the respective areas of medical
indication.
As Cerasorb™ ORTHO can be deployed throughout the entire
skeletal system, it was particularly important to find exper-
ienced partners with a proven marketing track record in
the field of regenerative medicine, thus guaranteeing
rapid market penetration. In CryoLife and Spinal Concepts,
curasan has found two companies that are capable of
covering the entire US orthopaedics market.
The Company plans to attract additional sales partners, e.g.
for the segment of dental surgery.
Listed on the New York Stock Exchange, CryoLife Inc.,
Kennesaw (Georgia/USA), is a leader in the processing and
distribution of implantable living human tissues for use in
surgeries throughout the United States and Canada.
Employing around 300 people, it generated revenues of
more than US$87 million in 2001. The five-year contract
encompasses the exclusive sales rights for all orthopaedic
applications not associated with the spinal column, such
as traumatology and sports medicine.
The privately held medical company Spinal Concepts,
based in Austin (Texas/USA), specialises in spinal implant
products. As a technology leader it has more than 30
patents within this segment. Boasting 44 independent
sales organisations and about 180 field representatives,
Spinal Concepts has achieved outstanding results in
recent years. The agreement signed with Spinal Concepts
also covers a period of five years and gives the company
exclusive sales rights for Cerasorb™ ORTHO within the
area of spinal surgery.
Both companies presented Cerasorb™ ORTHO to their
respective target groups at the American Association of
Orthopedic Surgery (AAOS) meeting in New Orleans.
Management Report
17
CONSOLIDATED FINANCIAL STATEMENTS
OF curasan AG (IAS)
Consolidated Financial Statements of curasan AG (IAS)
19
Assets Note 31 Dec. 2002 a 31 Dec. 2001 a '000
A. Current assets
1. Cash and cash equivalents 5.1 1,343,824.60 1,598
2. Securities held as current assets 5.2 0.00 3,575
3. Trade accounts receivable 5.3 1,614,852.61 1,540
4. Inventories 5.4 3,613,200.24 3,974
5. Other current assets 5.5 402,105.01 554
6. Prepaid expenses 63,623.69 79
Total 7,037,606.15 11,321
B. Non-current assets
1. Goodwill 5.6 651,490.50 779
2. Intangible assets 5.6 5,815,158.75 4,807
3. Property, plant and equipment 5.6 2,336,556.74 2,514
4. Deferred taxes 5.7 5,033,251.54 3,782
Total 13,836,457.53 11,882
20,874,063.68 23,203
Liabilities and Equity Note 31 Dec. 2002 a 31 Dec. 2001 a '000
A. Current liabilities
1. Short-term liabilities to banks 5.8 308,149.91 1,007
2. Trade accounts payable 5.9 2,258,970.43 1,676
3. Provisions 5.10 581,703.62 707
4. Other current liabilities 5.11 828,328.24 422
Total 3,977,152.20 3,812
B. Non-current liabilities
1. Long-term debts 5.8 1,266,459.64 1,501
2. Retirement benefit obligation 5.12 225,889.00 205
3. Other non-current liabilities 5.8 418,620.23 419
Total 1,910,968.87 2,125
C. Equity
1. Issued capital 5,000,000.00 5,000
2. Capital reserves 19,843,856.82 19,844
3. Loss carried forward (7,577,930.53) (4,705)
4. Net loss for the period (2,279,983.68) (2,873)
Total 14,985,942.61 17,266
20,874,063.68 23,203
CONSOLIDATED BALANCE SHEET FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002 (IAS)
Consolidated Financial Statements of curasan AG (IAS)
20
Note 31 Dec. 2002 a 31 Dec. 2001 a '000
Revenue 4.1 14,714,442.74 12,104
Changes in inventories of finished goods and
work in progress 4.1 88,891.11 19
Work performed by the enterprise and capitalised 4.1 1,103,863.05 799
Gross performance 15,907,196.90 12,922
Cost of materials and services purchased 4.2 (6,878,064.92) (4,942)
Gross profit 9,029,131.98 7,980
Other operating income 4.1 437,095.51 379
Staff costs 4.3 (6,220,055.88) (6,178)
Depreciation and amortisation of non-current assets 4.4 (983,065.91) (768)
Depreciation and amortisation of inventories to the extent
that they exceed the usual level 4.5 0.00 (484)
Other operating expenses 4.6 (5,630,785.93) (5,644)
Operating loss (3,367,680.23) (4,715)
Interest income 4.7 2,315.83 292
Write-down of securities held as current assets 4.7 (166,534.18) (425)
Financial loss (164,218.35) (133)
Taxes 4.8 1,251,914.90 1,975
Net loss for the period (2,279,983.68) (2,873)
Number of shares (‘000) 5,000 5,000
Loss per share (IAS; in a) (0.46) (0.57)
CONSOLIDATED INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002
Consolidated Financial Statements of curasan AG (IAS)
21
2002 2001
Net loss (2,280) (2,873)
Depreciation and amortisation of non-current assets 983 768
Write-down of securities held as current assets 166 425
Changes in deferred taxes (1,252) (1,975)
Change in provisions (104) 20
Change in trade accounts receivable
as well as other current assets 453 (1,216)
Changes in trade accounts payable as well as other
current liabilities 989 1,709
Cash flow from operating activities (1,045) (3,142)
Proceeds from the disposal of non-current assets 25 0
Payments for investments in property, plant and equipment (199) (699)
Payments for investments in intangible assets (1,510) (2,522)
Acquisition of companies 0 (323)
Cash flow from investing activities (1,684) (3,544)
Repayment of loans (934) (246)
Cash flow from financing activities (934) (246)
Net change in cash and cash equivalents (3,663) (6,932)
Non-cash change in cash and cash equivalents (166) (425)
Cash and cash equivalents at the beginning of the period 5,173 12,530
Cash and cash equivalents at the end of the period 1,344 5,173
STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002
a Issued Capital Loss carried Net loss for Total
capital reserves forward the period
Balance at
1 Jan. 2002 5,000,000 19,843,857 (7,577,931) 0 17,265,926
Net loss for the period 0 0 0 (2.279.984) (2,279,984)
Balance at
31 Dec. 2002 5,000,000 19,843,857 (7,577,931) (2,279,984) 14,985,942
CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002 (A ‘000)
1. GENERAL INFORMATION
Since 20 July 2000, curasan AG has been a public company
listed within the Geregelter Markt (Regulated Market), for-
mally within the Neuer Market and in future within the
Prime Standard segment, of the Frankfurt Stock Exchange.
The registered office of the Company is in Kleinostheim.
The Company is entered in the commercial register at
Aschaffenburg District Court under reference HRB 4436.
The object of the Company is the production and distri-
bution of drugs, medical products and diagnostics.
curasan AG has prepared its consolidated financial state-
ments in accordance with International Accounting Stand-
ards (IAS) issued by the International Accounting Stand-
ards Committee (IASC). For the financial year under review,
all International Accounting Standards and interpretations
issued by the Standing Interpretations Committee (SIC) and
applicable at the reporting date have been applied. Pursuant
to Section 292a of the German Handelsgesetzbuch (HGB –
German Commercial Code), preparation of the consolidated
financial statements in accordance with internationally
accepted accounting principles exempts the Company from
preparing consolidated financial statements on the basis of
accounting principles generally accepted in Germany.
The consolidated financial statements have been prepared
in euros (a) for the first time. The comparative figures for
the preceding financial year have been translated at the
official exchange rates.
The following legal information is of importance:
At the balance sheet date, the share capital of the Company
amounted to a 5,000,000, divided into 5,000,000 bearer
shares with a nominal value of a 1.00 each.
Subject to the agreement of the Supervisory Board, the
Management Board has a mandate to increase the share
capital in one or more stages in the period up to 30 June
2005 by up to a total of a 2,250,000, through the issue of
new bearer shares against contribution in cash or in kind
(Authorised Capital I). Subject to the agreement of the
Supervisory Board, the Management Board has a further
mandate to increase the share capital in one or more stages
in the period up to 30 June 2005 by up to a total of
a 250,000, through the issue of new bearer shares against
contribution in cash (Authorised Capital II). The Manage-
ment Board has not yet used these mandates to increase
share capital.
Based on a resolution passed by the General Meeting of
Shareholders of 3 July 2000, the share capital can be condi-
tionally increased by up to a 400,000 through the issue of
up to 400,000 shares (Conditional Capital). The purpose of
the conditional capital increase is solely to secure share
subscription rights (so-called stock options) within the
curasan stock option plan 2000. Those holding stock options
are members of the Management Board (20% – 80,000
bearer shares) and employees of curasan AG and its sub-
sidiaries (80% – 320,000 bearer shares). The stock options
granted as part of the Initial Public Offering (IPO) have
lapsed. No further options on shares were granted.
Following a decision by the General Meeting of Shareholders
on 27 June 2002, the Management Board was given a
mandate, subject to the agreement of the Supervisory Board,
to acquire, in the period up to 23 December 2003, in one
or more stages, shares of the Company for purposes other
than trading in its own shares, and to dispose of them again,
even after the end of the above-mentioned period, as a
whole or in part, observing the principle of equal treatment
or in return for the acquisition of companies, providing the
acquisition was in the interest of the Company, or to call
them in without any further decision by the General Meeting
of Shareholders. The acquired shares may not exceed 10%
of the Company's share capital (a 5,000,000). To date, the
Management Board has not made use of this mandate.
In addition to the two members of the Management Board,
the Group employed 121 members of staff on average in
the course of the financial year under review.
Notes to the Consolidated Financial Statements
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR 2002
The consolidated entities were included in the scope of
consolidation on the basis of their financial statements as
at 31 December 2002.
2. SCOPE OF CONSOLIDATION
The scope of consolidation for the financial year ended 31
December 2002 includes the parent company curasan AG as
well as the following entities (see below).
curasan AG holds no equity interests other than those held
in entities included in the consolidated financial statements
prepared for the financial year under review.
3. ACCOUNTING POLICIES
3.1 Use of estimates
The preparation of consolidated financial statements requires
management to make assumptions and estimates that
directly affect the amounts reported in the balance sheet
and the income statement. In particular, these estimates
and assumptions apply to provisions, inventories, receivables
as well as deferred tax assets.
3.2 Consolidation
The consolidated financial statements comprise the individ-
ual financial statements of curasan AG and the individual
financial statements of its subsidiaries, which have also
been prepared in accordance with International Accounting
Standards. The date of initial consolidation is the date on
which curasan AG assumed the power to control the enter-
prise. Capital consolidation was performed on the basis of
the purchase method of accounting. Any difference that
cannot be allocated directly to individual assets is carried
as goodwill under intangible assets.
Intragroup receivables and liabilities as well as intragroup
expenses and income have been eliminated as part of stand-
ard consolidation procedures.
Transactions to be included in the consolidated financial
statements have been carried at cost of purchase or con-
version. Unrealised profits resulting from intragroup trans-
actions were eliminated.
3.3 Currency translation
The financial statements of all entities included in the
scope of consolidation have been prepared in euros (a). No
currency translation was required.
3.4 Revenue recognition
Revenue is recognised when the goods or merchandise have
been delivered or when the service has been rendered.
3.5 Goodwill, software, development costs and other
intangible assets
Goodwill arising on acquisition of the subsidiaries has been
capitalised and is amortised on a systematic basis over its
estimated useful life of 7 years using the straight-line
method.
Development costs associated with internally generated drug
approvals have been capitalised. The costs of internally
generated intangible assets are calculated in accordance
with IAS 38 and comprise direct personnel-related
expenditure in addition to overheads directly associated
with the generation of the asset in question. The
Notes to the Consolidated Financial Statements
23
Name and location Ownership interest Date of initial consolidation
curasan Benelux b.v., Barneveld/Netherlands 100 % 31 Dec. 1998
GerontoCare GmbH, Kleinostheim 100 % 31 Dec. 1998
Pro-tec Medizinische Produkte GmbH, Kleinostheim 100 % 01 Mar. 2001
Titanium Innovations GmbH, Kleinostheim 100 % 01 Apr. 2001
depreciable amount of the aforementioned drug approvals
is allocated on a systematic basis over a useful life of 10
years.
Acquired drug approvals are recognised at cost as intangible
assets. The depreciable amount of acquired drug approvals
is allocated on a systematic basis over a useful life of 10
years.
An external appraisal report has been furnished with regard
to the recoverable amount of these intangible assets,
which is an essential element when assessing whether the
carrying amounts at the balance sheet date are impaired.
Based on this information, no impairment losses were
recognised as at the balance sheet date.
Purchased software has been capitalised and is amortised
over its useful life of 3 years.
3.6 Property, plant and equipment
Property, plant and equipment are recognised on the basis
of acquisition cost or production cost less depreciation on
a systematic basis. Additions to property, plant and equip-
ment are written down on a straight-line basis. The depreci-
ation periods follow those periods stipulated by taxation
requirements. Depreciation rates vary from 4% to 25%.
Due to their immaterial nature, items with a purchase cost
of up to a 410.00 are written down fully in the year of
purchase and shown as a disposal in order to avoid a
difference to the accounting requirements stipulated by
the German Commercial Code (HGB).
3.7 Cash and cash equivalents
Cash and cash equivalents as reported in the cash flow
statement comprise cash on hand and bank deposits.
3.8 Trade accounts receivable and other assets
Trade receivables and other assets are carried at the
estimated recoverable amount. In the event of doubtful
accounts, the carrying amount is reduced to its estimated
recoverable amount.
3.9 Inventories
Inventories are measured at the cost of purchase or cost of
conversion. Materials and production supplies as well as
goods are measured at their cost of purchase less an
appropriate deduction. Finished goods are measured at
their cost of conversion. The costs of conversion of
inventories include costs directly related to the units of
production and a systematic allocation of fixed and variable
production overheads that are incurred in converting
materials into finished goods, which includes depreciation
of fixed assets associated with conversion. An applicable
amount of administration overheads is also included. Bor-
rowing costs are not included in the costs of conversion.
The cost of conversion of finished goods is subject to an
appropriate deduction.
Inventories that are unsaleable or obsolete are written
down to the appropriate amount.
3.10 Trade accounts payable and other liabilities
Trade payables and other liabilities are carried at the
amounts payable.
3.11 Short-term liabilities to banks
Short-term liabilities to banks are carried at the amount
payable and are presented in the schedule of liabilities.
3.12 Provisions
The retirement benefit obligation was accounted for in
accordance with IAS 19 using the projected unit credit
method.
Other provisions take into account all liabilities of uncertain
timing or amount. They are carried at the amount that is
deemed appropriate following a reasonable commercial
assessment.
3.13 Deferred taxes
In accordance with IAS 12, deferred tax liabilities are the
amounts of income taxes payable in future periods in respect
of taxable temporary differences. Deferred tax assets are
Notes to the Consolidated Financial Statements
24
the amounts of income taxes recoverable in future periods
in respect of deductible temporary differences, the carry-
forward of unused tax losses and the carryforward of
unused tax credits. Temporary differences are differences
between the carrying amount or liability in the IAS balance
sheet and its tax base. Deferred tax assets and deferred tax
liabilities are measured at the tax rates and laws enacted
by the balance sheet date. The carrying amount of a deferred
tax asset is reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to
allow the benefit of part or all of that deferred tax asset to
be utilised.
curasan AG has considerable corporation tax and trade tax
loss carryforwards, thus resulting in deferred tax assets.
Due to the level of uncertainty as regards the Company's
tax situation, for reasons of caution the Management
Board assumes that the deferred tax asset up to the time
of the Company's IPO will not be utilised. Therefore, no
corresponding assets were recognised. Deferred tax assets
were recognised for losses generated in the period
subsequent to the IPO. Measurement is based on an expected
standard corporation tax rate of 25%. Including the soli-
darity surcharge and the trade tax on earnings, deferred
income taxes were determined at a rate of approx. 38.26%.
In addition, the subsidiaries of curasan AG also generated
tax losses, resulting in the recognition of deferred tax assets.
We have no reason to believe that the carrying amounts of
the aforementioned items are inappropriate. Please note:
Since its IPO, the curasan Group has been generating
operating losses. Taking into account planned increases in
future revenues, curasan AG is expected to reach the break-
even point in the coming financial year. Overall, slight
losses are expected to be recorded by the subsidiaries.
Based on the plans for the Group drawn up by the Manage-
ment Board and approved by the Supervisory Board,
sufficient taxable profit to allow the benefit of part or all
of the deferred tax assets to be utilised is expected to
materialise from the financial year 2004.
3.14 Concentration of risk
Financial risk is mainly associated with trade receivables.
Within the area of trade receivables, accounts payable by
customers located abroad represent a sizeable amount of
overall receivables. The increased risk of default and
concomitant interest losses due to the long terms of
payment has been accounted for by the Company. Within
the area of exporting activities (mainly billing in US dollars)
there are risks associated with currency fluctuations.
Notes to the Consolidated Financial Statements
25
4. NOTES TO INCOME STATEMENT
4.1 Sales revenue and operating income
Operating income (a '000) 2002 2001
Sales revenue 15,092 12,361
Sales deductions (378) (257)
Changes in inventories 88 19
Work performed by the enterprise and capitalised 1,104 799
Other operating income 437 379
Total 16,343 13,302
Notes to the Consolidated Financial Statements
26
4.2 Cost of materials
(a '000) 2002 2001
Raw materials and consumables used, and purchased goods 6,834 4,859
Purchased services 44 83
Total 6,878 4,942
4.3 Staff costs
(a '000) 2002 2001
Salaries and wages 5,388 5,364
Social security 832 814
Total 6,220 6,178
4.4 Depreciation and amortisation
(a '000) 2002 2001
Intangible assets 613 482
Property, plant and equipment 370 286
Total 983 768
4.5 Depreciation and amortisation of current assets
In the previous financial year, these applied to unsaleable goods or obsolete raw materials.
4.6 Other operating expenses
(a '000) 2002 2001
Sales expenses 1,741 1,610
Advertising expenses 767 1,121
Regulatory expenses 519 561
Administrative expenses 2,604 2,352
Total 5,631 5,644
Notes to the Consolidated Financial Statements
27
4.7 Financial income
(a '000) 2002 2001
Other interest and similar income 168 442
Write-down of securities held as current assets 166 425
Interest and similar expenses 166 150
Total (164) (133)
4.8 Tax income
Tax income reported in the income statement comprises the following items:
(a '000) 2002 2001
Current income taxes 0 0
Deferred tax income 1,252 1,975
Total 1,252 1,975
Reconciliation from expected to effective tax income is as follows:
(a '000) 2002 2001
Profit before taxes (3,532) (4,848)
Tax at domestic tax rate (38.26%) 1,351 1,855
Difference due to foreign tax rates (9) (17)
Effect of consolidation accounting (90) 137
Effective tax income 1,252 1,975
5. NOTES TO THE BALANCE SHEET
5.1 Cash and cash equivalents
Cash and cash equivalents comprise short-term fixed-term deposits as well as current account deposits. Cash and cash
equivalents amounting to a 1,192 thousand have been provided as security in connection with a bank loan.
5.2 Securities held as current assets
All fixed-interest securities and participation interests were disposed of over the course of the financial year 2002.
5.3 Trade accounts receivable
(a '000) 2002 2001
Trade receivables attributable to the parent company 1,514 1,528
Trade receivables attributable to subsidiaries 101 12
Total 1,615 1,540
Notes to the Consolidated Financial Statements
28
5.4 Inventories
(a '000) 2002 2001
Materials and production supplies 972 1.311
Finished goods and merchandise 2.641 2.663
Total 3,613 3,974
5.5 Other current assets
(a '000) 2002 2001
Accrued interest income 0 42
Reinsurance 128 115
Tax refund claim 42 120
Other items 232 277
Total 402 554
5.6 Intangible assets and property, plant and equipment
A breakdown of intangible assets and property, plant and equipment is provided in the Fixed Assets Schedule.
5.7 Deferred taxes
The deferred tax assets are the result of tax loss carryforwards of curasan AG and its subsidiaries, with the exception of
GerontoCare GmbH (total of a 3,976 thousand), as well as the effects associated with the elimination of unrealised profits
and losses resulting from intragroup transactions (a 1,057 thousand).
5.8 Liabilities
Liabilities consist of amounts due to banks, trade accounts payable, and other liabilities. As security for the payables due
to banks, land charges have been agreed upon in the amount of a 1,125 thousand, as well as the pledge of a fixed-term
deposit. Details regarding the maturity of liabilities are presented in the schedule of liabilities.
Liabilities (a '000) 2002 Maturity Maturity from Maturity 2001
under 1 year 1 to 5 years over 5 years
Payables due to banks* 1,575 308 1,094 172 2,508
Trade accounts payable 2,259 2,259 0 0 1,676
Other liabilities 1,247 828 419 0 840
Total 5,081 3,395 1,513 172 5,024
* Security: Land charge Pledge/dep.
Notes to the Consolidated Financial Statements
29
5.9 Trade accounts payable
(a '000) 2002 2001
Trade payables attributable to parent company 2,222 1,629
Trade payables attributable to subsidiaries 37 47
Total 2,259 1,676
5.10 Other provisions
The carrying amount of other provisions at the beginning and the end of the reporting period is displayed in the following
schedule:
Breakdown and movements
(a '000) 2002 Utilised Reversal Additions 2001
Staff-related provisions 250 267 69 250 336
Risks of litigation 150 60 0 49 161
Other items 111 144 0 111 144
External year-end accounting costs 71 66 0 71 66
Total 582 537 69 481 707
5.11 Other liabilities
(a '000) 2002 2001
Tax liabilities 289 84
Social security 144 135
Purchase price of interests in enterprises 419 419
Other items 395 203
Total 1,247 841
The purchase price for interests in enterprises is payable within seven years in revenue-related instalments; on the balance
sheet this item is carried under non-current liabilities.
5.12 Retirement benefit obligation
This item consists of a retirement benefit obligation for a member of the Management Board. The obligation has been
reinsured by means of life insurance.
6. OTHER INFORMATION
6.1. Financial instruments
Primary financial instruments in the form of cash, receivables and liabilities are included within the balance sheet. These
financial instruments are, by nature, subject to default and interest-related risks. The Company is mainly exposed to an
increased level of default-related risk in connection with trade accounts receivable – particularly as part of its export
activities. These risks are counteracted by means of credit investigations and systematic dunning procedures (collection of
accounts receivable).
The Company had no derivative financial instruments as at the balance sheet date.
6.2 Other financial obligations
Other financial obligations are attributable to rental and maintenance agreements as well as leasing obligations. These
obligations are due as follows:
(a '000) 2003 2004 to 2007 after 2007 Total
Rental and maintenance agreements 328 785 40 1,153
Leasing obligations 498 442 0 940
Total 826 1,227 40 2,093
6.3 Segment reporting
a) Segment revenues and results
(a '000) Pharma Bio N.A.* Total
Segment revenue 2002 11,004 5,338 0 16,342
Segment revenue 2001 8,159 5,142 0 13,301
Segment result 2002 (1,178) (1,488) (701) (3,367)
Segment result 2001 (2,255) (1,618) (841) (4,715)
(a '000) Germany Abroad N.A.* Total
Segment revenue 2002 14,345 1,997 0 16,342
Segment revenue 2001 11,759 1,542 0 13,301
Segment result 2002 (1,099) (1,567) (701) (3,367)
Segment result 2001 (2,304) (1,569) (841) (4,715)
* N.A. – not allocated
In the financial year 2002, the method used for the calculation of segment results was revised by the Company. The
alterations to this calculation method affect comparability with the previous year, and therefore the previous year's figures
have been recalculated.
Notes to the Consolidated Financial Statements
30
b) Segment assets
(a '000) Pharma Bio Total
Segment assets 2002 8,773 5,622 14,395
Segment assets 2001 9,055 5,113 14,168
(a '000) Germany Abroad Total
Segment assets 2002 11,744 2,651 14,395
Segment assets 2001 11,349 2,819 14,168
6.4 The Management Board
In the year under review, the Management Board comprised:
– Mr. Hans Dieter Rössler, Bessenbach (Chairman)
– Mr. Helmut Trahmer, Worms
Total remuneration for the Management Board amounted
to a 376 thousand in the financial year 2002 (FY 2001:
a 367 thousand, of which a 20 thousand variable).
6.5 The Supervisory Board
In the year under review, the Supervisory Board comprised:
– Dr. Detlef Wilke, Wennigsen (Chairman);
Managing Partner of Dr. Wilke & Partner Biotech
Consulting GmbH, Wennigsen
– Mr. Hans-Günter Niederehe, Mainz (Vice Chairman),
self-employed management consultant
– Dr. Konstantin Rogalla, Hamburg;
Managing Partner at Pflüger, Schulz, Rogalla
Unternehmensberatung GmbH, Hamburg
The Supervisory Board received remuneration in the finan-
cial year 2002 in the amount of a 67 thousand (FY 2001;
a 66 thousand).
The Supervisory Board members are also members of the
following Supervisory Boards and committees:
Dr. Detlef Wilke (Chairman)
– Faustus Forschungs Cie. Translational Cancer Research
GmbH, Leipzig
Mr. Hans-Günter Niederehe
– GenPharmTox BioTech AG, Martinsried, until 31 August
2002
Dr. Konstantin Rogalla
– INSTRUCT AG, Munich
6.6 Directors' Holdings
As at 31Dec.2002, the executive bodies of the company held
the following shares in curasan AG (share volumes in '000):
Notes to the Consolidated Financial Statements
31
Management Board 2002 Additions Disposals 2001
Hans Dieter Rössler 2,300 32 0 2,268
Helmut Trahmer 1 0 18 19
Supervisory Board
Dr. Detlef Wilke 12 0 0 12
The stock options granted to the Management Board and employees at the time of the Company's IPO have lapsed.
6.7 Corporate Governance Code
The Supervisory Board and the Management Board issued a declaration of conformity in accordance with Section 161 AktG
(German Stock Corporation Act) and have made these details permanently accessible to shareholders via the corporate website.
6.8 Disclosures in accordance with WpHG (Securities Trading Act)
In the financial year 2002, the following reports were published in accordance with the WpHG (Securities Trading Act):
6.8.1. (in April 2002)
Pursuant to Section 41 Paragraph 2 Sentence 1 WpHG, Mr. Hans Dieter Rössler, Bessenbach-Keilberg, has informed us
that, as at April 1, he is entitled to 45.25% of the voting rights in the Company.
As at April 1, 2002, the percentage of voting rights in curasan AG belonging to 3i Group plc, London, and to be counted
additionally amounted to 11.72 %. Of the aforementioned figure, 5.87% of the voting rights are to be counted to 3i Group
plc. in accordance with Section 22 Paragraph 1 Number 1 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i Investments plc, London, amounted to 11.74%. Of the afore-
mentioned figure, 11.74% of the voting rights are to be counted to 3i Group plc in accordance with Section 22 Paragraph
1 Number 6 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i Europartners II LP, London, amounted to 5.87%.
As at April 1, 2002, the percentage of voting rights of 3i Europartners II GP Ltd., London, amounted to 5.87%. Of the afore-
mentioned figure, 5.87% of the voting rights are to be counted to 3i Europartners II LP, in accordance with Section 22
Paragraph 1 Number 1 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i Holdings plc, London, amounted to 5.87%. Of the aforementioned
figure, 5.87% of the voting rights are to be counted to 3i Holdings plc, in accordance with Section 22 Paragraph 1 Number
1 WpHG.
Kleinostheim, April 2002 The Management Board
6.8.2. (in April 2002)
As at April 23, 2002, the percentage of voting rights in curasan AG belonging to 3i Group plc, London, and to be counted
additionally moved below the threshold of ten per cent and now stands at 9.86%. Of the aforementioned figure, 4.93%
of the voting rights are to be counted to 3i Group plc., in accordance with Section 22 Paragraph 1 Number 1 WpHG.
As at April 23, 2002, the percentage of voting rights of 3i Investments plc, London, moved below the threshold of ten per
cent and now stands at 9.86%. Of the aforementioned figure, 9.86% of the voting rights are to be counted to 3i Group
plc., in accordance with Section 22 Paragraph 1 Number 6 WpHG.
As at April 23, 2002, the percentage of voting rights belonging to 3i Europartners II LP, London, moved below the threshold
of five per cent and now stands at 4.93%.
Notes to the Consolidated Financial Statements
32
Notes to the Consolidated Financial Statements
33
As at April 23, 2002, the percentage of voting rights belonging to 3i Europartners II GP Ltd., London, moved below the
threshold of five per cent and now stands at 4.93%. Of the aforementioned figure, 4.93 % of the voting rights are to be
counted to 3i Europartners II LP, in accordance with Section 22 Paragraph 1 Number 1 WpHG.
As at April 23, 2002, the percentage of voting rights of 3i Holdings plc, London, moved below the threshold of five per
cent and now stands at 4.93%. Of the aforementioned figure, 4.93% of the voting rights are to be counted to 3i Holdings
plc, in accordance with Section 22 Paragraph 1 Number 1 WpHG.
Kleinostheim, April 2002 The Management Board
6.8.3 (in June 2002)
As at June 14, 2002, the percentage of voting rights in curasan AG belonging to 3i Group plc, London, moved below the
threshold of five per cent, and the aforementioned entity now holds no shares in the Company.
As at June 14, 2002, the percentage of voting rights in curasan AG belonging to 3i Investments plc, London, moved below
the threshold of five per cent, and the aforementioned entity now no longer manages shares in the Company.
Kleinostheim, June 2002 The Management Board
7. DISCUSSION OF MATERIAL DIFFERENCES BETWEEN INTERNATIONAL ACCOUNTINGSTANDARDS AND GERMAN COMMERCIAL LAW WITH REGARD TO PRINCIPLES OFACCOUNTING, MEASUREMENT AND CONSOLIDATION
The consolidated financial statements of curasan AG for the financial year ended 31 December 2002 have been prepared in
accordance with International Accounting Standards (IAS), which, pursuant to Section 292a HGB, exempts the Company
from preparing consolidated financial statements in accordance with the German Commercial Code. The significant dif-
ferences between HGB and IAS accounting principles that are applicable to curasan AG are listed below:
7.1 Deferred taxes for the carryforward of losses pursuant to IAS 12:
Pursuant to HGB, a tax refund claim arising from the carryforward of tax losses may not be capitalised. Pursuant to IAS
12, a tax refund claim should be recognised for the carryforward of unused tax losses and unused tax credits to the extent
that it is probable that they can be utilised.
7.2 Development costs of internally generated drug approvals:
Pursuant to HGB, development costs related to internally generated drug approvals may not be capitalised. In accordance
with IAS 38, they must be recognised as assets if certain requirements are met.
Kleinostheim, 28 February 2003
Hans Dieter Rössler Helmut Trahmer
Fixed Assets Schedule for the Financial Year 2002 (gross analysis)
34
FIXED ASSETS SCHEDULE FOR THE FINANCIAL YEAR 2002 (GROSS ANALYSIS)
Acquisition/Manufacturing Costs
Carried forward Balance
a 1 Jan. 2002 Additions Disposals Reclassifications 31 Dec. 2002
I. Intangible assets
1. Concessions, industrial
property rights and similar
rights and values, as well
as licences thereto 4,945,836.48 1,037,404.77 17,265.04 928,144.49 6,894,120.70
2. Software 285,202.74 3,108.66 0.00 11,543.47 299,854.87
3. Goodwill 1,004,294.47 0.00 0.00 0.00 1,004,294.47
4. Prepayments 1,002,310.36 469,987.23 0.00 (939,687.96) 532,609.63
7,237,644.05 1,510,500.66 17,265.04 0.00 8,730,879.67
II. Property, plant and
equipment
1. Land and leasehold rights
and buildings 1,887,281.08 0.00 0.00 0.00 1,887,281.08
2. Technical equipment, plant
and machinery 103,814.53 30,410.96 854.00 0.00 133,371.49
3. Other equipment, furniture
and fixtures, and office
equipment 1,566,005.50 166,805.54 6,230.00 79,223.34 1,805,804.38
4. Plant under construction 76,957.29 2,266.05 0.00 (79,223.34) 0.00
3,634,058.40 199,482.55 7,084.00 0.00 3,826,456.95
10,871,702.45 1,709,983.21 24,349.04 0.00 12,557,336.62
Fixed Assets Schedule for the Financial Year 2002 (gross analysis)
35
Depreciation and Amortisation Net book value
Carried forward Balance Balance Balance
1 Jan. 2002 Additions Disposals 31 Dec. 2002 31 Dec. 2002 31 Dec. 2001
1,335,225.86 440,991.25 0.00 1,776,217.11 5,117,903.59 3,610,610.63
91,210.93 43,998.41 0.00 135,209.34 164,645.53 193,991.81
225,036.56 127,767.41 0.00 352,803.97 651,490.50 779,257.91
0.00 0.00 0.00 0.00 532,609.63 1,002,310.36
1,651,473.35 612,757.07 0.00 2,264,230.42 6,466,649.25 5,586,170.71
266,860.99 79,447.12 0.00 346,308.11 1,540,972.97 1,620,420.09
59,436.44 11,797.82 0.00 71,234.26 62,137.23 44,378.09
793,292.94 279,063.90 0.00 1,072,357.84 733,446.54 772,712.56
0.00 0.00 0.00 0.00 0.00 76,957.29
1,119,590.37 370,308.84 0.00 1,489,900.21 2,336,556.74 2,514,468.04
2,771,063.72 983,065.91 0.00 3,754,130.63 8,803,205.99 8,100,638.74
Auditor's Report
36
“We have audited the consolidated financial statements, comprising the balance sheet, the income statement, and the statement of
changes in shareholders’ equity and cash flows as well as the notes to the financial statements, prepared by the curasan AG, Kleinost-
heim, for the business year from 1 January 2002 to 31 December 2002. The preparation and the content of the consolidated financial
statements are the responsibility of the Company's executive board. Our responsibility is to express an opinion whether the consolidated
financial statements are in accordance with International Accounting Standards (IAS) based on our audit.
We conducted our audit of the consolidated financial statements in accordance with German auditing regulations and generally
accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer in Deutschland (IDW). Those
standards require that we plan and perform the audit such that it can be assessed with reasonable assurance whether the consolidated
financial statements are free of material misstatements. Knowledge of the business activities and the economic and legal environment
of the Group and evaluations of possible misstatements are taken into account in the determination of audit procedures. The evidence
supporting the amounts and disclosures in the consolidated financial statements are examined on a test basis with the framework of the
audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the net assets, financial position, results of operations
and cash flows of the Group for the business year in accordance with IAS.
Our audit, which also extends to the group management report prepared by the executive board which is a summarised management
report over the actual position of curasan consolidated as well as the actual position of curasan AG for the business year from 1 January
2002 to 31 December 2002, has not led to any reservations.
In our opinion, on the whole the group management report together with the other disclosures in the consolidated financial statements
provides a suitable understanding of the Group’s position and suitably presents the risks of future development. In addition, we confirm
that the consolidated financial statements and the group management report for the business year from 1 January 2002 to 31 December
2002 statisfy the conditions required for the Company’s exemption from its obligation to prepare consolidated financial statements and
the group management report in accordance with German law.
Without qualifying our opinion we point out that the balance sheet includes deferred tax assets of 3,976 (a 000) based on tax losses
brought forward from the parent company as well as individual losses of subsidiary companies. These amounts can only be realised if
the Group business plan is met, which indicates profitability and positive cash flows from 2003 onwards. Furthermore, increased risks
exist in the export market.
Without qualifying our opinion we point out that the liquidity situation of the Group is strained. The business plan prepared by the
executive board indicates the need for additional cash during 2003, which according to management, may be financed by various
alternatives. If these financing alternatives can not be realised and the business plan can not be met, the continuing existence of the
parent company and subsidiaries will be threatened.”
Frankfurt am Main, 13 March 2003
PKF PANNELL KERR FORSTER GMBH
Wirtschaftsprüfungsgesellschaft
W. Hofmann M. Jüngling
Wirtschaftsprüfer Wirtschaftsprüfer
(Certified Public Accountant) (Certified Public Accountant)
AUDITOR'S REPORT
FINANCIAL STATEMENTS OF
curasan AG (HGB)
Financial Statements of curasan AG (HGB)
BALANCE SHEET FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002 (HGB)
Assets 31 Dec. 2002 a 31 Dec. 2002 (a '000)
A. Non-current assets
I. Intangible assets
1. Concessions, industrial property rights and similar rights
and values, as well as licences thereto 4,575,095.17 2,741
2. Software 164,645.53 194
3. Prepayments 532,609.63 1,002
Total 5,272,350.33 3,937
II. Property, plant and equipment
1. Land and leasehold rights and buildings 1,540,972.97 1,620
2. Technical equipment, plant and machinery 54,671.34 33
3. Other equipment, furniture and fixtures, and office equipment 666,748.15 70
4. Prepayments 0 77
Total 2,262,392.46 2,431
III. Financial assets
1. Shares of subsidiary companies 4,793,207.69 4,793
Total 12,327,950.48 11,161
B. Current assets
I. Inventories
1. Raw materials and production supplies 944,835.71 1,277
2. Work in progress 154,662.33 0
3. Finished goods and merchandise 2,645,214.45 2,723
Total 3,744,712.49 4,000
II. Receivables and other assets
1. Trade accounts receivable 1,513,874.77 1,528
2. Receivables from subsidiary companies 2,072,099.05 1,446
3. Other assets 263,525.33 486
– thereof due in more than one year
141,961.70 a (FY 2001: 131 a ’000)
Total 3,849,499.15 3,460
III. Securities 0 3,575
IV. Cash on hand, deposits at banks 1,278,586.31 1,582
Total 8,872,797.95 12,617
C. Prepaid expenses 61,524.14 79
21,262,272.57 23,857
Financial Statements of curasan AG (HGB)
39
Liabilities and Equity 31 Dec. 2002 a 31 Dec. 2002 (a '000)
A. Equity
I. Issued capital 5,000,000.00 5,000
II. Capital reserves 21,931,203.12 21,931
III. Accumulated loss (11,831,023.07) (8,896)
– Conditional capital a 400 000
Total 15,100,180.05 18,035
B. Provisions
1. Provisions for pensions 195,142.00 178
2. Other provisions 555,760.00 700
Total 750,902.00 878
C. Liabilities
1. Payables due to banks 1,574,609.55 2,508
– thereof due in more than one year
308,149.91 a (FY 2001: 1,007 a ’000)
2. Trade accounts payable 2,221,527.01 1,629
– thereof due in more than one year
2,221,527.01 a (FY 2001: 1,629 a ’000)
3. Payables due to subsidiary companies 497,260.13 13
– thereof due in more than one year
497,260.13 a (FY 2001: 13 a ’000)
4. Other liabilities 1,117,793.83 793
– thereof due in more than one year
699,173.60 a (FY 2001: 375 a ’000)
– of which for taxes
129,283.41 a (FY 2001: 97,629.60 a ’000)
– of which for social security
94,242.02 a (FY 2001: 112,075.65 a ’000)
Total 5,411,190.52 4,944
21,262,272.57 23,857
Financial Statements of curasan AG (HGB)
40
INCOME STATEMENT (HGB) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002
31 Dec. 2002 a 31 Dec. 2001 (a '000)
1 Revenue 14,257,293.89 11,854
2 Increase in inventories of finished goods and
work in progress 87,229.05 26
3 Other operating income 1,145,128.90 420
15,489,651.84 12,300
4 Cost of materials
a) Cost of raw materials and supplies and
purchased goods 6,964,135.85 4,779
b) Cost of purchased services 45,396.36 82
7,009,532.21 4,861
5 Staff costs
a) Salaries and wages 4,438,639.93 4,551
b) Social security, pension and other benefit costs 692,439.96 696
– of which for retirement benefits
19,331.79 a (FY 2001: 23 Ta)
(5,131,079.89) (5,247)
6 Depreciation and amortisation
a) of non-current intangible assets and property,
plant and equipment 826,617.22 590
b) of current assets to the extent that they exceed the
corporation's usual depreciation or amortisation 0 485
7 Other operating expenses 5,645,898.80 5,417
8 Income from profit and loss transfer agreement 173,928.25 119
9 Other interest and similar income 356,669.40 442
– thereof affiliated companies
188,7211.71 a (FY 2001: 0 Ta)
10 Write-down of securities held as current assets 166,577.40 426
11 Interest and similar expenses 166,534.18 149
12 Loss from ordinary activities (2,925,990.21) (4,314)
13 Other taxes 8,711.06 8
14 Net loss for the period 2,934,701.27 4,322
15 Loss carried forward 8,896,321.80 4,574
16 Accumulated loss 11,831,023.07 8,896
Notes
41
1. GENERAL INFORMATION
Since 20 July 2000, curasan AG has been a public company
listed within the Geregelter Markt (Regulated Market), for-
mally within the Neuer Market and in future within the
Prime Standard segment, of the Frankfurt Stock Exchange.
The registered office of the Company is in Kleinostheim.
The Company is entered in the commercial register at
Aschaffenburg District Court under reference HRB 4436.
The object of the Company is the production and distri-
bution of drugs, medical products and diagnostics.
As a publicly listed company, curasan AG is defined as a
large corporation, in accordance with Section 267 Paragraph
3 HGB.
The income statement is presented on the basis of the ex-
penses-by-nature method, unchanged from the previous year.
The financial statements have been prepared in euros (a)
for the first time. The comparative figures for the pre-
ceding financial year have been translated at the official
exchange rates.
2. ACCOUNTING POLICIES
Intangible assets acquired against a financial considera-
tion are carried at acquisition cost and amortised using the
straight-line method based on the best estimate of the
useful life of the asset. Within this context, a useful life in
the range from three to ten years has been assumed. The
depreciation periods follow those periods stipulated by
taxation requirements.
Property, plant and equipment are recognised on the basis
of acquisition cost or production cost less depreciation on
a systematic basis. Depreciation is calculated using the
straight-line method. The depreciation periods follow those
periods stipulated by taxation requirements. Depreciation
rates vary from 4% to 25%. Low-value assets as defined by
Section 6 Paragraph 2 EStG (Income Tax Act) are written
down fully in the year of purchase and shown as disposals.
Financial assets are carried at acquisition cost.
Inventories are measured at the cost of purchase or cost of
conversion. Materials and production supplies as well as
goods are measured at their cost of purchase less an ap-
propriate deduction. Finished goods are measured at their
cost of conversion. The costs of conversion of inventories
include costs directly related to the units of production
and a systematic allocation of fixed and variable pro-
duction overheads that are incurred in converting
materials into finished goods, which includes depreciation
of fixed assets associated with conversion. An appropriate
amount of administration overheads is also included. Bor-
rowing costs are not included in the costs of conversion.
The cost of conversion of finished goods is also subject to
an appropriate deduction. Work in progress is measured
pro rata in accordance with the stage of completion.
Inventories that are unsaleable or obsolete are written
down to the appropriate amount.
Receivables and other assets are measured at the lower of
nominal or realisable value at the balance sheet date.
Receivables that are subject to specific risks are written
down on an item-by-item basis. A general bad-debt allow-
ance covers the overall risk associated with trade accounts
receivable.
Cash and cash equivalents are carried at their nominal
values.
Retirement benefit obligations are recognised using the
so-called actuarial "Teilwertmethode" (expense allocated
from date of entry into service) on the basis of an assumed
rate of interest of 6%.
NOTES TO THE FINANCIAL STATEMENTS, FINANCIAL YEAR 2002
Other provisions take into account all liabilities of uncertain
timing or amount. They are carried at the amount that is
deemed appropriate following a reasonable commercial
assessment.
The liabilities are carried at the total amount payable.
3. FOREIGN CURRENCY TRANSLATION
The amounts of receivables or liabilities denominated in
foreign currencies are translated using either the exchange
rate on the day of the original business transaction or the
higher or lower exchange rate at the balance sheet date.
Losses arising from fluctuations in the exchange rate at
the balance sheet date are accounted for accordingly.
4. NOTES TO THE BALANCE SHEET
Changes in non-current assets are reported in a separate
fixed assets schedule.
Independent valuation reports are available confirming the
carrying amounts of significant approval rights included
under intangible assets.
Financial assets include curasan AG holdings, as listed
below.
In order to prevent excessive debt, curasan AG has issued
letters of subordination in relation to curasan Benelux b.v.
and Pro-tec Medizinische Produkte GmbH; they are limited
until 31 March 2003, and it is likely that they will have to
be renewed after this date.
All entities are included as subsidiaries in the consolidated
financial statements as at 31 December 2002, prepared in
compliance with IAS principles and thus falling under the
exemption clause of Section 292a HGB.
The value of the holding in GerontoCare GmbH is based
principally on approval rights held by the aforementioned
entity. The value of these rights is supported by an inde-
pendent valuation report.
All trade receivables are due within one year.
Receivables from subsidiary companies include merchandise-
related as well as financial receivables, incl. interest since
2002, in the amount of a 1,323 thousand (FY 2001: a 828
thousand) due from Curasan Benelux b.v. Financial
receivables due from Pro-tec Medizinische Produkte GmbH
amount to a 723 thousand (FY 2001: a 483 thousand).
All receivables associated with subsidiary companies are
due within one year.
Based on future corporate planning, the carrying amounts
of receivables due from subsidiary companies are assumed
not to be impaired.
Of the other assets, a 142 thousand (FY 2001: a 131
thousand) have a remaining term of more than one year.
At the balance sheet date, the share capital of the Company
amounted to a 5,000,000, divided into 5,000,000 bearer
shares with a nominal value of a 1.00 each.
Subject to the agreement of the Supervisory Board, the
Management Board has a mandate to increase the share
capital in one or more stages in the period up to 30 June
Notes
42
Name and location Ownership interest Equity Net profit / (loss)
curasan Benelux b.v. Barneveld/Netherlands 100 % (1,049) (227)
GerontoCare GmbH, Kleinostheim 100 % 3,707 0
Pro-tec Medizinische Produkte GmbH, Kleinostheim 100 % (629) (257)
Titanium Innovations GmbH, Kleinostheim 100 % 9 (11)
Notes
43
2005 by up to a total of a 2,250,000, through the issue of
new bearer shares against contribution in cash or in kind
(Authorised Capital I). Subject to the agreement of the
Supervisory Board, the Management Board has a further
mandate to increase the share capital in one or more
stages in the period up to 30 June 2005 by up to a total of
a 250,000, through the issue of new bearer shares against
contribution in cash (Authorised Capital II). The Manage-
ment Board has not yet used these mandates to increase
share capital.
Based on a resolution passed by the General Meeting of
Shareholders of 3 July 2000, the share capital can be con-
ditionally increased by up to a 400,000 through the issue
of up to 400,000 shares (Conditional Capital). The purpose
of the conditional capital increase is solely to secure share
subscription rights (so-called stock options) within the
curasan stock option plan 2000. Those holding stock options
are members of the Management Board (20% – 80,000
bearer shares) and employees of curasan AG and its sub-
sidiaries (80% – 320,000 bearer shares).
Following a decision by the General Meeting of Shareholders
on 27 June 2002, the Management Board was given a
mandate, subject to the agreement of the Supervisory
Board, to acquire, in the period up to 23 December 2003,
in one or more stages, shares of the Company for purposes
other than trading in its own shares, and to dispose of
them again, even after the end of the above-mentioned
period, as a whole or in part, observing the principle of
equal treatment or in return for the acquisition of com-
panies, providing the acquisition was in the interest of the
Company, or to call them in without any further decision
by the General Meeting of Shareholders. The acquired
shares may not exceed 10% of the Company's share capital
(a 5,000,000). To date, the Management Board has not
made use of this mandate.
Other provisions mainly include provisions for remaining
holidays (a 82 thousand), bonus payments (a 110 thou-
sand), invoices not yet received (a 80 thousand), litigation
costs and severance pay (a 150 thousand) as well as audit
and consultancy fees (a 65 thousand).
A schedule of liabilities and security provided is included in
the table presented below.
Liabilities in a 2002 Maturity Maturity from Maturity over 2001
within 1 year 1 to 5 years 5 years
Payables due to banks* 1,574 308 1,094 172 2,508
Trade payables 2,222 2,222 1,629
Payables due to subsidiary companies 497 497 13
Other liabilities 1,118 699 419 794
Total 5,411 3,726 1,513 172 4,944
* Security: Land charge, Pledge/dep.
The payables due to subsidiary companies include trade accounts payable due to GerontoCare GmbH, in the amount of
a 490 thousand (FY 2001: receivable of a 134 thousand). Trade payables due to Titanium Innovations GmbH amount to
a 7 thousand (FY 2001: a 13 thousand). All liabilities associated with subsidiary companies are due within one year.
Other operating expenses of a 517 thousand (FY 2001:
a 512 thousand) are attributable to expenses at subsidiary
companies, mainly for the use of drug licences.
The write-down of securities held as current assets to their
fair value at the date of disposal amounted to a 166 thou-
sand (FY 2001: a 425 thousand).
6. EMPLOYEES
In addition to the two members of the Management Board,
the Company employed 95 members of staff on average in
the course of the financial year 2002 (FY 2001: 84).
7. THE MANAGEMENT BOARD
In the year under review, the Management Board comprised:
– Mr. Hans Dieter Rössler, Bessenbach (Chairman)
– Mr. Helmut Trahmer, Worms
Total remuneration for the Management Board amounted
to a 376 thousand in the financial year 2002, of which
a20 thousand variable (FY 2001: a 367 thousand, of which
a 20 thousand variable).
A pension obligation exists for one of the members of the
Management Board; an appropriate pension provision has
been recognised. The allocation for 2002 amounted to
a 17 thousand.
8. THE SUPERVISORY BOARD
In the year under review, the Supervisory Board comprised:
– Dr. Detlef Wilke, Wennigsen (Chairman); Managing Partner
of Wilke & Partner Biotech Consulting GmbH, Wennigsen
– Mr. Hans-Günter Niederehe, Mainz (Vice Chairman),
self-employed management consultant
– Dr. Konstantin Rogalla, Hamburg; Managing Partner at
Pflüger, Schulz, Rogalla Unternehmensberatung GmbH,
Hamburg
Notes
44
Other financial obligations are attributable to rental and maintenance agreements as well as leasing obligations. These
obligations are due as follows:
Obligations (a '000) 2003 2004 to 2007 after 2007 Total
Rental and maintenance agreements 221 571 40 832
Obligations under leases 438 417 0 855
Total 659 988 40 1,687
5. NOTES TO INCOME STATEMENT
The geographical breakdown of sales revenue by region is outlined below.
Revenue (a '000) 2002 2001
Sales revenue Germany 12,680 10,711
Sales revenue Abroad 1,956 1,400
14,636 12,111
Sales deductions (378) (257)
Total 14,258 11,855
Notes
45
In the financial year 2002, the Supervisory Board received
remuneration in the amount of a 67 thousand (FY 2001;
a 66 thousand). The Supervisory Board members are also
members of the following Supervisory Boards and commit-
tees:
Dr. Detlef Wilke (Chairman)
– Faustus Forschungs Cie. Translational Cancer Research
GmbH, Leipzig
Mr. Hans-Günter Niederehe
– GenPharmTox BioTech AG, Martinsried (until 31 August
2002)
Dr. Konstantin Rogalla
- INSTRUCT AG, Munich
9. OTHER INFORMATION
Financial risk is mainly associated with trade receivables.
Within the area of trade receivables, accounts payable by
customers located abroad represent a sizeable amount of
overall receivables. In one case, the local currency of a
customer depreciated. Due to these special circumstances,
an extended term of payment was negotiated. The con-
comitant interest loss has been accounted for. The
Management Board has reasonable assurance to assume
that the level of receivables will decline in the future.
Within the area of exporting activities (billing in US dollars)
there are risks associated with currency fluctuations.
10. CORPORATE GOVERNANCE
The Supervisory Board and the Management Board issued
a declaration of conformity in accordance with Section
§ 161 AktG (German Stock Corporation Act) and have made
these details permanently accessible to shareholders via
the corporate website.
11. DISCLOSURES IN ACCORDANCE WITHWPHG (SECURITIES TRADING ACT)
In the financial year 2002, the following reports were pub-
lished in accordance with the WpHG (Securities Trading Act):
11.1. (in April 2002)
Pursuant to Section 41 Paragraph 2 Sentence 1 of WpHG,
Mr. Hans Dieter Rössler, Bessenbach-Keilberg, has informed
us that, as at April 1, he is entitled to 45.25 % of the voting
rights in the Company.
As at April 1, 2002, the percentage of voting rights in curasan
AG belonging to 3i Group plc, London, and to be counted
additionally amounted to 11.72 %. Of the aforementioned
figure, 5.87 % of the voting rights are to be counted to 3i
Group plc., in accordance with Section 22 Paragraph 1
Number 1 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i
Investments plc, London, amounted to 11.74%. Of the
aforementioned figure, 11.74 % of the voting rights are to
be counted to 3i Investments plc, in accordance with
Section 22 Paragraph 1 Number 6 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i
Europartners II LP, London, amounted to 5.87 %.
As at April 1, 2002, the percentage of voting rights of 3i
Europartners II GP Ltd., London, amounted to 5.87%. Of the
aforementioned figure, 5.87 % of the voting rights are to
be counted to 3i Europartners II LP, in accordance with
Section 22 Paragraph 1 Number 1 WpHG.
As at April 1, 2002, the percentage of voting rights of 3i
Holdings plc, London, amounted to 5.87%. Of the
aforementioned figure, 5.87 % of the voting rights are to
be counted to 3i Holdings plc, in accordance with Section
22 Paragraph 1 Number 1 WpHG.
Kleinostheim, April 2002
The Management Board
11.2. (in April 2002)
As at April 23, 2002, the percentage of voting rights in
curasan AG belonging to 3i Group plc, London, and to be
counted additionally moved below the threshold of ten per
cent and now stands at 9.86%. Of the aforementioned
figure, 4.93 % of the voting rights are to be counted to 3i
Group plc., in accordance with Section 22 Paragraph 1
Number 1 WpHG.
As at April 23, 2002, the percentage of voting rights of 3i
Investments plc, London, moved below the threshold of ten
per cent and now stands at 9.86%. Of the aforementioned
figure, 9.86 % of the voting rights are to be counted to 3i
Investments plc, in accordance with Section 22 Paragraph
1 Number 6 WpHG.
As at April 23, 2002, the percentage of voting rights be-
longing to 3i Europartners II LP, London, moved below the
threshold of five per cent and now stands at 4.93%.
As at April 23, 2002, the percentage of voting rights be-
longing to 3i Europartners II GP Ltd., London, moved below
the threshold of five per cent and now stands at 4.93%. Of
the aforementioned figure, 4.93 % of the voting rights are
to be counted to 3i Europartners II LP, in accordance with
Section 22 Paragraph 1 Number 1 WpHG.
As at April 23, 2002, the percentage of voting rights of 3i
Holdings plc, London, moved below the threshold of five
per cent and now stands at 4.93%. Of the aforementioned
figure, 4.93 % of the voting rights are to be counted to 3i
Holdings plc, in accordance with Section 22 Paragraph 1
Number 1 WpHG.
Kleinostheim, April 2002
The Management Board
11.3 (in June 2002)
As at June 14, 2002, the percentage of voting rights in
curasan AG belonging to 3i Group plc, London, moved
below the threshold of five per cent, and the afore-
mentioned entity now holds no shares in the Company.
As at June 14, 2002, the percentage of voting rights in
curasan AG belonging to 3i Investments plc, London, moved
below the threshold of five per cent, and the afore-
mentioned entity now no longer manages shares in the
Company.
Kleinostheim, June 2002
The Management Board
Kleinostheim, 13 March 2003
Hans Dieter Rössler Helmut Trahmer
Notes
46
Auditor's Report
47
AUDITOR'S REPORT
“We have audited the annual financial statements, together with the bookkeeping system and the management report
which is a summarised management report over the actual position of the group and the actual position of curasan AG,
Kleinostheim, for the business year from 1 January 2002 to 31 December 2002. The maintenance of the books and records
and the preparation of the annual financial statements and management report in accordance with German commercial
law and supplementary provisions in the articles of incorporation are the responsibility of the Company’s management.
Our responsibility is to express an opinion on the annual financial statements, together with the bookkeeping system and
the management report based on our audit.
We conducted our audit of the annual financial statements in accordance with § 317 HGB ("Handelsgesetzbuch”: German
Commercial Code”) and the generally accepted standards for the audit of financial statements promulgated by the Institut
der Wirtschaftsprüfer in Deutschland (IDW). Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results of operations in the
annual financial statements in accordance with German principles of proper accounting and in the management report are
detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of
the Company and evaluations of possible misstatements are taken into account in the determination of audit procedures.
The effectiveness of the internal control system and the evidence supporting the disclosures in the books and records, the
annual financial statements and the management report are examined primarily on a test basis within the framework of
the audit. The audit includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the annual financial statements and management report We believe that
our audit provides a reasonable basis for our opinions.
Our audit has not led to any reservations.
In our opinion, the annual financial statements give a true and fair view of the net assets, financial position and results
of operations of the Company in accordance with German principles of proper accounting. On the whole the management
report provides a suitable understanding of the Company’s position and suitably presents the risks of future development.
Without qualifying our opinion we point out that the balance sheet includes amounts totalling 2,047 (a 000) due from
two group companies. These amounts can only be realised if the planned results and cash flows of these companies are
realised in the future. Furthermore, increased risks exist in the export market.
Without qualifying our opinion we point out that the liquidity situation of curasan AG is strained. The business plan
prepared by the executive board indicates the need for additional cash until October 2003, which according to
management, may be financed by various alternatives. If these financing alternatives cannot be realised and the business
plan cannot be met, the continuing existence of the company will be threatened.”
Frankfurt am Main, 13 March 2003
PKF PANNELL KERR FORSTER GMBH
Wirtschaftsprüfungsgesellschaft
W. Hofmann M. Jüngling
Wirtschaftsprüfer Wirtschaftsprüfer
(Certified Public Accountant) (Certified Public Accountant)
Fixed Assets Schedule for the Financial Year 2002 (gross analysis)
48
FIXED ASSETS SCHEDULE FOR THE FINANCIAL YEAR 2002 (GROSS ANALYSIS)
Acquisition/Manufacturing Costs
Carried forward Balance
a 1 Jan. 2002 Additions Disposals Reclassifications 31 Dec. 2002
I. Intangible assets
1. Concessions. industrial
property rights and similar
rights and values, as well
as licences thereto 3,760,411.85 1,361,732.91 17,265.00 928,144.49 6,033,024.25
2. Software 285,202.74 3,108.66 0.00 11,543.47 299,854.87
3. Prepayments 1,002,310.36 469,987.23 0.00 -939,687.96 532,609.63
5,047,924.95 1,834,828.80 17,265.00 0.00 6,865,488.75
II. Property, plant and
equipment
1. Land and leasehold rights
and buildings 1,887,281.08 0.00 0.00 0.00 1,887,281.08
2. Technical equipment,
plant and machinery 86,712.88 30,410.96 854.00 0.00 116,269.84
3. Other equipment, furniture
and fixtures, and office
equipment 1,469,892.49 149,990.59 6,231.00 79,223.34 1,692,875.42
4. Prepayments 76,957.29 2,266.05 0.00 (79,223.34) 0.00
3,520,843.74 182,667.60 7,085.00 0.00 3,696,426.34
III. Financial assets
1. Investments in subsidiaries 4,793,207.69 0.00 0.00 0.00 4,793,207.69
13,361,976.38 2,017,496.40 24,350.00 0.00 15,355,122.78
Fixed Assets Schedule for the Financial Year 2002 (gross analysis)
49
Depreciation and Amortisation Net book value
Carried forward Balance Balance Balance
1 Jan. 2002 Additions Disposals 31 Dec. 2002 31 Dec. 2002 31 Dec. 2001
1,019,697.19 438,231.88 0.00 1,457,929.07 4,575,095.17 2,740,714.68
91,210.93 43,998.41 0.00 135,209.34 164,645.53 193,991.81
0.00 0.00 0.00 0.00 532,609.63 1,002,310.36
1,110,908.13 482,230.29 0.00 1,593,138.42 5,272,350.33 3,937,016.85
266,860.99 79,447.12 0.00 346,308.11 1,540,972.97 1,620,420.09
53,907.88 7,690.62 0.00 61,598.50 54,671.34 32,805.00
768,878.08 257,249.19 0.00 1,026,127.27 666,748.15 701,014.49
0.00 0.00 0.00 0.00 0.00 76,957.29
1,089,646.95 344,386.93 0.00 1,434,033.88 2,262,392.46 2,431,196.87
0.00 0.00 0.00 0.00 4,793,207.69 4,793,207.69
2,200,555.08 826,617.22 0 3,027,172.30 12,327,950.48 11,161,421.41
In the year under review, the Management Board regularly
provided the Supervisory Board with detailed information,
both in written and verbal form, pertaining to the course
of business and the Company's state of affairs, as well as
all significant developments and events. The Supervisory
Board convened on four occasions; these meetings were
all attended by the full board.
Transactions requiring authorisation were assessed by the
Supervisory Board and discussed with the Management
Board. Within this context, the main focus was on issues
relating to the financing of the parent company and indi-
vidual group entities, as well as the risk management of
the Group. Furthermore, the Supervisory Board held in-
depth discussions with the Management Board regarding
the progression of operating activities, both in Germany
and abroad. As in the past, the Supervisory Board also
discussed the business development of acquisitions carried
out in previous years as well as the profitability of indi-
vidual group entities. In the financial year 2002, no special
committees were established within the Supervisory Board.
Supported by regular reports, the Supervisory Board was
always in a position to make a sound judgement regarding
the commercial and financial state of the Company and
the Group.
The financial statements and consolidated financial
statements for the financial year ended 31 December
2002, as well as the combined management report of the
curasan Group, in conjunction with the accounting records,
were audited by PKF Pannell Kerr Forster GmbH, Wirt-
schaftsprüfungsgesellschaft, Frankfurt am Main (Germany),
as officially appointed auditors, and were granted an un-
qualified audit opinion.
The Supervisory Board examined the financial statements
and consolidated financial statements, as well as the
combined management report, and raised no objections.
In its resolution passed on 13 March 2003, the Super-
visory Board approved the financial statements prepared
by the Management Board and audited by PKF Pannell
Kerr Forster GmbH, Wirtschaftsprüfungsgesellschaft. The
2002 financial statements are thereby adopted. The Super-
visory Board supports the proposal by the Management
Board to carry forward the net loss for the year.
The Supervisory Board would like to express its thanks to
the Management Board and to all employees for their
committed contributions in the financial year 2002.
Kleinostheim, 13 March 2003
The Supervisory Board Dr. Detlef Wilke, Chairman
Report of the Supervisory Board
50
REPORT OF THE SUPERVISORY BOARD
Dr. Detlef Wilke, Chairman
MANAGEMENT BOARD
Hans Dieter Rössler
55 years of age; degree in business administration; CEO and Managing Director since 1988
Helmut Trahmer
47 years of age; degree in business administration (FH); CFO since 2000
SUPERVISORY BOARD
Dr. Detlef Wilke (Chairman)
Managing Partner at Dr. Wilke & Partner Biotech Consulting GmbH, Wennigsen
Hans-Günter Niederehe (stv. Vorsitzender)
Self-employed management consultant, Mainz.
Dr. Konstantin Rogalla
Managing Partner at Pflüger, Schulz, Rogalla Unternehmensberatung GmbH, Hamburg
Board Members of the Company
51
BOARD MEMBERS OF THE COMPANY
The Supervisory Board members
in the background (starting left):
Hans-Günter Niederehe,
Dr. Detlef Wilke,
Dr. Konstantin Rogalla
The Management Board
in the foreground:
Hans Dieter Rössler,
Helmut Trahmer
Anaesthesia: Elimination of pain induced by drugs (either local or general anaes-
thetics).
Anaesthetic: Drug that eliminates the sensation of pain.
Antibiotic: Anti-bacterial drug
Anti-infective: Drug that treats various types of infection (e.g. bacterial, viral and
fungal infections)
Bone regeneration material: Material with all the properties of bone replacement material but
which is also highly porous and is resorbed as the new bone grows.
Bone replacement material: Material that is not toxic (poisonous), immunogenic or allergenic, that
causes neither inflammation nor infection, and is thus suitable to be
inserted either permanently or temporarily at the site of a bone defect.
Fibrinolytics: Drugs that break down (or lyse) blood clots (thrombi or emboli); used
for heart attacks, pulmonary embolism, venous thrombosis and arterial
occlusions.
Generic drugs: Drugs no longer subject to patent protection and which can
consequently be offered at a much lower price.
Generics plus: Generic drugs containing an enhancement to the original preparation.
Hyaluronic acid: Highly viscous mucopolysaccharide; plays an important role in
lubricating joints.
Implantologist: Dentist specialising in implants.
Local anaesthetic: Drug that eliminates the sensation of pain in or from a specific part of
the body.
Opioids: A family of drugs that fights chronic pain; available on prescription only.
Orthopaedist: Doctor specialising in treating congenital or acquired deformities and
functional disorders of the spine and joints.
PRP: Platelet-rich plasma: contains autologous growth factors.
Tissue engineering: The growth of hard and/or soft tissue (skin and bones) in the laboratory.
Traumatology: The study of the causes, prevention and treatment of trauma.
Glossary
52
GLOSSARY
FINANCIAL CALENDAR
25 March 2003 Financial Statements Press Conference
25 March 2003 DVFA Analysts' Conference
13 May 2003 Publication of Interim Report for Q1
26 June 2003 General Meeting of Shareholders
12 August 2003 Publication of Interim Report for Q2
11 November 2003 Publication of Interim Report for Q3
IMPRINT
curasan AG
Lindigstraße 4
D-63801 Kleinostheim
Tel.: ++49 (0) 6027 4686-0
Fax: ++49 (0) 6027 4686-86
www.curasan.de
Concept, Text and Design:
ZIEGLER & ZIEGLER IR Consulting GmbH, Hamburg
Contact:curasan AG · Lindigstrasse 4 · 63801 KleinostheimTel. ++49 (0)6027 – 46 86 – 0 · fax +49 (0)6027 – 46 86 – [email protected] · www.curasan.de
Investor Relations:Ralph WintermantelTel. ++49 (0)6027 – 46 86 – 468 · fax +49 (0)6027 – 46 86 – [email protected]