annual report 2009

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Annual Report + Independent auditors’ report ‘09 www.bosnalijek.ba + serving H ealth

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Page 1: Annual Report 2009

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Annu

al Re

port ‘09

Annual Report+Independent auditors’ report ‘09

www.bosnalijek.ba

+ serving Health

+ serving HealthBOSNALIJEK - Pharmaceutical and chemical industry, joint stock company Jukićeva 53, Sarajevo, Bosnia and Herzegovina tel: + 387 33 25 44 00, fax: + 387 33 66 49 71 www.bosnalijek.ba, [email protected]

www.bosnalijek.ba

RESPONSIBILITY PROFESSIONALISM COMPETENCE/EXPERTISE TEAM WORK/COOPERATION OPEN COMMUNICATION/HONESTY RESPECT

Page 2: Annual Report 2009

www.bosnalijek.ba

Annual Report +Independent Auditors’ Report ‘09

Page 3: Annual Report 2009

PROFESSIONALISMRESPONSIBILITYWe act responsibly in our jobs we per-form, towards our colleagues, users and other external publics;We accept assignments and challenges ahead of us and take the responsibility to successfully overcome them;We are focused on solutions and accom-plishing of results, and not on problems;We assume the responsibility for our success, as well as for our own mistakes;We are ready to make a decision and ac-cept the responsibility for risks, activities and results arising from it.

We insist on high standards in perform-ing business tasks;We make our decisions on the basis of facts;We are committed to fulfilling expecta-tions of our users and other publics;We endeavour to overcome the obstacles in our work resulting from the lack of time, resources or complex and demand-ing circumstances;We use the knowledge and experience from previous situations for more suc-cessful solving of problems in the pres-ent period;We approach our job positively and with enthusiasm.

2 Vrijednosti ‘09

COMPETENCE/EXPERTISE

We set ourselves high standards in the knowledge, professionalism and com-petence and we are devoted to their ac-complishment;We always strive for developing and finding new and better methods, pro-cedures and technologies for more suc-cessful performance of business duties;We endeavour to achieve the defined goals and expected business results despite the obstacles and in accordance with personal standards and adopted quality standards in the Company.

Values

Page 4: Annual Report 2009

We place the interest of the team, unit, department and Company above our personal interests;We are aware of the fact that the con-tribution of all team members is indis-pensable for a successful planning and realization of a common goal, along with respecting different opinions and approaches to problem solving;We believe that quality team work goes beyond individual achievements with-out diminishing the significance of indi-vidual results.

TEAM WORK/COOPERATION

OPENCOMMUNICATION/HONESTY

RESPECTWe insist on high ethical and moral standards in relationships with our col-leagues, users and other external publics;We cherish fair, honest and correct rela-tionships in the Company;We treat everyone with the same respect and appreciation regardless of their func-tion, gender, age or experience;We communicate with our colleagues and associates in a kind and polite man-ner and encourage them to share their own opinions and ideas;We show our respect through constant communication, listening to what the other person has to say and analyzing of other people’s opinions before we pro-vide an answer or suggest an activity.

We create an environment where we can all freely express our own opinion, needs and problems and point out what is im-portant to us;We cherish open communication and an atmosphere where original ideas and creative problem solving are appreciated;We strive to achieve clear, open and con-sistent mutual communication;We try to appropriately, timely and ob-jectively inform our colleagues and as-sociates on issues which concern them in order for them to be more successful in their work.

Vrijednosti ‘09 3

Page 5: Annual Report 2009

Basic financial indicatorsLetter of the Company CEOPrinciples of corporate governanceSupervisory Board ReportInformation for investorsReview of operations Sales results Sale structure by groups of products Bosnia and Herzegovina market International markets Development and registrations Quality system Environmental responsibility Health and safety responsibility Technical operations, IT support and investments Human resources Social responsibility

568

1214151617202126283031363840

TABLE OFCONTENTS‘09

PROFESSIONALISM COMPETENCE/EXPERTISERESPONSIBILITY

Report by the Audit Committee Financial reports and independent auditors’ report Who is who in Bosnalijek Companies abroadRepresentative offices and agencies abroad Product portfolio

424366686870

www.bosnalijek.ba

Page 6: Annual Report 2009

BASIC FINANCIAL INDICATORS

Net sales

Operative profit (EBITDA)

EBITDA margin

Net income

Net profit margin

Long-term assets

Shor t-term assets

Capital

Long-term liabilities

Shor t-term liabilities

Sale/employee

Net income/employee

2009

109.551

19.517

17,82%

8.989

8,21%

88.296

85.169

113.893

5.371

54.200

176

14

2008

107.128

20.515

19,15%

8.207

7,66%

85.718

71.244

107.474

7.689

41.799

172

13

2009

56.012

9.979

17,82%

4.596

8,21%

45.145

43.546

58.233

2.746

27.712

90

7

2008

54.774

10.489

19,15%

4.196

7,66%

43.827

36.426

54.951

3.931

21.371

88

7

‘000 KM ‘000 EUR

* Net profit/value of property in end of the year** Net profit/value of capital in the end of year

INDEXES

Short-term relations

Return on assets (ROA)*

Return on equity (ROE)**

2009

1,6

5,18%

7,89%

2008

1,7

5,00%

7,80%

INFORMACIJE O DIONICAMA

Total number of shares

Earning per share in KM

Share price in end of the year KM

P/E ratio

Market capitalisation in ‘000 KM

2009

7.829.987

1,15

16,37

14,3

128.177

2008

7.829.987

1,26

16,94

13,4

132.640

TEAM WORK/COOPERATION

OPENCOMMUNICATION/HONESTY

RESPECT

Page 7: Annual Report 2009

We have just gone out of a quite dif-ficult business year in which we man-aged to achieve the defined goals. We realised significant investments in development projects and production capacities, and continued strengthen-ing our marketing teams in Bosnia and Herzegovina and international markets.

Our sales revenue totalled 109.6 mil-lion KM, with net profit of 9.0 million KM. Our profit at BH market was 69.8 million KM, equal to profit from year 2008. At international markets, Bos-nalijek faced annual growth of 6.3% with profit of 39.7 million KM.

Dear shareholders, business partners and employees,

Revenue growth rate at international mar-kets was lower than in previous years, as we did not accomplish the defined aims we had at the Libyan market. Moreover, the economic crisis has affected realisation of our plans, mostly in Ukraine and Serbia, facing significant devaluations of their lo-cal currencies, what had a negative effect on our sales value in these countries. I am aware that all the employees from export markets have put their maximum effort for which I extend my congratulations. I am aware that we have all the prerequisites to continue the growth at international markets.

Letter of the Company CEO There have been significant changes in B&H market, due to aggressive approach of international producers with non-real-istically low prices and lobbying at all au-thority levels for complete taking over of BH market, in which domestic producers have only 20% share. Therefore, drug pric-es were lowered during the year, and that trend will be continued in future. Owing to the fact that we accomplished enviable results in a chaotic business surrounding, I believe that Bosnalijek is well-positioned and totally ready to retain the status of market leader in B&H in future.

6 Letter of the Company CEO ‘09

Edin ArslanagićBosnalijek CEO

Page 8: Annual Report 2009

We were quite successful in launching new products at B&H market. Namely, we launched 9 new products in past year. Thirty three first registration certificates were received in eleven countries abroad, 48 registrations have been renewed in 6 countries, so that we had 383 active mar-keting authorisations approvals in the end of 2009. Despite the fact that regulatory requirements are constantly becoming stricter, I am very much satisfied with the results accomplished in this field. We shall continue intensive work on introducing new products and strengthening regula-tory teams in Bosnalijek.

Bosnalijek shares, as well as capital market in B&H, were not immune to the negative surrounding of financial sector during the year, and we faced a decrease in sales and drop in prices as compared to year 2008. Good business results accomplished in sec-ond half of year 2009 have strengthened the trust of investors in Bosnalijek, so that a share, after a decrease to amount below nominal price in first quarter, has reached maximum value of 18.11 KM, and it’s value was 16.37 KM in end of the year.

Edin Arslanagić, BSc Chem EngBosnalijek CEO

During 2009, all the employees gave their maximum contribution in performing the defined Company goals. We all together contributed to maximisation of profit for our shareholders. Bosnalijek will continue to operate in very turbulent conditions in its full capacity, es-pecially in B&H. I am certain that we shall successfully finish the first decade of 21st century.

In the end, I would like to emphasise one thing that makes me very happy which is a fact that we managed to create a new generation of young, capable and moti-vated personnel in past 10 years, who will successfully lead Bosnalijek on the path to its establishment into the leading phar-maceutical company of Southeast Europe, and thusly the most significant factor in BH economy.

Letter of the Company CEO ‘09 7

Page 9: Annual Report 2009

ManagementThe Management is responsible for run-ning the operations and producing ad-ditional value for shareholders, work or-ganisation, agency and representation of the Company and ensuring the legality of operations. The Management reports the Supervisory Board on financial and business results on a regular basis, and implements decisions of the Shareholders Assembly.Bosnalijek Management consists of the CEO and executive directors who are re-sponsible for coordination of activities, making and supervising execution of op-erational decisions within their responsi-bilities, and in accordance with Company plans.

Bosnalijek management consists of: Edin Arslanagić, Bosnalijek CEO, Belma Abazović, Executive Director for Produc-tion and Development, Nermin Zubčević, Executive Director for Quality and Regula-tion, Šefik Handžić, Executive Director for General Finances and Nedim Vilogorac, Executive Director for Corporate Finances and Communication.

With observing principles of corporate governance, Bos-nalijek performs operations in accordance with the best interests of its shareholders and completely fulfils the ob-ligations of regular reporting on operations. Company management bodies are obligat-ed to adhere to ethical principles and busi-ness operations defined by the Company Statute and the relevant legal rules.

Having been quoted on the Sarajevo Stock Exchange (SASE) in year 2006, Bosnalijek has accepted the obligation for regular and transparent reporting to financial market about all significant business processes.

Bosnalijek has accepted Corporate Gover-nance Code for companies listed on the Sa-rajevo Stock Exchange, which makes avail-able access to information on Company operations, in accordance with the corpo-rate governance principles.

Supervisory BoardPursuant to Bosnalijek Statute, Supervisory Board shall appoint the Company Manage-ment and supervise its work, consider and approve financial statements, consider the Company strategy, investment policy and development of operations, and it will submit reports to Shareholders Assembly. In addition, the Supervisory Board will sug-gest to Shareholders Assembly to select an external auditor, method for distributing profit and other decisions in charge of the Shareholders Assembly. Supervisory Board consists of a president and four members and they are appointed for a four year mandate.

As decided at Shareholders Assembly held on 28.06.2008, Supervisory Board consist-ing of the following persons was selected: Veljko Trivun, PhD, LLB, president, and the following members Abdulhakim Mo-hamed El-Misurati, MSc Acc, Rifat Klopić, PhD, Abdul-Umid Šalaka, Prim MD and Edin Buljubašić, LLB.

Principles of corporate governance

8 Principles of corporate governance ‘09

Page 10: Annual Report 2009

Auditing Board Auditing Board is made of a president and two members. The Auditing Board is authorised and responsible for preparing and suggesting procedures that need to minimise the risk of Company breaches and violations, to ensure and supervise implementation of accounting standards and propose accounting policies.

Following decision of the Shareholders As-sembly held on 28th June 2008, Auditing Board was selected consisting of Željko Kordić - president, and members Sead Sarvan and Rabija Avduli. Mandate of the Auditing Board will last four years.

Shareholders’ Assembly Shareholders Assembly shall adopt annual report on Company operations which in-cludes financial statement and an inde-pendent auditor’s report. It has authority in appointing and dismissing Supervisory Board and Auditing Board members, con-siders the work of Supervisory Board, de-cides on distribution of profit, changes and supplements to Company Statute, chang-es in original capital and status changes of the Company and appointing external auditor and Auditing Board. Annual Shareholders Assembly held on 20th June 2009 has made the following decisions:

Decision on adopting Annual Report on Company operations for year 2008, with reports from auditor, Supervisory Board and Auditing Board;Decision on allocation and method of us-age of profit gained according to Annual Report on Operations for 2008;Decision on allocating a part of profit gained in year 2007 into Company’s re-serves fund;Decision on adopting Company Business Plan for year 2009; Decision on changes and supplements to Bosnalijek d.d. Statute

Principles of corporate governance ‘09 9

Page 11: Annual Report 2009

MissionVisionStrategy

10 Mission+Vision+Strategy ‘09

Page 12: Annual Report 2009

Our mission is to improve the quality of life by producing, delivering and selling the new best-quality pharmaceuticals and related products.We shall maintain highest international standards related to the quality of products and protection of the environment. We shall permanently endeavour to meet expectations of our customers, shareholders and employees.

Our vision Our vision is to be a reputable and progressive pharmaceutical company, capable to compete in the world pharmaceutical market.We shall turn the vision into reality by de-veloping our own proprietary portfolio of the best quality pharmaceuticals, by investing into modern production facilities and by complying with regulatory requirements of the most demanding markets.

Our long-term strategyis based on development, production and sale of generics under proprietary trade names, in compliance with international standards applicable for the pharmaceutical industry.Intensified investments into product devel-opment and promotion at local and interna-tional markets, along with strengthening of international sales network, will assure fur-ther growth of our company.

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Mission+Vision+Strategy ‘09 11

Page 13: Annual Report 2009

On 18th July 2008, Supervisory Board has in accordance with Law on Organisations appointed Edin Arslanagić as Company CEO for a period of four years. After that, the following persons were appointed as executive directors: Belma Abazović, Ned-im Vilogorac, Nermin Zubčević and Šefik Handžić on 1st August 2009.

Pursuant to legal authorisations and re-sponsibilities, the Supervisory Board has monitored and supervised the work of Company Management and its opera-tions, and it has monitored and considered the entire problematics of Company op-erations for the purpose of achieving the planned business goals. In its work, the Su-pervisory Board has observed the Rules for managing stock companies.

In year 2009, Bosnalijek business opera-tions were in accordance with the defined Business Plan for 2009 with minimum dis-crepancy resulting from the stagnation of pharmaceutical market due to economic crisis as well as more expressive trend for decreasing drug product prices.

The accomplished sales revenue growth of 2.26 % as compared to the one from year 2008, has confirmed trend for growth of sales revenue and stability in business. Bosnalijek has faced sales revenue in ex-port amounting to 39.69 million KM with a growth of 6.26% as compared to 2008, generating sales revenue of 69.86 million KM in B&H market, the same as in year 2008, with a slight increase of 0.12%. The Company had a profit of 8.989 million KM, what is greater by 9.5% as compared to year 2008.

The Supervisory Board has appraised as a satisfactory result the total accomplished Company business achievements, so that the Supervisory Board has accordingly ap-praised as successful the work of Company Management, which has realised positive financial results in very complex business conditions with its professionalism and endeavours, and retained high financial stability of the Company.

Supervisory Board Report Supervisory Board of Bosnalijek d.d. is an independent managing body in Company management structure, act-ing in accordance with the Company Statute, decisions of Shareholders As-sembly and laws of Bosnia and Herze-govina and Federation of Bosnia and Herzegovina in the best interests of Company shareholders.

The Supervisory Board consists of Veljko Trivun, president, and Abdul-hakim. Mohamed El Misurati, Abdul-Umid Šalaka, Edin Buljubašić and Rifat Klopić, members of SB, appointed by the Shareholders Assembly held on 28th June 2008, for a four-year period.

12 Supervisory Board Report ‘09

Veljko Trivun, LLB, PhDSupervisory Board President

Page 14: Annual Report 2009

Veljko Trivun, LLB, PhD Supervisory Board President

Sarajevo, 25 May 2010

In the period between two Shareholder Assemblies, at which annual report on operations is to be considered, the Su-pervisory Board has held five sessions for addressing issues on functioning and op-erations of the Company, and reached 20 decisions dealing with issues significant for realisation of the function for supervising Company operations, within Supervisory Board competence, implementing deci-sions of Shareholders Assembly and pre-paring draft decisions to the Shareholders Assembly.

When supervising the Company opera-tions, the Supervisory Board has consid-ered and adopted Company Report on Operations for period January – June 2009, and the Supervisory Board has accepted Company Report on Operations by annual account for year 2009 with income state-ment and balance sheet on session held on 26.03.2010.

Additionally, the Supervisory Board has adopted Annual Report on Company Op-erations for 2009 with reports from auditor, Supervisory Board and Auditing Report at the session held on 25.05.2010, it has also accepted Company Management sug-gestions for allocation and method of us-ing profit generated in 2009 as well as on allocating a part of profit from year 2008; decisions have been made suggesting to Shareholders Assembly to distribute profit from 2009 into the reserves fund and to invest into improvement and develop-ment of Company activities, as well as to allocate a part of profit gained in 2008 into the Company reserves fund. At the same session, the Supervisory Board has defined a draft Business Plan for year 2010, which shall be submitted to Shareholders Assem-bly together with Annual Report on Com-pany Operations for 2009.

The Supervisory Board has cooperated with the Company Management, in accor-dance with Company Statute and Law, and it was regularly reported by the Manage-ment on all important business events. In direct communication with the Manage-ment, this has enabled Supervisory Board a complete and unobstructed supervision over the Company business dealings.

Based on a continuous supervision of Company operations and adopted reports on Company operations by the Manage-ment, the Supervisory Board hereby con-cludes that Company business operations in 2009 were conducted in accordance with decisions of the Shareholders Assem-bly, Company Statute, law as well as other regulations.

Supervisory Board Report ‘09 13

Page 15: Annual Report 2009

%STRUCTURE OFBOSNALIJEK SHAREHOLDERS

FB&H IFC Libya B&H investors

Int investors

60

50

40

30

20

10

0

31. 12. 200931. 12. 2008

Price on 31 December

Highest price in year

Lowest price in year

Number of traded shares

Nominal value

Earning per a share in end of the period

P/E ratio

Market capitalisation in end of the period (‘000 KM)

Number of issued shares

2009

16,37

18,11

9,53

620.863

10,00

1,15

14,3

128.176

7.829.987

2008

16,94

49,52

13,7

669.553

10,00

1,23

13,4

132.640

7.829.987

INFORMATION ON SHARES (KM)

Information for investors

In 2009, Bosnalijek was included in BATX INDEX (Bosnian Traded Index) traded at Vi-enna Stock Exchange. This index monitors price movement of six largest and most liquid companies in Bosnia and Herzegovina market, including four companies from the Sarajevo Stock Exchange and two from Banja Luka Stock Exchange.The initial share price was 16.94 KM in 2009, and end price 16.37 KM. Maximum daily average share price during the year was 18.11 KM, while the lowest price was 9.53 KM.

As decided by the Shareholders Assembly in 2009, a dividend amounting to 0.28 KM per share was paid to shareholders. The Company will in future reach policy on dividends on annual basis.

Structure of shareholders

There have been no significant changes in the Company capital structure in 2009. Government of Federation of B&H is still the largest single shareholder owning 19.3% share in Bosnalijek capital. Libyan Economic and Social Development Fund is the second largest shareholder holding 8.8%, and International Finance Corporation - IFC, member of World Bank, with 8.4 % por-tion in the capital.

Foreign investors had 31.4% portion in Bosnalijek capital in end of the year, while the remaining belonged to institutional and private investors from Bosnia and Her-zegovina.Totally 22 countries were represented in Bosnalijek shareholders structure in end of 2009.

The capital market was character-ised with low liquidity in 2009 as a continued trend from 2008 caused by the global financial crisis. Although the value of Bosnalijek share has dropped below the nominal value (10.00 KM) in first quarter of 2009, a share price has been stabilised in 2009 as compared to year 2008.

Bosnalijek market capitalisation in the end of 2009 has amounted to 28 million KM, what is by 3% lower as compared to previ-ous year. It was traded with a smaller num-ber of shares than in past year. Even de-spite that, Bosnalijek was ranked amongst top 5 most liquid companies at the Sara-jevo Stock Exchange in year 2009. Total number of marketed shares was 620.863, with annual drop of sale of 7%.

TRADING1.000

TRADINGPRICE KM PRICE

25

20

15

10

5

0

20

18

16

14

12

10

8

6

4

2

0

PRICES AND TRADING OF BOSNALIJEK SHARESIN 2009

01.2009 02.2009 03.2009 04.2009 05.2009 06.2009 07.2009 08.2009 09.2009 10.2009 11.2009 12.2009

14 Information for investors ‘09

Page 16: Annual Report 2009

Review of operations ‘09 15

Review of operations

* 109,55 million KM sales revenue

* continuation of Bosnalijek successful operations

We realisestrategic goal -with the continuous growthof export, its portion in totalsales revenue is increased.

In realising the long-term development strategy and planned busi-ness goals, Bosnalijek has faced sales revenue growth from 1997 until 2009, with the average annual rate of 16.20%. The sales rev-enues were tripled in past 10 years.

100

80

60

40

20

0

%BiH

EXPORT

‘02. ‘09.91% 9% 64% 36%

Page 17: Annual Report 2009

In realising the long-term development strategy and planned business goals, Bos-nalijek has faced sales revenue growth from 1997 until 2009, with the average annual rate of 16.20%. The sales revenues were tripled in past 10 years.Successful operations of Bosnalijek in 2009 and growth of sale revenues primarily re-sult from realising Bosnalijek long-term strategic goals directed at development of international operations, but also retaining leading position at local pharmaceutical market. This means that several-year preparations in creating conditions for international sale, careful formation of product portfolio for each of the export markets, good-qual-ity products and documentation for their registration, as well as efficient representa-tive and distributive network abroad have ensured significant sale growth rates in ex-port in year 2009.

In year 2009, Bosnalijek has realised growth of sales and quite successful business results, thus confirming the trend of sales revenue growth and sta-bility in operations. The accomplished business results are even more significant as they were realised in world recession conditions that has significantly struck all Bos-nalijek sale markets, which were char-acterised in 2009 with strengthening of generics pharmaceutical industry, slowing market growth rates, making stricter regulations in the field of drugs manufacture and sale, restrictive policy of healthcare insurance funds, pres-sures on drug prices lowering, as well as decrease of life standard and con-sumption of self-treatment drugs.

The realised sales revenue amounted to 109.55 million KM, what is an increase by 2.26% as compared to previous year, pri-marily thanks to our international sales.

Export sale has generated profit of 39.69 million KM with a growth of 6.26% in comparison to year 2008 and a portion in the total sales revenue of 36.23%.

With expressed market instability in Bos-nia and Herzegovina, as well as constantly growing competition and pressures to lower drug prices, Bosnalijek’s sale reve-nue was 69.86 million KM, thus managing to retain sales value at the last year’s level with a slight increase of 0.12%.

Sales results

TOTAL SALEIN 2009 BY MARKETS (KM)

B&H

* Products

* Ser vices

EXPORT

* Southeast Europe

* CIS and Russia region

* Middle East, Africa and Asia

* Ser vices

TOTAL

2009

69.858.091

69.746.820

111.271

39.692.493

12.245.907

25.996.037

563.091

887.458

109.550.584

%

63,77

63,67

0,10

36,23

11,18

23,73

0,51

0,81

100,00

2008

69.774.762

69.652.307

122.455

37.353.056

11.237.419

19.147.882

6.967.755

107.127.818

%

65,13

65,02

0,11

34,87

10,49

17,87

6,50

100,00

Index

100,12

100,14

90,87

106,26

108,97

135,76

8,08

102,26

16 Review of operations ‘09

120

100

80

60

40

20

0‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09

SALES GROWTH1997 - 2009 (KM)1.000.000

Page 18: Annual Report 2009

Sale structureby groups of products

Drug manufacture was a basic activity of Bosnalijek in year 2009 as well. Our sale has given us profit of 107.47 million KM, what is an increase of 1.41% as compared to year

2008.

Drugs sale in 2009 has generated 98.10% of total sales revenue, while the remaining 1.90% refers to produc-tion and sale of disinfectants for me-dicinal usage and mass consumption, as well as providing services in B&H and abroad.

The services rendered in 2009 are mainly continuation of the commenced long last-ing collaboration with the Libyan partners and we consider them very important, as they include transfer of Bosnalijek experts’ knowledge in the field of quality manage-ment and quality control.

Bosnalijek own products had a share of 87.76% in total sales revenue, while 11.24% share belonged to pharmaceuticals from our long-term cooperation with pharma-ceutical company Eli Lilly.

Bosnalijek product portfolio covers almost all pharmaco-therapeutic groups and pro-vides medications for the most frequent diseases. Therefore, cardiovascular drugs and medicines for treating digestive tract are the leading Bosnalijek products, which are followed by medicines for the nervous system and antiinfectives.

Lopril®H and Lysobact® have the leading positions by value of total Bosnalijek sale in 2009, and they are followed by Enterofuryl®, Lopril®, Ranibos®, Xiclav®/Xiclav®2X and Nomigren®.

We launched 9 new products to Bosnia and Herzegovina market in 2009..Prescription medicines still have a domi-nant portion of 74.19%, while non-pre-scription medicines or OTC products hold only 25.81%, with especially significant sale of these products at export markets.

Following the world trends and a tenden-cy for growing consumption of self-treat-ment drugs, Bosnalijek has formed its OTC programme on a carefully chosen prod-uct portfolio. Efficacy and quality of these products in self-treatment is confirmed by increase of their sale and numerous com-petitors, financial crisis and decreased pur-chasing power of end users.

Lysobact®, Bronchobos®, Pilfud® and Royal Jelly® are already well-built and positioned Bosnalijek brands at many international markets.

A

C

B

D

J

M

N

R

ALIMENTARY TRACT AND METABOLISM

CARDIOVASCULAR SYSTEM

BLOOD AND BLOOD FORMING ORGANS

DERMATOLOGICALS

ANTIINFECTIVES

MUSCULO-SCELETAL SYSTEM

NERVOUS SYSTEM

RESPIRATORY SYISTEM

OTHER

34,6%

34,1%

1%

1,9%

11,2%

1,4%

12,3%

2,3%

1,2%

SALE STRUCTUREBY PHARMACO-THERAPEUTIC GROUPS IN 2009

SALE STRUCTUREBY PRODUCT TYPES IN (KM)

Medicines

* Our own medicines

* Medicines – cooperation with partners

Disinfectants

Services

* Services – local market

* Services – international market

TOTAL

2009

107.466.471

95.391.650

12.074.822

1.085.384

998.729

111.271

887.458

109.550.584

%

98,10

87,08

11,02

0,99

0,91

0,10

0,81

100,00

2008

105.971.098

92.219.785

13.751.312

1.034.265

122.455

122.455

107.127.818

%

98,92

86,08

12,84

0,97

0,11

0,11

100,00

Index

101,41

103,44

87,81

104,94

815,59

90,87

102,26

Review of operations ‘09 17

Page 19: Annual Report 2009

Bosnalijek OTC programme • is represented by strong brands• it guarantees qualitative and efficient drugs• it stimulates self-treatment

1. FENIX ®(pantoprazole) tablets 28x20 mg2. BETHASAL® (betamethazone+salicylic acid) lotion (0.5+20)mg/g 50 ml3. DIFEN® (diclofenac) injection 5x75mg/3ml4. DIFEN® (diclofenac) retard tablets 20x100 mg5. DUOCLAR ® (clarithromycin) film-coated tbl with extended release 7x500 mg6. TOZAR® (atorvastatin) film-coated tablets 30x10 mg7. TOZAR® (atorvastatin) film-coated tablets 30x20 mg8. LOPRIL®H plus (lisinopril+hydrochlorothiazide), tablets 20 and 30x(20+25) mg9. GOLDERM® (sucralfate), liquid gel 30 g (medical device)

NEW PRODUCTS IN THE MARKET

18 Review of operations ‘09

Page 20: Annual Report 2009

Review of operations ‘09 19

Page 21: Annual Report 2009

Bosnia and Herzegovina Market

Our products and services’ sale in 2009 was increased by 3.14% as compared to previous year. This means that that share of our product portfolio and ser-vices portfolio sales in the total sales revenue at BH market was increased from 80.29% in 2008 to 82.72% in 2009.

Disinfectants sale faced an increase of 16.72% in comparison to past year, as a result of Bosnalijek efforts to satisfy needs of the key buyers caused by the enlarged consumption, especially during H1N1 vi-rus epidemics. However, this product pro-gramme still sees low profitability caused by inadequate implementation of the Ex-cise Law in B&H and unjustified payment of high excise taxes on importation of al-cohol, which is a basic raw-material in the manufacture of these products.

Along with the overall aggravation of eco-nomic situation, there has been utter non-functionality of the local pharmaceutical market in year 2009 as well. Namely, our expectations that adoption of a unique Law on Medicines and Medical Devices in B&H will finally result in arrang-ing the pharmaceutical market according to international standards did not come true. Slow implementation of this Law, es-pecially in reaching by-laws, in area of reg-istration and drug prices, as well as making unique drugs list to be financed from the healthcare insurance fund have contrib-uted to deterioration of pharmaceutical market and aggravation of conditions for its stabilisation.

The only result from reaching the new Law was legalisation of marketing of drugs man-ufactured in eastern surrounding countries at the entire BH market. Those drugs com-pete with Bosnalijek products with non-realistically low prices, without institutional quality control for such medications and a tendency of poor cantonal healthcare insur-ance funds for their financing.

Bosnalijek has accomplished an enviable re-sult at domestic market in such conditions, realising sales revenue of 69.86 million KM (products and providing services), thus keeping its leading position.

SALE IN B&HBY PROGRAMMES (KM)

OUR OWN PROGRAMMES

+ Our own medicines

+ Disinfectants

+ Ser vices

COOPERATION WITH PARTNERS

+ Eli Lilly

+ Novar tis

TOTAL

2009

57.783.270

56.586.615

1.085.384

111.271

12.074.822

12.070.264

4.558

69.858.092

%

82,72

81,00

1,55

0,16

17,28

17,28

0,01

100,00

2008.

56.023.449

54.971.114

929.880

122.455

13.751.312

13.244.495

506.817

69.774.761

%

80,29

78,78

1,33

0,18

19,71

18,98

0,73

100,00

2009/2008

103,14

102,94

116,72

90,87

87,81

91,13

0,90

100,12

SALE STRUCTUREOF BY TYPES OF PRODUCTS IN 2009.

OUR OWN MEDICINES

MEDICINES COOPERATION WITH PARTNERS

DISINFECTANT

SERVICES

81%

17,28%

1,55%

0,16%

1,55%

0,16%

20 Review of operations ‘09

Page 22: Annual Report 2009

Most marketedBosnalijek brandsin export in 2009 were

LYSOBACT®ENTEROFURYL®LOPRIL®HNOMIGREN®LOPRIL®STOMATIDIN®

InternationalMarkets

Bosnalijek’s export has grown nine times in the period from 2002 – 2009, realising cur-rently almost 40% of products and services’ revenue at international markets.

In year 2009, Bosnalijek exported products to 22 international markets, including 7 French-speaking African countries. CIS countries have a very significant potential among the above-mentioned markets. Therefore, the structure of total interna-tional sales revenue has continuously been increased in favour of CIS and Russia region, followed by Southeast Europe with markets of former Yugoslavia and Albania, where Bosnalijek is well-positioned as a reliable and qualitative pharmaceutical producer.

CIS AND RUSSIA

SOUTHEAST EUROPE

MIDDLE EAST, AFRICA AND ASIA

65,49%

30,85%

3,65%

Review of operations ‘09 21

A continuous increase of export and ex-panding of Bosnalijek export markets, especially in conditions of general re-cession represents valorisation of long-term investments in development of international business operations and a confirmation of highly professional knowledge and abilities of our own personnel in the field of marketing and sale.

Our products and services sale at ex-port markets has generated profit amounting to 39.69 million KM in 2009, i.e. the export was increased by 6.26% in comparison to previous year having a portion of 36.23% in total sales revenue.

EXPORT SALEBY REGIONSA/MARKETS (KM)

Southeast Europe

Serbia

Kosovo

Macedonia

Albania

Croatia

Montenegro

CIS and Russia

Russia

Ukraine

Moldova

Georgia

Azerbaijan

Middle East, Africa and Asia

Qatar

Kuwait

Yemen

French-speaking Africa

Libya

- sale of products

- ser vices

EXPORT

2009

12.245.907

1.853.033

3.643.445

1.613.743

1.337.602

2.546.195

1.251.888

25.996.037

16.112.789

7.815.509

1.795.067

135.233

137.439

1.450.550

315.155

134.475

52.847

60.615

887.458

887.458

39.692.494

%

30,85

4,67

9,18

4,07

3,37

6,41

3,15

65,49

40,59

19,69

4,52

0,34

0,35

3,65

0,79

0,34

0,13

0,15

2,24

2,24

100,00

2008

11.237.419

1.884.117

3.255.108

1.398.605

968.465

2.113.936

1.617.187

19.147.882

8.958.084

8.108.180

1.938.766

142.852

6.967.755

197.907

18.346

266.125

6.485.377

6.485.377

37.353.055

%

30,08

5,04

8,71

3,74

2,59

5,66

4,33

51,26

23,98

21,71

5,19

0,38

18,65

0,53

0,05

0,71

17,36

17,36

100,00

2009/2008

108,97

98,35

111,93

115,38

138,12

120,45

77,41

135,76

179,87

96,39

92,59

94,67

20,82

159,24

288,06

22,78

13,68

106,26

45

40

35

30

25

20

15

10

5

0‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09

GROWTH OF EXPORT2002-20091.000.000

Page 23: Annual Report 2009

www.bosnalijek.ba+ serving Health

Page 24: Annual Report 2009

CIS + RUSSIA

65,49%Azerbaijan* new Bosnalijek market* first sale realised in 2009

SOUTH EASTEUROPE

30,85%Kosova+Croatiaare the most important markets of this region, where 51% of export was realised.

MIDDLE EAST+AFRICA+ASIA

3,65%Middle East, Africa and Asia region includes very significant world markets on the global level, with a high potential and continuous growth trend.

Page 25: Annual Report 2009

Azerbaijan* new Bosnalijek market* first sale realised in 2009

The goal of Bosnalijek is to keep the sales growth trend in countries of this region, especially in Russia and Ukraine. We have numerous activities for widening sales portfolio, strengthening of our representa-tive offices, advancement of professional personnel, cooperation with renowned healthcare experts, as well as various mar-keting activities for the purpose of more active promoting and better positioning of the Company and certain brands.

Many Bosnalijek products with trend of sales growth and their increasingly large market share have become recognisable brands in Russia and Ukraine (Enterofuryl®, Nomigren® and Lopril®H), and some of the leading OTC products (Lysobact® and Sto-matidin®) were given a special emphasis in the renowned professional magazines.

In CIS and Russia region, products’ sale in 2009 was increased by 35.76% as compared to previous year, and this re-gion had a 65.49% share in the entire Bosnalijek export.

Sales growth in Russia has been achieved with exceptionally high an-nual rate of 79.87%. There was a slight decrease in sale at Ukraine and Moldo-va markets caused by expressive global and local financial movements in these countries.

In accordance with Bosnalijek export strat-egy and expansion of market, we had a first export to Azerbaijan in year 2009, and ac-tivities were continued for further growth of export in Georgia, as well as penetrating into new areas of the Russian Federation.

Lysobact® was given a prestigious award „PANACEA“ as a preparation of the year in Ukraine, in a group of medicines for treat-ing throat.

Continuation of conducting clinical study in Russia for proving effectiveness of En-terofuryl in new indication (eradication of Helicobacter pillory) in adults has signifi-cantly contributed to strengthening of our products’ position in the market and con-firmation of their quality. Postmarketing investigations and collabo-ration with respectable medical scientists has had a special importance in the Rus-sian market. Therefore, we deem very important the visit of renowned Russian scientists as well as our distributor Protek, and their introduction with Bosnalijek per-sonnel, development and production ca-pacities, production conditions and quality control as well as total product portfolio in 2009.

Region CIS+Russia

CIS + RUSSIA – STRUCTURE 2009

RUSSIA

UKRAINE

MOLDOVA

GEORGIA

AZERBAIJAN

62%

30%

7%

1%

1%

24 Review of operations ‘09

Page 26: Annual Report 2009

Kosovo+

Hrvatskaare the most important markets of this region, where 51% of export was realised.

RegionSouth EastEurope

Sales growth in 2009 was accomplished in all markets except for Montenegro and Serbia, where total export was close to the one from year 2008.

Marketing strategies and total market-ing activities are continuously adjusted to conditions and all specificities of individual markets of this region, in which Bosnalijek products already have decade-long pres-ence. Activities were mostly directed at improvement of work conditions in our representative offices, education and im-proving work of personnel in the field, co-operation with opinion leaders in certain areas (especially cardiovascular drugs), but also work on launching to market, good positioning and sale of medicines from OTC programme.

Sales growth of 8.97% was accom-plished in Southeast Europe and a por-tion in total sales revenue in export of 30.85%.

In six countries of this region, Bosnali-jek is positioned as a renowned and reliable pharmaceutical manufacturer, which gained trust of doctors, custom-ers and end-users with its recognisable brands.

SOUTH EAST EUROPE – STRUCTURE 2009

SERBIA

KOSOVO

MACEDONIA

ALBANIA

CROATIA

MONTENEGRO

15%

30%

13%

11%

21%

10%

The cooperation with National Centre for Food and Drugs Control in Libya in trans-ferring our experts’ professional knowl-edge in the field of quality assurance and quality control has been realised in accor-dance with the agreement, so that we ex-pect its continuation in future.

Middle East, Africa and Asia region includes very significant world markets on the global level, with a high potential and con-tinuous growth trend. The accomplished results in this region were lower than in year 2008, as a consequence of stoppages in realising the agreed production for local pharmaceutical company in Libya. Never-theless, in line with already realised invest-ments in this market, Bosnalijek still plans to realise significant results from business activities in future period.

Activities in this region were directed in 2009 at improving business profit-ability, establishing and developing cooperation with new partners for promotion and distribution in French-speaking Africa, as well as establishing infrastructure for efficient operating of our representative office in Algeria.

LIBYA

YEMEN

KUWAIT

QATAR

SF AFRICA

61%

4%

9%

22%

4%

MIDDLE EAST + AFRICA + ASIA– STRUCTURE 2009

Region Middle East+Africa+Asia

Review of operations ‘09 25

Page 27: Annual Report 2009

Development+registrations

That is an extension of our leading prod-uct Lopril®H in combination with diuretic in new dose and it has submitted applica-tion for registering three new products as a line extensions of products Monoclar® and Xiclav®.

Apart from the registration and regis-tration applications for new products, we have renewed registration of 12 products in Bosnia and Herzegovina, registered new packaging sizes of 7 products, continued and initiated pro-cedures for registration renewal of 18 products and reported variations in manufacturing procedures of 14 prod-ucts, all of which are mainly the results of development activities.

Global generic pharmaceutical market has increasingly been characterised with numerous acquisitions that result in build-ing strong global market players, whose requirements are speeded development and shortening deadlines for launching a generic medicine after expiry of patent protection and data exclusivity, maximum reduction of production costs and offering cheap generic parallels that bring huge savings to healthcare systems.

On the other hand, response of large phar-maceutical companies that invest huge amounts of money into investigating new molecules, is actually directed at estab-lishing of stricter and stricter regulatory requirements and imposing additional trials on others to confirm the equality of generic and original medicines.

Out of that reason, Bosnalijek has been investing significant funds into develop-ment and registration of new products each year, so that a portion of these costs was as high as 6.5% in sales revenue of 2009.

Following expansion of our product port-folio with first registrations of 15 new products (14 medicines and one medi-cal device) in 2008, these activities were pretty slowed in 2009 due to inefficient implementation of new Law on Medicines and Medical Devices, slow reaching of ap-propriate by-laws and a long-lasting estab-lishment of a unique regulatory authority. Bosnalijek received registration certificate for only one new product in 2009.

26 Review of operations ‘09

Page 28: Annual Report 2009

Of particular significance for Bosnalijek is the fact that during 2009 our activities directed at product registration abroad resulted in 33 new registrations in 11 countries, along with 48 registration renewals in 6 countries. This means that by the end of 2009 Bosnalijek disposed of 383 active approvals for the marketing of its products abroad.Along with finalized registration procedures, during 2009 we made 29 new registration applications in 8 countries.

Review of operations ‘09 27

As long-term sales growth and business success in pharmaceutical industry are entirely dependent on development of new products and sped up obtaining of marketing authorizations, Bosnalijek also in 2009 invested a great part of its energy and funds into development.

There are over fifty development projects in different phases of development which imply the development of our own tech-nology for completely new products, de-velopment of new pharmaceutical forms and unit doses for the existing products, optimization of technological processes for the existing products, transfer of tech-nological procedures to manufacturing capacities and taking over of new tech-nologies from business partners. These activities are to be continued also in the next year.

Page 29: Annual Report 2009

QualitySystem

Bosnalijek confirms its quality system success by a regular recertification audit (recertification) and annual system control which was by the end of 2009 performed by the internationally renowned certification company Bureau Veritas.

28 Review of operations ‘09

This document confirms that Bosnalijek has established, documented and has been implementing and maintaining the system of quality, environmental, occupational health protection and safe-ty management in accordance with the GMP requirements and the standards ISO 9001:2000 (quality), ISO 14001:2004 (environmental management) and OH-SAS 18001:2007 (occupational health protection and safety), which it has con-tinually been checking and improving its efficiency.

All employees participate in the build up, improvement and implementation of Bosnalijek’s quality system through con-sistent implementation of elements of the prescribed quality within their scope of work and as a part of their daily activi-ties. The implementation and improve-ment of the quality system require all employees to be continually educated and checked by means of internal audits and inspections.

Bosnalijek quality system has been integrated in all business processes and we have continually been im-proving it in order not only to meet but also surpass the expectations of the end-users of our products, as well as of our shareholders and our employees.

Our quality system incorporates all ele-ments of good manufacturing and busi-ness practice, thus ensuring high quality of our products and services to our cli-ents and strengthening Bosnalijek’s in-ternational competence.By the implementation of ISO standards Bosnalijek opted for acceptance and construction of a process-based ap-proach to managing and constructing a quality management system based on identification of processes, their network connection and monitoring.Quality policies and integrated manage-ment system are described in the docu-ment Rulebook on quality, environ-mental, occupational health protection and safety management.

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www.bosnalijek.ba

Review of operations ‘09 29

Page 31: Annual Report 2009

Environmental responsibilityis an integral part of Bosnalijek’s quality system and is defined in the document Environmental orientations.

Bosnalijek’s responsibility toward the environment is based on observing legal regulations, documenting of all procedures, as well as monitoring and reporting, which has been confirmed by certification according to ISO 14001:2004 standard.

Bosnalijek has devoted its business activities to sustainable de-velopment which it demonstrates on a daily basis by continu-ous improvements, economical use of natural resources and acquisition of new know-how, as well as by fully transparent internal activities in cooperation with the competent regula-tory institutions and through an open communication with the local community.

In order to ensure a constant monitoring of its impact on the environment, Bosnalijek has developed, constructed and has been managing its own facility for waste water treatment. Fur-thermore, it has established a system for collecting, removing and destroying waste materials, and it has been performing regular control of environmental emissions and monitoring their conformity with legal regulations.

Environmentalresponsibility

30 Review of operations ‘09

Page 32: Annual Report 2009

Health and Safetyresponsibility Bosnalijek has completely defined and has been implementing the occupational health protection and safety policy which it has proven by having obtained a Certificate of Conformity with OHSAS 18001:2007 standard (Occupational Health and Safety series Specifications) whose requirements are implemented in the Company’s entire business management system.

In this way Bosnalijek has ensured an efficient management of risks in the fields of occupational protection, employees’ oc-cupational health protection, fire protection, as well as pro-tection of buildings, facilities and spaces and has obliged all participants in business processes to consistently implement procedures and processes leading to implementation of pre-ventive measures aimed at elimination of risks and efficient decreasing of their number.

Review of operations ‘09 31

Page 33: Annual Report 2009

Our quality policy is to meet all requirements, needs and expectations of our clients and shareholders. Our goal is to create and maintain the image of a successful and reliable company; to conquer new markets and improve the quality of life with our products.

QUALITYPOLICY

This we will realize by:Observing GMP guidelines and applying the highest standards which guarantee the quality of the products and protection of the environment;Continuous quality improvement in all business processes;Permanent education of all the employees;Application of most up-to-date techno-logical solutions,Commitment on the part of the managers at all levels to continuously improve quality;Including suppliers into our quality system and developing partner relations.

In Bosnalijek we are aware of the environ-mental impact of products and services and therefore we will act according to the Company’s environmental orientation.By placing importance on quality and by continuously working on implementing the Quality policy we will meet the needs and expectations of our clients.

32 Review of operations ‘09

Page 34: Annual Report 2009

We are aware of the environmental impact of our activities We are aware of the fact that we can only achieve our business goals if we comply with the environmental standards set by the society. Bosnalijek is aware that the main impact of its products and services on the environment is based on their life cycle. The employees understand their responsibility and take into account environmental problems while performing their everyday activities.

ENVIRONMENTALORIENTATIONS OF THE COMPANY BOSNALIJEK

We use resourcesin an economical wayNatural sources, raw materials and en-ergy are sparingly used in all aspects of the Company’s procedures. We intend to gradually improve environmental protec-tion and reduce waste production within the company; we will develop recycling procedures and will continue to ensure the safe ways of waste disposal in order to avoid unwanted long-term negative im-pact on the environment. We will continue to develop low emission technologies by concomitantly increasing the use of re-newable energy sources.

Our activities are transparentThe company communicates in an open and free manner about its goals, activities and impacts related to the environment. It maintains a constructive and continuous dialogue with the stakeholders and by its activities contributes and supports the de-velopment of environmental protection.

We support cooperation related toenvironmental protection issuesThe Company is making efforts to ensure that the whole supply chain meet the standards of a clearly defined quality. It is for this reason that it supports the suppli-ers and partners in terms of development of the procedures directed at meeting high environmental standards which Bos-nalijek itself uses.

We continually improveour work practiceInvestments in technology, training and the improvement of work practice are based on the experience of different inter-est groups and the Company’s systemic monitoring procedures. The environmen-tal impact of monitoring is reduced by the application of the best technological solutions available, as well as by accepting legal and official requirements as a mini-mum of the standards which are to be met by these procedures.

Review of operations ‘09 33

Page 35: Annual Report 2009

Bosnalijek is determined to maintain and improve occupational protection, occupational health protection, fire protection, as well as the protection of buildings, facilities and spaces.

In addition to continuous improvement the goal of the Enhanced Safety Program is also to make Bosnalijek a low risk company.

OCCUPATIONAL HEALTH AND SAFETYPOLICY

34 Review of operations ‘09

Page 36: Annual Report 2009

Periodical checks of the Occupational Health Protection and Safety System and the assessment of its compliance with the Policy are performed within reassessment of the Quality and Environmental Manage-ment System;Planned training of all employees signifi-cantly contributes to the development of awareness and creating of safe work and environmental conditions;Environmental quality and care, as well as occupational health protection and safety are the responsibilities of the manage-ment and each employee.

In order to implement concrete measures, Bosnalijek is trying to ensure that all em-ployees are actively involved in the devel-opment and improvement of the Occupa-tional Health and Safety System, and that the acceptance of the system is reflected within their scope of work by their fulfilling of their obligations in a safe manner

The Occupational Health and Safety Man-agement is an integral part of the total business process which prevents losses caused by injuries to the employees, pro-fessional diseases, as well as other condi-tions related to work and property damage.High level of protection is based on com-plying with the relevant legal and other requirements and is simultaneously im-proved by means of a continuous improve-ment of the efficiency of the Occupational Health Protection and Safety System;In order to implement this policy, Bosnali-jek provides resources adequate to the lev-el of danger, by observing legal, technical, financial and other requirements;Occupational health protection and safety goals are published in Bosnalijek’s maga-zine Info, in order for all the employees and interested parties to be informed and to ensure their participation in this policy’s implementation in practice;The management at all levels is respon-sible for the achievement of goals, as well as the implementation and maintenance of the whole system;

Review of operations ‘09 35

Page 37: Annual Report 2009

Technical operations, IT support and Investments

36 Review of operations ‘09

Thanks to a maximum exploitation of the existing manufacturing ca-pacities and educated staff, as well as continuous orientation toward process improvement and increasing of work productivity, 23 million of unit packaging of products were manufactured in 2009 which entirely met the requirements of domestic and foreign sales.Furthermore, planned transfers of technological procedures from development laboratories to manufacturing capacities were also successfully realized. With the purpose of responding as efficiently as possible to future market chal-lenges, in 2009 Bosnalijek initiated many activities directed at expanding manufacturing capacities and increasing their flexibility and invested 6.3 million KM in the increase of manufacturing capacities, as well as in the pro-curement of new manufacturing equipment and tools.

Page 38: Annual Report 2009

In 2009 the IT Department realized the Project of upgrade of Glorya-the registra-tion documentation management system.

Continuous trainings of SAP system users were performed and complete documen-tation complying with the requirements of the SAP system Validation master plan was made with the aim of supporting business processes within the Company. Tests were performed on the basis of created testing protocols for the Company’s GMP process-es which had been implemented in the ERP system SAP. As a result of comprehen-sive activities directed at system validation, a document named SAP R/3 was created - Review of critical items, which represents a starting basis for the improvement of work within the system.

Over the course of the year improvements were made relating to user support to sales in CRM (Customer Relationship Man-agement – Client Relationship Manage-ment) system - Sales Vision.

As regards optimization of the system safety, as well as modernization of domain monitoring, system improvements were achieved by the implementation of the following up-grades: back-up, antivirus, firewall and Symantec AntiSpam system, as well as having the complete domain platform use Microsoft Windows 2008 architecture (Active Direc-tory).

Optimization of the Company’s complete network infrastructure was completed through the installation of VLANs (virtual LAN – Local Area Network) in all buildings. A concurrent up-date of all hardware net-work components was made.

Administration system was enhanced by virtualization of the complete production system GLORYA on VMware ESX platform, CRM Sales Vision system, electronic bank-ing, print and antivirus server, as well as SAP Training system for which a disaster-recovery procedure was reviewed and tested.

Despite financial crisis, in 2009 Bosnalijek made significant investments in tangible and intangible assets. By keeping up with the trend of rapid sales growth, Bosnalijek directed the majority of its investments toward increasing of its manufacturing capacities. Out of total real-ized investments of an amount of 11.6 mil-lion KM., 6.3 million of KM were invested in the expansion of capacities in the leading manufacturing facility of solid oral forms of drugs. The rest of the investments concerned the furnishing of development laboratories of an amount of 1.5 million KM, equipment modernization in control laboratories totaling approximately 700.000 KM and procurement and modernization of the resources necessary for the work of medi-cal agents on the field, both in B&H and abroad.

The quality of Bosnalijek products is checked in quality control laboratories in keeping with GLP (Good Laboratory Practice) re-quirements, as well as rigorous requirements relating to drug quality assurance and Bosnalijek quality standards in all phases of manufacturing process and finished products. With the aim of ensuring a final guarantee of high quality of Bos-nalijek drugs, in 2009 drug control laboratories performed around 50.000 of different analyses of starting raw materials’, packaging material and finished drugs’ quality.

Review of operations ‘09 37

Page 39: Annual Report 2009

In Bosnalijek we invest in development and know-how of all the employees and try to connect the needs of the Company with development of individual poten-tials and talents of the employees and their personal motivation in order to be able, through a system of planned devel-opment, professional development, skill training and problem solving within differ-ent business segments, to qualify the staff for demanding and responsible jobs.

We create a culture of mutual trust and respect, team work and constant learning, we encourage creativity, innovation and dynamic approach and in particular we support professionalism and responsibil-ity, as well as observation of legal norms and regulations. We are committed to nurturing ethical mutual relationships and partnerships with the wider community in keeping with Bosnalijek’s values.

We care about the health and safety, social status and quality of life of our employees which Bosnalijek has proven by having ob-tained a certificate on meeting all require-ments of the OHSAS 18001:2007 standard whose guidelines have been implemented in the entire management system.

Monitoring of career development – Personal development is a project that Bosnalijek uses to recognize the most promising individuals and to develop and improve their expert and business skills for mastering the know-how necessary for taking over of new and more complex jobs within the Company with the aim of ensur-ing succession for key positions.

Taking into account Bosnalijek’s quality system and all particularities of pharma-ceutical industry, as well as new technolo-gies and new development processes, particular attention is paid to regular GMP training of employees (Good Manufactur-ing Practice), as well as the training related to ISO standards and legal regulations in the field of protection and safety.

Furthermore, Bosnalijek adjusts the pro-grams of continuous education of em-ployees to the needs for development and up-grade of know-how and acquisition of skills from different business segments in accordance with the development and the status of the system of competencies, sup-plements them and reconsiders the meth-ods and the effects of the implementation of acquired know-how.

Human resourcesBosnalijek’s success is primarily based on know-how and experience, talents and skills of its employees and their joint action in the realization of the set business goals.The achievement of Bosnalijek’s long-term goals will in future continue to depend on the employees who are able by their know-how, creativ-ity, competence and dedication to work to keep track of and master new pharmaceutical technologies and business skills and thus ensure a con-tinuous progress of the Company.

38 Review of operations ‘09

Page 40: Annual Report 2009

Apart from educational programs for its employees, Bosnalijek continuously of-fers a chance to high school students and students of mostly pharmaceutical and medical vocation from the whole Bosnia & Herzegovina to get familiar with its busi-ness operations through a practical sum-mer training and organized visits to the Company.

In 2009 a poll about Bosnalijek employees’ satisfaction with their work place was con-ducted which identified the areas and the measures necessary for improvement of employees’ satisfaction, as well as for their increased involvement and motivation.

Qualification structure of Bosnalijek em-ployees (44 % of university graduates) satisfies the needs of very complex and demanding business processes and man-ufacturing of drugs which by their quality and efficiency successfully compete on global pharmaceutical market.

At the end of 2009 Bosnalijek had 621 employees: • 407 or 65,54% of women• 258 or 41,55% of employees under 35 years of age• 43,96% of highly educated experts – predominantly pharmacists, doctors, chemists and engineers of various vocations• 36 employees with scientific and specialist titles• 50 or 8,05% of employees undergoing specialist training and about to acquire scientific titles • 21 menagerial positions out of which 57,50% of women• Average age of employees 40 • Average years of service 15,41

We create a culture of mutual trust and respect, team work and constant learning, we encourage creativity, innova-tion and dynamic approach and in particular we support professionalism and responsibility

QUALIFICATION STRUCTURE 2009

UNIVERSITY DEGREE

TWO YEAR COLLEGE

SECOND SCHOOL GRADUATE

HIGHLY QUALIFIED

OTHER

43,96%

1,61%

28,34%

3,86%

22,22%

Review of operations ‘09 39

Page 41: Annual Report 2009

Social responsibilityBosnalijek’s attitude toward social responsibility is derived from our long-term goals based on our mission, vision, strat-egy and our commitment to responsible, professional and ethical performing of all business functions, investing in pro-fessional development of our employees, caring about their health and satisfaction and ultimately caring about the local community. We are aware of the fact that we can be a socially responsible company only if we exhibit professional excellence in every-thing we do and if we show responsibility toward all partners and end-users of our products.

By accepting social responsibility as a way of doing business Bosnalijek has joined UN Global Compact– the greatest global initiative for equalization and im-provement of business standards of the companies which accept the way of work based on the principles of ethical business directed at creating social legiti-macy of companies and markets.

Bosnalijek’s social responsibility is reflected in its business results, its observing of all le-gal and social norms, building of new busi-ness capacities, applying of environmental protection-based processes, as well as in processing and controlling all activities in accordance with the quality system. A proof for all this is an integral Environmen-tal license valid for all its facilities.

During 2009 Bosnalijek directed its dona-tions and sponsorships to a number of projects in the field of education, science, culture and sport in keeping with its mis-sion of improving and protecting citizens’ health and through offering its assistance to the work of humanitarian associations and associations of persons with special needs.

As we are convinced that knowledge is the basis of every progress, we support educa-tion and actively cooperate with faculties and high schools particularly of medical, pharmaceutical and chemical orientation. Our contribution to scientific research was confirmed by conclusion of an Agreement on cooperation with B&H Academy of Sci-ences and Arts in 2009.

40 Review of operations ‘09

Page 42: Annual Report 2009

We provide continuous sponsorship to 200 university and high school students, support expert works by young and tal-ented students and actively sponsor ex-pert and scientific meetings (congresses, symposiums and seminars) of pharmacists and doctors in the country and abroad, as well as the participation of Bosnian experts at similar meetings abroad.

In 2009 Bosnalijek supported numerous cultural projects which promote national and cultural identity and cultural heritage of Bosnia and Herzegovina. We were the main sponsor of the Interna-tional theatre festival MESS and we sup-ported the concert „Bridges of friendship – from Sarajevo to Sarajevo“ conducted by the famous conductor Riccardo Muti.

Beside its involvement in numerous other projects during 2009, Bosnalijek supported the Center for culture of dialogue in Bosnia and Herzegovina in organizing World De-bate Competition, the action „Walk for life“ which promotes early discovery of breast cancer, as well as the cycling competition „Das ist Walter 2009.“.

www.bosnalijek.ba

Review of operations bh // /N/,L,.,

Page 43: Annual Report 2009

AUDIT COMMITTEE

Report by the Audit Committeefor 2009

Sarajevo, 27 April 2010

KPMG audit finding as of 31.12.2009 con-firmed that the produced financial reports of Bosnalijek d.d. show in an objective and realistic manner financial position of Bosnalijek d.d. for the year 2009 in all tan-gible items, as well as business results and changes in cash flows and share capital. Financial reports show in a realistic and objective manner the Company’s financial position as of 31 December 2009, as well as business results and cash flows for the year which ended on that day.

Based on the original documentation and the reports by independent auditor and the Management it can be concluded that financial reports of Bosnalijek d.d. have been made in accordance with Interna-tional standards of financial reporting and the Accounting Law of the Federation of Bosnia and Herzegovina.

In 2009 Bosnalijek d.d. realized a total in-come of 110,94 million KM which is 98,44% of the plan for 2009 and is by 2,45% higher than the previous year’s.

Net profit totaled 8,99 million KM, which is by 782.000 KM or 9,53% more as compared with the year 2008.

During 2009, the shareholders of Bosnalijek d.d. owing at least 10% of ordinary shares did not, pursuant to Article 70. paragraph 3. of Bosnalijek d.d. Statute communicate to the Audit Committee a request for au-diting of semi-annual and annual calcula-tion or an audit of Bosnalijek d.d. financial operations.

Audit Committee of Bosnalijek d.d. performed a control of the final account for the year 2009 on the basis of original documentation from Corporate Finance Department, Company Management Op-erational Report based on 2009 annual calculation and Bosnalijek Auditing Report for the year 2009 made by the auditing company KPMG B-H d.o.o. from Sarajevo.

Željko Kordić, President Sead Sarvan, Member Rabija Avduli, Member

42

Page 44: Annual Report 2009

ResultsThe results of the Company are set out in the statement of comprehensive income on page 4 of the financial statements.

Management BoardThe members of the Management Board during the year were as follows:Mr. Edin Arslanagić, Chief Executive OfficeMr. Šefik Handžić, Executive Director of General FinancesMs. Belma Abazović, Executive Director of Production and Development, appointed 1 August 2009Mr. Nedim Vilogorac, Executive Director of Corporate Finance and Communications, appointed 1 August 2009Mr. Nermin Zubčević, Executive Director of the Quality and Regulation, appointed 1 August 2009Mr. Akif Mujezin, Executive Director for Production, resigned 31 July 2009Ms. Ljiljana Kamberović, Executive Director for Development, resigned 31 July 2009

Audit CommitteeThe members of the Audit Committee during the year are as follows:Mr. Željko Kordić, ChairmanMr. Sead Sarvan, Member Ms. Rabija Avduli, Member

Edin Arslanagić 20 April 2010Director

Management Board’s ReportThe Management Board submits its report together with the audited financial statements for the year ended 31 December 2009.

Principal activityBosnalijek d.d. (“the Company”) is a shareholding company registered and domiciled in Sara-jevo in Bosnia and Herzegovina. The principal activity of the Company is the production and sale of pharmaceutical products.

Supervisory BoardThe members of the Supervisory Board during the year were as follows:Mr. Veljko TrivunMr. Rifat KlopićMr. Umid Šalaka Ms. Edin BuljubašićMr. Abdulhakin Mohamed Al Misurati

ChairmanMemberMember MemberMember

43

• Management Board’s Report • Statement of Management Board’s responsibilities • Independent auditors’ report to the shareholders of Bosnalijek d.d. • Statement of comprehensive income • Statement of financial position • Statement of changes in equity • Statement of cash flows • Notes (forming part of the financial statements)

Contents4344

45

4646474748

Annual Financial Statements31 December 2009

Page 45: Annual Report 2009

Edin Arslanagić, director

The Management Board is required to pre-pare financial statements for each financial year which give a true and fair view of the financial position of the Company and of the results of its operations and cash flows, in accordance with applicable accounting standards, and is responsible for maintain-ing proper accounting records to enable the preparation of such financial state-ments at any time. It has a general respon-sibility for taking such steps as are reason-ably available to it to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Management Board is responsible for se-lecting suitable accounting policies to con-form with applicable accounting standards and then apply them consistently; make judgements and estimates that are reason-able and prudent; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Com-pany will continue in business.

The Management Board is responsible for the submission to the Supervisory Board of its annual report on the Company togeth-er with the annual financial statements, following which the Supervisory Board is required to approve the annual financial statements for submission to the General Assembly of Shareholders for adoption.

The financial statements set out on pages 4 to 36 were authorised by the Manage-ment Board on 20 April 2010 for issue to the Supervisory Board and are signed be-low to signify this.

Statement of Management Board’s responsibilities

44

Annual Financial Statements31 December 2009

Page 46: Annual Report 2009

Independent auditors’ reportto the shareholders of Bosnalijek d.d.We have audited the accompanying financial statements of Bosnalijek d.d. (“the Company”), which comprise the statement of financial position as at 31 December 2009, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a sum-mary of significant accounting policies and other explanatory notes.

Management’s Responsibilityfor the Financial Statements

Management is responsible for the prepa-ration and fair presentation of these finan-cial statements in accordance with Inter-national Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in ac-cordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the finan-cial statements are free of material mis-statement.

An audit involves performing proce-dures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected de-pend on our judgment, including the as-sessment of the risks of material misstate-ment of the financial statements, whether due to fraud or error.

In making those risk assessments, we con-sider internal control relevant to the en-tity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effective-ness of the entity’s internal control.

An audit also includes evaluating the ap-propriateness of accounting principles used and the reasonableness of account-ing estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 Decem-ber 2009, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.

KPMG B-H d.o.o. Registered auditorsFra Anđela Zvizdovića 171000 SarajevoBosnia and Herzegovina

20 April 2010

45

Annual Financial Statements31 December 2009

Page 47: Annual Report 2009

46

Statement of comprehensive incomeFor the year ended 31 December 2009(All amounts are expressed in thousands of BAM)

Note

7

8

9

12

12

12

13

34

2009.

BAM’000

109.551

(38.891)

70.660

1.132

(50.570)

(3.482)

(5.796)

11.944

261

(3.216)

(2.955)

8.989

-

8.989

-

8.989

1,15

2008.

BAM’000

107.128

(42.463)

64.665

208

(47.859)

(3.272)

(4.099)

9.643

959

(2.395)

(1.436)

8.207

-

8.207

-

8.207

1,26

Revenue

Cost of sales

Gross profit

Other operating income

Administration and distribution expenses

Research and development expenses

Other expenses

Profit from operating activities

Financial income

Financial expenses

Net finance costs

Profit before taxation

Income tax expense

Profit for the year

Other comprehensive income

Total comprehensive income for the period

Basic and diluted earnings per share

Annual Financial Statements31 December 2009

Statement of financial positionAs at 31 December 2009(All amounts are expressed in thousands of BAM)

ASSETS

Non–current assets

Proper ty, plant and equipment

Intangible assets

Investments

Loans and deposits

Total non-currents assets

Current assets

Loans and deposits

Trade and other receivables

Inventories

Income tax receivables

Cash and cash equivalents

Total current assets

Total assets

EQUITY AND LIABILITIES

Equity

Share capital

Treasur y shares

Share premium

Reser ves

Retained earnings

Total equity and reserves

Liabilities

Non-current liabilities

Employee benefits

Provisions

Loans and borrowings

Other liabilities

Total non-current liabilities

Current liabilities

Employee benefits

Loans and borrowings

Trade and other payables

Derivative financial liabilities

Total current liabilities

Total liabilities

Total equity and liabilities

14

15

16

17

17

18

19

20

21

22

23

25

27

29

28

25

29

30

31

Note

82.669

2.247

2

795

85.713

813

43.585

22.343

2.457

2.051

71.249

156.962

71.742

-

3.912

19.502

11.938

107.094

707

133

1.159

85

2.084

-

22.825

17.311

7.648

47.784

49.868

156.962

87.584

3.771

5

655

92.015

1.712

36.180

19.769

2.457

2.227

62.345

154.360

52.945

-

-

31.537

14.405

98.887

564

133

1.077

116

1.890

-

28.819

16.522

8.242

53.583

55.473

154.360

31 December 2009

84.477

1.308

12

562

86.359

712

60.115

20.382

2.457

3.439

87.105

173.464

71.742

(182)

3.912

24.432

13.988

113.892

953

34

4.384

-

5.371

69

20.580

24.248

9.304

54.201

59.572

173.464

31 December 2008

Restated Note 5

1 January2008

Restated Note 5

The accounting policies and other notes on pages 48 to 65 form an integral part of these financial statements

Page 48: Annual Report 2009

47

Annual Financial Statements31 December 2009

Share

Capital

52.945

-

52.945

-

-

17.530

-

(1.070)

2.337

71.742

71.742

-

-

(182)

-

-

71.560

Share

premium

-

-

-

-

-

-

-

-

3.912

3.912

3.912

-

-

-

-

-

3.912

Reserves

31.537

-

31.537

-

-

(17.530)

5.495

-

-

19.502

19.502

-

-

-

4.930

-

24.432

Total

99.267

(380)

98.887

8.207

8.207

-

-

-

-

107.094

107.094

8.989

8.989

-

-

(2.191)

113.892

Retained

earnings

14.785

(380)

14.405

8.207

8.207

-

(5.495)

1.070

(6.249)

11.938

11.938

8.989

8.989

182

(4.930)

(2.191)

13.988

Statement of changes in equity For the year ended 31 December 2009.(All amounts are expressed in thousands of BAM)

As at 01 January 2008 reported

Prior year adjustment

(Note 5a)

As at 01 January 2008

restated

Profit for the year

Total comprehensive

income for the period

Issuing of bonus shares to

existing shareholders

Transfer to reserves

Movement of IFC shares under put option

Shares issued to employees

under share based payments

As at 31 December 2008

restated

As at 01 January 2009

Profit for the year

Total comprehensive

income for the period

Treasury shares

(Note 22)

Transfer to reserves

(Note 23)

Dividends declared

(Note 24)

As at 31 December 2009

Statement of cash flows For the year ended 31 December 2009(All amounts are expressed in thousands of BAM)

2008.

Restated

8.207

8.546

2.325

(119)

1.780

(14)

(594)

20.131

(7.394)

(2.574)

789

112

11.064

(1.780)

9.284

(2)

(3.645)

(801)

22

119

899

(140)

(3.548)

(21,770)

15,858

-

(5.912)

(176)

2.227

2.051

Cash flows from operating activities

Profit for the year

Adjustments for:

Depreciation and impairment of property, plant and equipment

Amortization of intangible fixed assets

Interest income

Interest expense

Loss on sale of property, plant and equipment

Movement in derivative fair value

Increase in trade and other receivables

Decrease / (increase) in inventories

Increase in trade and other payables

Increase in provisions and other liabilities

Cash generated from operating activities

Interest paid

Net cash from operating activities

Investing activities

Increase in investments

Purchase of property, plant and equipment

Purchase of intangible assets

Proceeds from the disposals of property, plant and equipment

Interest received

Receipts from collection of loans receivable

Payments for loans receivable

Net cash outflow from investing activities

Financing activities

Repayment of loans and borrowings

Loans and borrowings received

Dividends paid

Net cash outflow from financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Note

24

20

2009.

8.989

7.848

1.517

(10)

1.349

1.529

1.656

22.878

(16.530)

1.960

6.260

216

14.784

(1.349)

13.435

(10)

(11.079)

(739)

55

10

1.033

(699)

(11.429)

(17,240)

18,220

(1,598)

(618)

1.388

2.051

3.439

Page 49: Annual Report 2009

REPORTING ENTITY

Bosnalijek d.d. (“the Company”) is a shareholding company regis-tered and domiciled in Sarajevo in Bosnia and Herzegovina. The principal activity of the Company is the production and sale of pharmaceutical products. Bosnalijek d.d. is listed on the Sarajevo Stock Exchange.

BASIS OF PREPARATION

Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These finan-cial statements are a translation of the official statutory financial statements prepared in Bosnian.The financial statements were approved by the Management

Board on 20 April 2010.

Basis of measurement

The financial statements have been prepared on the historical cost basis except for derivative financial instruments, which are mea-sured at fair value.

Functional and presentation currency

These financial statements are prepared in the currency of Bosnia and Herzegovina, Convertible marks (BAM), which is the Com-pany’s functional currency. All financial information presented in Convertible marks has been rounded to the nearest thousand.

Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongo-ing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.In particular, information about significant areas of estimation un-certainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the Note 38.

1

2

(a)

(b)

(c)

(d)

(e)

(f )

Determination and presentation of operating segments

As of 1 January 2009 the Company determines and presents op-erating segments based on the information that internally is pro-vided to the CEO, who is the Company’s chief operating decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of segment op-erating disclosures is presented as follows.

Comparative segment information has been re-presented in con-formity with the transitional requirements of such standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.

An operating segment is a component of the Company that en-gages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. An operating segment’s operating results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete finan-cial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, financial cost and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equip-ment, and intangible assets other than goodwill.

Presentation of financial statements

The Company applies revised IAS 1 Presentation of Financial State-ments (2007), which became effective as of 1 January 2009. As a result, the Company presents in the statement of changes in equi-ty all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in ac-counting policy only impacts presentation aspects, there is no im-pact on earnings per share.

48

Annual Financial Statements31 December 2009

Page 50: Annual Report 2009

(ii)

(iii)

A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Company’s contractual rights to the cash flows from the financial assets expire or if the Company trans-fers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular purchas-es and sales of financial assets are accounted for at trade date, that is, the date that the Company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Company’s obligations specified in the contract expire or are discharged or cancelled.Cash and cash equivalents for the purpose of preparation of cash flow statement and balance sheet comprise cash balances and call deposits. Accounting for finance income and expense is discussed in Note 3(k).Trade and other receivables are measured at amortised costs less impairment (refer Note 3(f )).Trade and other payables and interest-bearing loans and borrow-ings are measured at amortised cost.

Derivative financial instruments

Derivative financial instruments include Company shares that can be put back to the Company, as described in Note 31. These puttable shares are measured at fair value with changes in fair value recorded through profit and loss.

Share capital

Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as a treasury shares and are presented as a deduction from total equity.

3

(a)

(b)

(i)

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistent-ly to all periods presented in these financial statements. Where necessary, comparative information has been reclassified and restated as explained in Note 5, to achieve consistency in disclosure with current financial year amounts and other disclosures.

Foreign currencies

Transactions in foreign currency are translated to the functional cur-rency of the Company at exchange rates at the dates of the transac-tions. Monetary assets and liabilities denominated in foreign curren-cies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.Non-monetary assets and liabilities denominated in foreign curren-cies, which are stated at historical cost, are translated into functional currency at foreign exchange rates ruling at the dates at which the values were determined. Non-monetary assets and items that are measured in terms of historical cost of a foreign currency are not re-translated.

Financial instruments

Non-derivative financial instrumentsNon-derivative financial instruments comprise trade and other re-ceivables, loans and deposits, cash and cash equivalents, loans and borrowings, and trade and other payables.Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recogni-tion non-derivative financial instruments are measured as described below.

49

Annual Financial Statements31 December 2009

Page 51: Annual Report 2009

Amortisation

Amortisation is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use. The estimated useful life for the current and comparative periods as follows:

Amortisation method, useful lives and residual values are reas-sessed at the reporting date.

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss when incurred.Development activities involve a plan or design for the produc-tion of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capi-talised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its in-tended use. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less ac-cumulated amortisation and accumulated impairment losses.

Inventories

Inventories are stated at the lower of cost and net realisable value. Inventories are valued based on purchase price and include the costs of bringing the inventories to a condition ready for use, using the weighted average cost principle. In the case of manufactured inventories and work in progress, costs include an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.

(iii)

(iv)

(e)

Software

Licenses

3 years

5 years

50

Property, plant and equipment

Recognition and measurement

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses (refer to Note 3(f )).Cost includes expenditures that are directly attributable to the ac-quisition of the asset. Borrowing costs that are not directly attribut-able to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Subsequent expenditure

The cost of replacing part of an item of property, plant and equip-ment is recognised in the carrying amount of the item if it is prob-able that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equip-ment are recognised in profit or loss as incurred.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.The estimated useful lives are as follows:

Depreciation method, useful lives and residual values are reas-sessed at the reporting date.

Intangible assets

Intangible assets

Intangible assets are measured initially at cost. After initial recogni-tion, intangible assets are carried at cost less any accumulated am-ortisation and any accumulated impairment losses (refer to Note 3(f )). The rate of amortisation used for intangible assets is based on the estimated useful life.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on inter-nally generated goodwill and brands, is recognised in the income statement when incurred.

(c)

(i)

(ii)

(iii)

(d)

(i)

(ii)

Buildings

Plant, equipment and motor vehicles

7 to 33 years

3 to 15 years

Annual Financial Statements31 December 2009

Page 52: Annual Report 2009

Calculation of recoverable amount

The recoverable amount of the Company’s receivables carried at amortised cost is calculated as the present value of estimated fu-ture cash flows, discounted at the original effective interest rate (that is, the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversal of impairment

An impairment loss in respect of a held-to-maturity security or receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.An impairment loss in respect of goodwill is not reversed.In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Provisions

A provision is recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(i)

(ii)

(g)

Impairment

The carrying amounts of the Company’s assets, other than inven-tories (refer to accounting policy e) and deferred tax assets are re-viewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.For intangible assets that have an indefinite useful life and in-tangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.Assets that are subject to amortisation are reviewed for impair-ment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income state-ment.The Company considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables not to be specifically impaired are then col-lectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.For the purpose of impairment testing, assets that cannot be test-ed individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit, or CGU”).Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or Company of units) and then, to reduce the carrying amount of the other assets in the unit (or Company of units) on a pro rata basis.

(f )

51

Annual Financial Statements31 December 2009

Page 53: Annual Report 2009

52

Loans and borrowings

Interest bearing loans and borrowings

Interest bearing loans and borrowings are recognised initially at fair value of the proceeds received, less attributable transaction costs. In subsequent periods, interest bearing loans and borrowings are stated at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the re-demption value is recognised in the income statement as interest expense over the period of the borrowings on an effective interest basis.

Employee benefits

Defined contributions pension fund

Obligations for contributions to defined contribution pension funds are recognised as an expense in the income statement when they are due, which is the period during which services are rendered by employees.

Retirement benefits

The Company’s net obligation in respect of retirement benefits is the amount of future benefit that employees have earned in re-turn for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the average interest rate on loans of commercial banks, whose matu-rity dates are approximately the same in terms and conditions of the liabilities of the Company..

Share-based payments

The Company grants shares to its employees in accordance with local legislation. The grant date fair value of shares granted to the employees is recognised as a decrease in retained earnings with a corresponding increase in share capital per nominal value and increase of share premium for the difference between nominal and the fair value of granted shares. The fair value of the amount payable to employees in respect of shares which will be settled in cash, is recognised as an employee expense with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel cost in profit or loss.

(h)

(i)

(i)

(i)

(ii)

(iii)

(j)

(k)

(l)

Revenue

Goods sold and services rendered

Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowanc-es, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimat-ed reliably, and there is no continuing management involvement with the goods.Revenue from services is recognised in the income statement in proportion to the stage of completion of the transaction at the reporting date.Revenue from the sale of goods is generally recognised at the date the goods are delivered and represents the net invoiced value of goods and excludes value added taxes.

Financial income and expenses

Finance income comprises interest income on funds invested (in-cluding available-for-sale financial assets) and positive changes in the fair value of financial instruments at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings, unwind-ing of the discount on provisions and negative changes in the fair value of financial instruments at fair value through profit or loss. Borrowing costs that are not directly attributable to the acquisi-tion, construction or production of a qualifying asset are recog-nised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis

Lease payments made

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incen-tives received are recognised as an integral part of the total lease expense, over the term of the lease.

Annual Financial Statements31 December 2009

Page 54: Annual Report 2009

DETERMINATION OF FAIR VALUES

A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the fol-lowing methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

On call bank deposits

The carrying value of on call bank deposits approximate their fair value due to their proximity in nature to cash.

Trade and other receivables/payables

The carrying amount of trade and other receivables/payables is deemed to reflect the fair value due to the short-term maturity of theses financial instruments.The fair value of long term trade receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at reporting date, as disclosed in Note 17.Trade receivables are estimated on each balance sheet date and are impaired according to the estimate of the probability to collect the amount stated. Each customer is valuated separately based on different parameters ageing of the amount due.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calcu-lated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the report-ing date.

Employee benefits

Long-term employee benefit liability is determined using assump-tion regarding the likely number of staff to whom the benefit will be payable, estimated benefit cost and the discount rate.

Share based payments

The Company granted shares to its employees from retained earn-ings. The Company has recognised this transaction at the fair value of its shares at the grant date. The Company has recognised em-ployee costs and corresponding liability at fair value of its shares at the balance sheet date.

Income tax expense

Corporate income taxes are computed on the basis of reported income under the laws and regulations of Federation of Bosnia and Herzegovina. Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.Deferred tax is recognised using the balance sheet liability meth-od, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes Deferred tax is mea-sured at the tax rates that are expected to be applied to the tem-porary differences when they reverse using tax rates enacted or substantively enacted by the reporting date.A deferred tax asset is recognised only to the extent that it is prob-able that future taxable profits will be available against which tem-porary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstand-ing during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordi-nary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

New standards and interpretations not yet adopted

A number of new standards, amendments to standards and inter-pretations have been released and are not yet effective for the year ended 31 December 2009, and have not been applied in prepar-ing these financial statements. The Company has not made an as-sessment of the likely impact, if any, of these on the 2010 financial statements.

(m)

(n)

(o)

4

(i)

(ii)

(iii)

(iv)

(v)

53

Annual Financial Statements31 December 2009

Page 55: Annual Report 2009

RESTATEMENT OF PRIOR PERIOD

Restatement of comparative balance sheet items relates to the fol-lowing:The adjustment of BAM 380 thousand represents the results of income tax inspection from March 2009. The results of this inspec-tion was that the Company is liable to pay additional amounts to tax authorities related to 2004 to 2007 year. Management believes a position for this liability should have been made in the financial statements from 2004 to 2007 and accordingly have treated this as a prior period error. The Company has restated borrowings from non-current to cur-rent of BAM 5,605 thousand as at 31 December 2008 (1 January 2008: BAM 8,097 thousand) due to breaches in loan covenant (see Note 36), which would require early repayment of the long term loan. The Company’s management does not believe that the breach in covenants will however cause for a pre-payment.

(All amounts are expressed in thousands of BAM)

EQUITY AND LIABILITIES

Equity

Share capital

Share premium

Statutory reserves

Retained earnings

Total equity and reserves

Non-currents liabilities

Loans and borrowings

Total non-current liabilities

Current liabilities

Trade and other payables

Loans and borrowings

Total currents liabilities

Total equity and liabilities

Note

a)

b)

a)

b)

As reported

31 December

2008

71.742

3.912

19.502

12.318

107.474

6.764

7.689

16.931

17.220

41.799

156.962

Ispravke

-

-

-

(380)

(380)

(5.605)

(5.605)

380

5.605

5.985

-

Restated

31 December

2008

71.742

3.912

19.502

11.938

107.094

1.159

2.084

17.311

22.825

47.784

156.962

Restated

1January

2008

52.945

-

31.537

14.405

98.887

1.077

1.890

16.522

28.819

53.583

154.360

54

5

a)

b)

Annual Financial Statements31 December 2009

Page 56: Annual Report 2009

GEOGRAPHICAL SEGMENTS

The Company has four reportable geographical segments in which it sells its products, but manufacturing facilities are located in Bosnia and Herzegovina. In presenting information on the basis of geographical segments, segment revenue is based on the geo-graphical location of customers. Segment assets are based on the geographical location of the assets.

6

55

Annual Financial Statements31 December 2009

2009

109.551

(38.891)

70.660

1.132

(41.204)

(9.366)

21.222

(3.482)

(5.796)

(2.955)

(12.233)

8.989

173.464

59.572

2008

6.968

(4.419)

2.549

-

(2.203)

(3)

343

363

-

2008

19.148

(6.194)

12.954

-

(7.859)

(281)

4.814

11.319

-

2009

25.996

(6.798)

19.198

-

(11.478)

(345)

7.375

11.531

-

2008

11.237

(4.516)

6.721

-

(3.551)

(130)

3.040

7.774

-

2008

69.775

(27.334)

42.441

208

(23.375)

(10.457)

8.817

137.506

49.868

Revenue

Cost of sales

Gross profit

Other operating income

Administration and distribution expenses

Depreciation

Profit from segments

Unallocated expenses

Research and development expenses

Other expenses

Net finance costs

Total unallocated expenses

Profit before tax

Reportable segment assets

Reportable segment liabilities

East Europe and Russia Middle East and Africa Total

2009

69.858

(27.244)

42.614

1.132

(24.733)

(8.888)

10.125

145.146

59.572

2009

12.246

(4.519)

7.727

-

(3.700)

(121)

3.906

16.119

-

2009

1.451

(330)

1.121

-

(1.293)

(12)

(184)

668

-

2008

107.128

(42.463)

64.665

208

(36.988)

(10.871)

17.014

(3.272)

(4.099)

(1.436)

(8.807)

8.207

156.962

49.868

(All amounts are expressed in thousands of BAM)

Bosnia and Herzegovina Ex Yugoslavia and Albania

Page 57: Annual Report 2009

56

EXPENSES BY NATURE

The following items are allocated to the appropriate headings of expenses by function in the income statement:

Total personnel costs allocated to cost of sales for the year is BAM 6,703 thousand (2008: BAM 6,415 thousand).

NET FINANCIAL EXPENSE

INCOME TAX EXPENSE

The following is a reconciliation of income tax expense to effective tax rates:

11

12

13

(All amounts are expressed in thousands of BAM)

Change of inventories of finished goods and work in progress

Raw materials and consumables

Energy

Depreciation and amortization

Personnel costs

Retirement and other fees to employees

Consultancy fees contracts

Supervisory board members fees

Transport services

Maintenance

Rent expenses

Advertisement

Insurance

Bank charges

Entertainment

Travel costs

Memberships

Phone costs

Other expenses

2009

(988)

29.041

2.624

9.366

20.345

130

7.769

110

1.752

2.320

422

8.241

588

506

5.522

1.414

136

683

2.962

92.943

2008

(1.517)

34.249

2.264

10.871

17.967

601

5.385

118

1.485

2.664

369

6.763

556

597

5.407

1.960

120

920

2.815

93.594

(All amounts are expressed in thousands of BAM)

Interest income

Net decrease in derivative liability

Adjustment of long term deposit to fair value

Gross foreign exchange gains

Financial income

Interest expense

Net increase in derivative liability

Gross foreign exchange losses

Financial expenses

Net financial expense

2009

10

-

130

121

261

(1.349)

(1.656)

(211)

(3.216)

(2.955)

2008

97

594

22

246

959

(1.780)

-

(615)

(2.395)

(1.436)

(All amounts are expressed in thousands of BAM)

Profit before tax

Profit tax at 10%

Non-deductible expenses

Tax incentive for export

Income tax expense

Average effective income tax rate

2009

8.989

899

506

(1.405)

-

0.00%

2008

8.207

821

605

(1.426)

-

0.00%

REVENUE

OTHER OPERATING INCOME

OTHER EXPENSES

PERSONNEL COSTS

The number of employees in the Company at year end was 621 (2008: 623). Personnel costs include BAM 2,907 thousand (2008: BAM 2,814 thousand) of defined contribution pension contribu-tions paid into obligatory state pension funds.

7

8

9

10

(All amounts are expressed in thousands of BAM)

2008

69.652

37.353

123

107.128

2009

69.747

38.805

999

109.551

Domestic sales

Foreign sales

Service rendered

(All amounts are expressed in thousands of BAM)

2008

14

-

-

194

208

2009

55

498

100

479

1.132

Gain on disposal of property, plant and equipment

Credit notes received

Release of provision for court cases

Other income

(All amounts are expressed in thousands of BAM)

2008

937

6

282

1.097

127

1.650

4.099

Inventories written off

Impairment of property, plant and equipment

Net receivable impairment

Donations, sponsorships and scholarships

Accrued withholding tax expenses

Other

2009

1.292

1.432

301

514

-

2.257

5.796

(All amounts are expressed in thousands of BAM)

2008

17.824

184

(41)

17.967

2009

20.015

337

(7)

20.345

Wages, salaries and other staff costs

Share based payments (Note 26)

Increase/(decrease) in retirement benefits

Annual Financial Statements31 December 2009

Page 58: Annual Report 2009

INTANGIBLE ASSETS

Licences include the cost of developing and licensing new ge-neric medicines, some of which are currently being sold and for the remainder future economic benefit considered are probable. The Company intends to and has sufficient resources to complete development and to sell these generic medicines.Intangible assets under construction relates to software not brought in use as at 31 December 2009.

15PROPERTY, PLANT AND EQUIPMENT

Assets under construction relate to site preparation (BAM 1,089 thousand), reconstruction of “Solid oral forms of drugs” production facility (BAM 1,623 thousand), office premises (BAM 889 thousand), line for packaging (BAM 4,335 thousand) and other of BAM 1,804 thousand.Total depreciation and amortisation expense allocated to cost of sales is BAM 3,525 thousand (2008: BAM 3,477 thousand).Security

The Company has pledged plant and equipment with a carrying value of BAM 45,449 thousand (2008; BAM 32,960 thousand) to se-cure loans granted by IFC Washington, UniCredit banka d.d Mostar, Intesa San Paolo banka d.d. Sarajevo, Bor banka d.d. Sarajevo and BBI Bank. (see Note 28).

14

Licences

5.682

-

-

543

6.225

6.225

-

-

476

6.701

3.328

1.549

-

4.877

4.877

1.028

-

5.905

2.354

1.348

1.348

796

Software

3.387

-

-

249

3.636

3.636

-

(70)

265

3.831

2.230

776

-

3.006

3.006

489

(52)

3.443

1.157

630

630

388

Assets under

development

260

801

-

(792)

269

269

739

(143)

(741)

124

-

-

-

-

-

-

-

-

260

269

269

124

Total

9.329

801

-

-

10.130

10.130

739

(213)

-

10.656

5.558

2.325

-

7.883

7.883

1.517

(52)

9.348

3.771

2.247

2.247

1.308

Cost

At 1 January 2008

Additions

Disposals and write offs

Transfers

At 31 December 2008

At 1 January 2009

Additions

Disposals, write offs and adjustments

Transfers

At 31 December 2009

Accumulated amortisation

and impairments

At 1 January 2008

Charge for year

Disposals and write offs

At 31 December 2008

At 1 January 2009

Charge for year

Disposals and write offs

At 31 December 2009

Carrying amount

At 1 January 2008

At 31 December 2008

At 1 January 2009

At 31 December 2009

(All amounts are expressed in thousands of BAM) (All amounts are expressed in thousands of BAM)

Land and

buildings

92.061

-

-

198

92.259

92.259

-

(2.150)

600

90.709

31.439

3.745

-

35.184

35.184

3.642

(782)

38.044

60.622

57.075

57.075

52.665

Plant and

equipment

55.300

-

(790)

3.048

57.558

57.558

-

(1.032)

3.005

59.531

30.211

4.801

(782)

34.230

34.230

4.206

(977)

37.459

25.089

23.328

23.328

22.072

Assets under

construction

1.873

3.639

-

(3.246)

2.266

2.266

11.079

-

(3.605)

9.740

-

-

-

-

-

-

-

-

1.873

2.266

2.266

9.740

Total

149.234

3.639

(790)

-

152.083

152.083

11.079

(3.182)

-

159.980

61.650

8.546

(782)

69.414

69.414

7.848

(1.759)

75.503

87.584

82.669

82.669

84.447

Cost

At 1 January 2008

Additions

Disposals and write offs

Transfers

At 31 December 2008

At 1 January 2009

Additions

Disposals and write offs

Transfers

At 31 December 2009

Accumulated depreciation

and impairments

At 1 January 2008

Charge for the year

Disposals and write offs

At 31 December 2008

At 1 January 2009

Charge for the year

Disposals and write offs

At 31 December 2009

Carrying amount

At 1 January 2008

At 31 December 2008

At 1 January 2009

At 31 December 2009

57

Annual Financial Statements31 December 2009

Page 59: Annual Report 2009

58

TRADE AND OTHER RECEIVABLES

INVENTORIES

CASH AND CASH EQUIVALENTS

INVESTMENTS

LOANS AND DEPOSITS

The deposit with Intesa San Paolo Bank d.d Sarajevo, with a fair val-ue of BAM 422 thousand (2008. BAM 637 thousand) is held as secu-rity for loans given by that Bank to the Company’s employees, ma-turing in 2018 with an interest rate of 0.5% per annum. The nominal value of the deposit is BAM 599 thousand (2008; BAM 899 thou-sand). Due to the low interest rate, the Company has recognised a fair value of the deposit using a discount rate of 3.98% (2008: 3.5%) and has recognised adjustment of BAM 130 thousand as financial income through profit and loss in the current period.

16

17

18

19

20

(All amounts are expressed in thousands of BAM)

MF Invest d.o.o. Sarajevo

ASA Finance d.d. Sarajevo

2009

2

10

12

2008

2

-

2

Trade receivables – gross

Trade receivables – impairment

Trade receivables – net

Prepayments for property, plant and equipment

Receivables from employees

Prepayments to suppliers

VAT prepayment

Other receivables and prepayments

2009

58.738

(2.159)

56.579

1.932

-

613

497

494

60.115

2008

42.601

(1.943)

40.658

2.367

7

146

-

407

43.585

(All amounts are expressed in thousands of BAM)

(All amounts are expressed in thousands of BAM)

Non current loans and receivables

Loans to employees

Deposit with Intesa San Paolo Bank

Other deposits and receivables

Current loans and deposits

Loan receivables from Brstanica d.o.o.

Loan receivables from Medifarm d.o.o.

Other deposits and receivables

2009

14

422

126

562

600

99

13

712

2008

21

637

137

795

800

-

13

813

(All amounts are expressed in thousands of BAM)

Raw materials and consumables

Work in progress

Finished goods

2008

12.012

1.510

8.821

22.343

2009

9.042

1.505

9.835

20.382

(All amounts are expressed in thousands of BAM)

Cash with banks in BAM

Foreign currency accounts

Cash on hand

2008

833

1.057

161

2.051

2009

1.972

1.355

112

3.439

Annual Financial Statements31 December 2009

Page 60: Annual Report 2009

SHARE BASED PAYMENTS

On 28 June 2008 the Company granted 233,731 shares to its em-ployees solely from retained earnings based on the Decision of the General Assembly. Employees granted shares have the immedi-ate right to receive dividends and vote at General Meetings of the Company. The fair value of the shares at the grant date was BAM 6,249 thousand representing 233,731 shares at BAM 26.74 fair val-ue per share. The Company has an obligation to repurchase these shares from its employees provided the following conditions are satisfied: they must remain in the employment of the Company for six years from the grant date, and they must be employed by the company at their retirement date.Provided the employees meet these conditions then they can sell the shares, at the average market price for the last six months, only to the Company at, or following, retirement. Employees who retire before the six year period have right to sell their shares, at mar-ket value, only to the Company. Employees whose employment is cancelled due to reorganization and restructuring before the six year period expire must sell their shares to the Company only, before the end of the vesting period. Employees whose employ-ment is cancelled due to their failure to fulfil their responsibilities lose their rights and shares are returned at no consideration under the scheme. As at 31 December 2009 the Company has recognised an expense of BAM 337 thousand (2008: BAM 185 thousand) as personnel costs with a corresponding increase in liabilities in relation to the share based payments scheme. This represents that portion of the fair value of the shares that accrue to the participants of the scheme at 31 December 2009. The Company estimates that 56% of the employees participating in the scheme will meet all of the conditions.

PROVISIONS

OTHER LONG TERM LIABILITIES

SHARE CAPITAL

TREASURY SHARES

Treasury shares relate to shares that have been transferred to the Company from employees, as employees have lost right on these shares net of shares that have been reissued to employees.

RESERVES

During the year the Company transferred BAM 4,930 thousand to statutory reserves. In accordance with the Law on Enterprises the Company is obliged to have under the statutory reserves an amount which represents 25% of share capital.

DIVIDENDS

The General Assembly at a meeting held on 20 June 2009 ap-proved dividends of BAM 2,191 thousand from the net profit from 2008 which represented BAM 0.28 per share. The amount unpaid at 31 December 2009 is BAM 593 thousand.

EMPLOYEE BENEFITS

26

27

28

59

(All amounts are expressed in thousands of BAM)

2009

516

437

953

69

69

2008

523

184

707

-

-

Non current employee benefits

Retirement awards

Cash-settled share-based payment liability

Current employee benefits

Cash-settled share-based payment liability

(All amounts are expressed in thousands of BAM)

2009

-

2008

85Other long term liabilities

(All amounts are expressed in thousands of BAM)

As at 1 January 2009

Provision made during the period

Provision released during the period

As at 31 December 2009

Court cases

133

-

(99)

34

21

22

23

24

25

Common shares with nominal

value of BAM 10

Less: IFC puttable shares

classified as liabilities (Note 31)

Less: treasury shares

(Note 22)

Number

of shares

7.829.987

(655.729)

-

7.174.258

Number

of shares

7.829.987

(655.729)

(6.828)

7.167.430

2009 2008

Restated

KM’000

78.299

(6.557)

-

71.742

KM’000

78.299

(6.557)

(182)

71.560

Annual Financial Statements31 December 2009

Page 61: Annual Report 2009

60

TRADE AND OTHER PAYABLES

DERIVATIVE FINANCIAL INSTRUMENTS

IFC has an option to sell all or part of 655,729 shares held in Bosnali-jek to Bosnalijek at any time during the exercise period, based on the exercise price agreed in the contract. The exercise period is up until 2012 and the exercise price is based on the percentage of share-holding multiplied by the net sales of the previous financial year.

OPERATING LEASESLeases as lessee

Operating lease rentals are payable as follows:

The Company leases a number of premises for representative offices in Russia, Ukraine, Albania and Moldavia. In addition, leases also include premises in Banja Luka and premise at University in Sarajevo. All leasing contracts are for one year.

30

31

32

Less than one year2008

394

394

2009

385

385

(All amounts are expressed in thousands of BAM)

BAM’000

7.648

1.656

9.304

Beginning balance

Net increase in fair value of derivative liability

Ending balance

(All amounts are expressed in thousands of BAM)

2008

7.997

1.939

9.936

2.946

3.516

481

-

-

432

17.311

Trade payables – foreign

Trade payables – domestic

Trade payables

Salaries payable

Accrued expenses

VAT payables

Dividends payable

Advance payments received

Other liabilities

2009

8.325

3.311

11.636

3.742

7.396

-

593

539

342

24.248

LOANS AND BORROWIGS

* Due to the breach of IFC loan covenants, IFC loan is classified as current liability (see Note 36). The interest rates and terms of repayment for the Company at 31 December 2009 are as follows:

The loans are secured by pledged property plant and equipment (see Note 14).

29

(All amounts are expressed in thousands of BAM)

Total

2009

5,606

2,000

1,139

2,339

1,650

2,600

2,400

2,500

2,730

2,000

24,964

1 godina

ili manje

5.606

611

158

325

1.650

2.600

2.400

2.500

2.730

2.000

20.580

1-2

godine

-

667

170

349

-

-

-

-

-

-

1.186

3-4

godine

-

55

195

401

-

-

-

-

-

-

651

2-3

godine

-

667

182

374

-

-

-

-

-

-

1.223

Više od 4

godine

-

-

434

890

-

-

-

-

-

-

1.324

Krediti i pozajmice

Osigurani

Instrumenti sa varijabilnom

kamatnom stopom

IFC EUR 7.5 miliona.

Euribor +3,514%

UniCredit Bank, EUR 1.023 hiljade,

6 mjeseci Euribor +6%

Instrumenti sa fiksnom

kamatnom stopom

BOR Banka, USD 890 hiljada. 7%

BOR Banka, USD 1.722 hiljade. 7%

UniCredit Bank, 6,8%

Intesa San Paolo banka d.d.. 5,8%

Intesa San Paolo banka d.d.. 5,8%

Intesa San Paolo banka d.d.. 5,8%

Intesa San Paolo banka d.d.. 5,8%

Bosna Bank International d.d., 6,8%

Krediti i pozajmice

(All amounts are expressed in thousands of BAM)

2009

2.995

1.389

4.384

5.606

483

611

13.880

20.580

24.964

2008

1.159

-

1.159

8.096

77

-

14.652

22.825

23.984

Non current liabilities

Loan received from BOR Banka d.d Sarajevo

Loan received from UniCredit Bank

Current liabilities

Loan received from International Finance Corporation (“IFC”)*

Loan received from BOR Banka d.d Sarajevo

Loan received from UniCredit Bank

Other loans

Total loans and borrowings

Annual Financial Statements31 December 2009

Page 62: Annual Report 2009

61

33

(i)

(ii)

(iii)

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors moni-tors the return on capital, which the Company defines as result from operating activities divided by total shareholders’ equity, ex-cluding non-redeemable preference shares and non-controlling interests. The Board of Directors also monitors the level of divi-dends to ordinary shareholders. The Company’s debt to capital ratio at the end of the reporting period was as follows:

There were no changes in the Company’s approach to capital management during the year.Exposure to credit, interest and currency risk arises in the normal course of the Company’s business.

FINANCIAL RISK MANAGEMENT

Financial risk management

The Company has exposure to the following risks from its use of

financial instruments:

• Credit risk

• Liquidity risk

• Market riskThis note presents information about the Company’s exposures to each of the above risk, the Company’s objectives, policies and pro-cesses for measuring and managing risk, and the Company’s man-agement of capital. Further quantitative disclosures are included through these financial statements.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contrac-tual obligations, and arises principally from the Company’s receiv-ables from customers.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company believes it has no significant exposure to liquidity risk.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rate, interest rates and equity prices will affect the Com-pany’s income or value of its holdings of financial instruments. The Company believes it has no significant exposure to market risk.

(All amounts are expressed in thousands of BAM)

2008

49.868

(2.051)

47.817

107.094

0.45

Total liabilities

Less: cash and cash equivalents

Net debt

Total equity

Debt to capital ratio at 31 December

2009

59.572

(3.439)

56.133

113.892

0.49

Annual Financial Statements31 December 2009

Page 63: Annual Report 2009

62

Credit risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:

The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:

Impairment losses

The ageing of trade receivables at the reporting date was:

The movement in the allowance for impairment in respect of receivables during the year was as follows:

Liquidity risk

The following are the contractual maturities of financial liabilities:

(All amounts are expressed in thousands of BAM)

More

than 5

years

-

711

439

Carrying

amount

11.636

24.964

1.476

Contractual

Cash flows

11.636

26.697

1.795

6 months

or less

11.636

5.815

492

6-12

Months

-

12.695

284

1-2

Years

-

4.020

258

2-5

Years

-

3.456

322

31 December 2009

Non-derivative

financial liabilities

Trade and other

payables

Interest bearing loans

and borrowings

Guarantees given

Carrying

amount

9.936

23.984

779

Contractual

Cash flows

9.936

26.725

1.118

6 months

or less

9.936

3.451

102

6-12

Months

-

15.704

103

1-2

Years

-

3.090

95

2-5

Years

-

4.006

285

More

than 5

years

-

474

533

(All amounts are expressed in thousands of BAM)

31. decembar 2008.

Non-derivative

financial liabilities

Trade and other

payables

Interest bearing loans

and borrowings

Guarantees given

(All amounts are expressed in thousands of BAM)

Note

17,18

20

Loans and receivables

Cash and cash equivalents

2009

61.389

3.439

64.828

2008

45.193

2.051

47.244

(All amounts are expressed in thousands of BAM)

2009

30.262

26.317

56.579

2008

22.877

17.781

40.658

Domestic

Foreign

(All amounts are expressed in thousands of BAM)

2009

56.579

2008

40.658Wholesale customer

(All amounts are expressed in thousands of BAM)

2009

38.371

13.088

5.120

56.579

2008

32.062

7.226

1.370

40.658

Non past due

Past due 0 to 90 days

Past due over 90 days

(All amounts are expressed in thousands of BAM)

2009

1.943

216

2.159

2008

2.405

(462)

1.943

Balance at 1 January

Impairment loss recognised/(reversed)

Balance at 31 December

Annual Financial Statements31 December 2009

Page 64: Annual Report 2009

Interest rate risk

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:

Fair values

The fair value of financial assets and liabilities correspond to their carrying values.

EARNINGS PER SHARE

Basic and diluted earnings per share

RELATED PARTY TRANSACTIONS

Director’s and executives remunerations

The remuneration of management and Supervisory Board

members during the year was as follows:

Currency risk

Exposure to currency risk

The Company incurs foreign currency risk on sales, purchases and short term loans receivable that are denominated in a currency other than convertible mark. The currencies giving rise to this risk is primarily Euro. These exposures are not currently hedged.The Company’s exposure to foreign currency risk was as follows based in functional currency:

The following significant exchange rate applied during the year:

63

34

35

2009

1,95583

1,36409

2009

1,95583

1,40855

2008

1,95583

1,38731

2008

1,95583

1,33174

Average rate Reporting date spot rate

EUR

USD

BAM

1.274

32.010

(3.311)

(13.880)

16.093

BAM

1.608

24.233

(1.939)

(14.622)

9.280

EUR

-

26.397

(8.069)

(7.606)

10.722

EUR

-

17.995

(7.715)

(8.127)

2.153

USD

-

331

(224)

(3.478)

(3.371)

USD

-

373

(267)

(1.235)

(1.129)

Other

-

-

(32)

-

(32)

Other

-

-

(15)

-

(15)

Short term

loans receivable

Trade receivables

Trade payables

Interest bearing loans

and borrowings

Gross balance

sheet exposure

2009 2008

(All amounts are expressed in thousands of BAM)

(All amounts are expressed in thousands of BAM)

2009

1.274

(17.358)

(16.084)

-

(7.606)

(7.606)

2008

1.608

(15.887)

(14.279)

-

(8.097)

(8.097)

Fixed rate instruments

Financial assets

Financial liabilities

Variable rate instruments

Financial assets

Financial liabilities

2009

8.989

7.827

1,15

2008

8.207

6.505

1,26

Profit after tax in BAM

Average number of issued shares

Earnings per share (in BAM)

(All amounts are expressed in thousands of BAM)

Gross salaries

Bonuses

Other benefits

2009

824

640

29

1.493

2008

884

668

108

1.660

Annual Financial Statements31 December 2009

Page 65: Annual Report 2009

64

36 CONTINGENT LIABILITIES

Bank guarantees

Contingent liabilities for bank guarantees issued to BOR Banka d.d amount to BAM 1,100 thousand (2008: BAM 800 thousand), Intesa Sanpaolo d.d. amount to BAM 450 thousand (2008: nil) and Triglav BH Osiguranje d.d. amount to BAM 300 thousand (2008: nil) and relate to obligations of third parties to these banks, Bosna Bank International d.d. amount to BAM 245 thousand to Indirect Tax Authorities, BAM 31 thousand to Department of Health Insurance and BAM 470 thousand to Cantonal Agency for Privatization, Uni-Credit Bank amount to BAM 295 thousand to SFC Umwelttechnik GmbH Salzburg.

Tax inspection

In March 2009, the Company was subject to tax inspection. The results of this inspection was that the Company is liable to pay ad-ditional amounts to tax authorities. The Company does not believe that an amount totalling BAM 925 thousand, claimed as a result of the tax inspection, related to years from 2004 to 2008 is valid and has appealed against this claim to Federal Ministry of Finance. Fed-eral Ministry of Finance has issued a resolution which abolishes the decision made by tax authorities and the case was returned back to tax authorities for reconsideration.

Noncompliance with covenants included inProject Loan Agreement with IFC

According to the Loan Agreement between the Company and IFC dated 9 June 2005 (the “Third Loan Agreement”), the Company is obliged to maintain procedures, records and accounts adequate to reflect the operations in accordance with internationally ac-cepted accounting standards and certain financial conditions. The Company failed to comply with the terms, covenants, provisions, or conditions of Article VI, section 6.02 Negative Covenants of the Loan Agreement between the Company and IFC dated 9 June 2005 (the “Third Loan Agreement”) as they relate to financial and accounting matters. The Company did not comply with the fol-lowing covenants:

• “Derivatives transactions“ 6.02 (e);

• “Guarantee or assume the Liabilities of others“ provision of

section 6.02 (f );

• “Mortgages“ provision of section 6.02 (g);

• “Branches or subsidiaries” provision of section 6.02 (j);Due to the above breaches the total loan was classified as current, as early repayment of the long term loans could be demanded.

COMMITMENTS

At 31 December 2009 the Company has capital commitments of BAM 10 million (2008: BAM 10 million). The Company has signed agreement with KJP ZOI’84 OCS d.o.o. regarding development of the tourism complex on the Bjelašnica mountain. The deadline for the finalisation of the development is two years, starting from the date when the Company obtains all blinding permits. The Compa-ny is still waiting on approval from Water and Sanitary Inspection. The Company has given BAM 470 thousand to Cantonal Agency for Privatization as a guarantee for the execution of investment commitments.

37

Annual Financial Statements31 December 2009

Page 66: Annual Report 2009

Fair value of share based employee benefits

As at 31 December 2009 the Company has made provision for share based employee benefits option, see Note 26. The manage-ment is of the opinion that provision for share based employee benefits is adequate based on the available information.

Revenue recognition

As at 31 December 2009 the Company has made provision for financial and other rebates. These provisions are based on the analysis of the contractual obligations, historical trends and man-agement experience. The management is of the opinion that provision for financial and other rebates is adequate based on the available information.

OWNERSHIP STRUCTURE

The ownership structure of the Company is as follows:

The above ownership structure includes shareholding of IFC (See Note 21) and shares issued to employees as part of a share-based payment arrangement in 2008 (See Note 26).

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on expectations of future events that are believed to be rea-sonable under the circumstances.Certain accounting estimates in applying Company’s and Com-pany’s accounting policies are described below:

Provisions

Provisions have been estimated on each balance sheet date taking into account probability of future sacrifice of economic benefits and taking into account the risk and uncertainties surrounding the obligation.

Impairment of receivables

Trade receivables are estimated on each balance sheet date and are impaired according to the estimate of the probability to collect the amount stated. Each customer is valuated separately based on the ageing of the amount due, security of payment and estimated probability to collect the outstanding amount.

Income tax

Tax calculations are performed based on the Company’s inter-pretation of current tax laws and regulations. These calculations which support the tax return may be subjected to review and ap-proval by the local tax authority.

Fair value of derivative instruments

As at 31 December 2009 the Company has made provision for IFC PUT option, see Note 31. The management is of the opinion that provision for derivative financial instruments is adequate based on the available information.

38

39

65

Federation of Bosnia and Herzegovina

World Bank, Washington D.C (IFC)

General People’s Committee of Finance Libya

Employees

Other shareholders

Number of

shares ‘000

1.508

656

687

645

4.334

7.830

Number of

shares ‘000

1.508

656

687

645

4.334

7.830

Ownership

19,26

8,38

8,77

8,24

55,35

100,00%

Ownership

19,26

8,38

8,77

8,24

55,35

100,00%

31 December 2009 31 December 2008

Annual Financial Statements31 December 2009

Page 67: Annual Report 2009

Company SecretaryMeliha BegovićTel.: + 387 33 254 490Fax: + 387 33 664 971e-mail: [email protected]

Domestic Marketing and Sales Abdul – Umid Šalaka, directorTel.: + 387 33 254 415Fax: + 387 33 664 975e-mail: [email protected]

Foreign Marketing and SalesAmar Arslanagić, directorTel.: + 387 33 254 404Fax: + 387 33 216 676e-mail: [email protected]

South East Europe RegionAziz Šukalo, directorTel.: + 387 33 254 525 Fax: + 387 33 216 018e-mail: [email protected]

CIS and Russia RegionSamir Telibečirović, directorTel.: + 387 33 254 515 Fax: + 387 33 216 018e-mail: [email protected]

Middle East, Africa and Asia RegionNermin Kadrić, directorTel.: + 387 33 254 426Fax: + 387 33 216 676e-mail: [email protected]

Chief Executive OfficerEdin ArslanagićTel.: + 387 33 212 920Fax: + 387 33 664 971e-mail: [email protected]

Assistant to the CEO Ljiljana KamberovićTel.: + 387 33 254 421Fax: + 387 33 254 472e-mail: [email protected]

Executive Director ofProduction and DevelopmentBelma AbazovićTel.: + 387 33 254 405 Fax: + 387 33 560 653 e-mail: [email protected]

Executive Director ofQuality and RegulationNermin ZubčevićTel.: + 387 33 254 405 Fax: + 387 33 560 653 e-mail: [email protected]

Executive Director of General Finance Šefik HandžićTel.: + 387 33 254 401Fax: + 387 33 664 971e-mail: [email protected]

Executive Directorof Corporate Finance and CommunicationsNedim VilogoracTel.: + 387 33 254 421Fax: + 387 33 254 472e-mail: [email protected]

66 Who is Who in Bosnalijek ‘09

WHO IS WHO IN BOSNALIJEK

Page 68: Annual Report 2009

MaintenanceAlen Jakupović, directorTel.: +387 33 254 480Fax: + 387 33 665 443 e-mail: [email protected]

Registration and Regulatory AffairsMidhat Vehabović, directorTel.: + 387 33 254 411 Fax: + 387 33 665 925e-mail: [email protected]

Quality and Environmental Management Aida Durmo, directorTel.: + 387 33 254 407Fax: + 387 33 254 538e-mail: [email protected]

Materials Management Ljunora Mavrić, directorTel.: + 387 33 254 530Fax: + 387 33 664 974e-mail: [email protected]

Quality Control Samira Omerović, directorTel.: + 387 33 254 420Fax: + 387 33 665 442e-mail: [email protected]

Legal Department Edin Buljubašić, directorTel.: + 387 33 560 608 Fax: + 387 33 221 288e-mail: [email protected]

General Services Feriha Šarenkapa, directorTel.: + 387 33 254 406Fax: + 387 33 254 514e-mail: [email protected]

Strategic MarketingAmela Šuman, directorTel.: +387 33 254 421Fax: + 387 33 254 472 e-mail: [email protected]

Public Relations Zinaida Babović, directorTel.: + 387 33 254 458Fax: + 387 33 254 466e-mail: [email protected]

Human ResourcesEma Borovina, directorTel.: + 387 33 254 531Fax: + 387 33 254 466e-mail: [email protected]

Corporate FinanceMirjana Lasić, directorTel.: + 387 33 254 438Fax: + 387 33 664 971e-mail: [email protected]

ITAmela Hasović, directorTel.: + 387 33 254 468Fax: + 387 33 560 652e-mail: [email protected]

ManufacturingSamra Sladić, directorTel.: + 387 33 254 422Fax: + 387 33 665 443e-mail: [email protected]

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Who is Who in Bosnalijek ‘09 67

Page 69: Annual Report 2009

REPRESENTATIVEOFFICES ANDAGENCIESABROAD

Representative Office inKosovaBulevardi Nënë Terezë No. 40/7, Priština, KosovaTel: + 381 38 247 820Fax: + 381 38 247 817e-mail: [email protected] person: Genc Bućinca, Representative Office Director

Representative Office in SerbiaCara Nikolaja II 61/B, 11 000Beograd, SerbiaTel: + 381 11 244 3838Fax: + 381 11 308 7333Mob: + 381 64 822 6407e-mail: [email protected] Contact person: Jasmina Novaković, Representative Office Director

Representative Office inAlbaniaBrigada e VIII Street,Building Nr.8, 4*floor, Apt.Nr.6,Tirana, AlbaniaTel: + 355 4 4500738Contact person: Anila TumpejRepresentative Office Director

Representative Office in RussiaVavilova, d. 85, of. 3., 117335,Moskva, RussiaTel/fax: + 7 495 771 76 32Tel/fax: + 7 499 134 80 34 e-mail: [email protected] person: Nedim Uzunović, Representative Office Director

Representative Office inGeorgia Distributer: GPC JSC6, Sanapiro Str. Tbilisi 0108Tel: +995 32 952802Fax: +995 32 940740web: www.gpc.gee-mail: [email protected] Contact person: Anna.Yablunchaskaya

Representative Office inUkraineRaisa Okipnaya 4 of 81,Kiev 02 002, UkraineTel/fax: + 380 44 569 5703 e-mail: [email protected] [email protected] person: Oksana Kogay, Representative Office Director

Representative Office inAzerbaijanDistributer: IISTANBUL ILAÇ MMC28 May kűç. 5, men. 77, 1000 BakuTel: +994 12 598 00 17Fax: +994 12 493 53 87e-mail: [email protected] person: Sabina Musayeva

Representative Office in MoldovaStr. Petru Movila 23/2,office 22, 2001 ChrisinauTel: + 373 22 21 09 14Tel/fax: + 373 22 24 31 92e-mail: [email protected] person: Stella Grama, Representative Office Director

Representative Office in CroatiaGruška 18, 10 000 Zagreb, CroatiaTel: + 385 1 615 71 22Fax: + 385 1 615 72 37e-mail: [email protected] person: Zoran Grgurev, Representative Office Director

Representative Office inMacedoniaBulevar Partizanski odredi br. 101,1000 Skopje, MacedoniaTel: + 389 2 30 90 230 + 389 2 30 90 240Fax: + 389 2 30 90 255e-mail: [email protected] Contact person: Mara Akimovska,Representative Office Director

Representative Office inMontenegroBulevar Svetog PetraCetinjskog Velikog 63,81 000 Podgorica, MontenegroTel/fax: + 382 20 248 920 + 382 20 248 921e-mail: [email protected] person: Biljana Popović,Representative Office Director

South East Europe Region

CIS and Russia Region

68 Representative offices and agencies abroad ‘09

Page 70: Annual Report 2009

Agent for French-speaking African countriesDISPOPHARM Distribution & Promotion Ltd.Gewerbestrasse 184123 Allschwill, SwitzerlandTel: + 41 61 487 96 36 Fax : + 00 41 61 487 96 20E-mail : [email protected] person: Denis Trébucien i Anna Vallat

Agent in SudanMedcare for Medical & Chemical Imports Co LTDP.O.Box :10778 , Shohada Ashora Street Elsagana, Building No.(39), Block No.3/B, KhartoumRepublic Of Sudan Tel: + 249 183 480512Fax: + 249 183 480511e-mail: [email protected] Contact person: Tarig Moh.Osman Khairy

Representative Office inAlgeria09 rue Mohamed GARIDI,deuxième étage, Kouba,AlgerAlgerieTel: + 213 05 57 631 783e-mail: [email protected] person: Kamel Guesmi

Agent in LybiaYashfeen Medical CompanyAlmenshya Sreeet – Ben Ashour streetTripoli – LybiaTel: + 218 21 725 8732Fax: + 218 21 483 1614e-mail: [email protected] person: Abdulkhalek Mhanni

Agent in KuwaitAgent „Yanbua Al-Khaleey International“Gen.Trad.Co.W.I.I.P.O.Box 629, Salmya, KuwaitTel: + 965 433 25 38Fax: + 965 433 25 36Mob: + 965 989 9660e-mail: [email protected] person: Alamaladin M.Adi

Agent in QatarAgent „Qatar Pharmacy Establishment“P.O.Box 390, Doha, QatarTel: + 974 432 0887 Fax: + 974 432 0933Mob: + 974 542 3074e-mail: [email protected] person: Samer Al-Otaibi

Agent in YemenAgent „Al-Saadah Corporation“Ali.A Mugni St. Beside Tag Sheba Hotel SaanaP.O.Box 5102, Saana, YemenTel: + 9671 272214 + 9671 297955Fax: + 9671 283678e-mail: [email protected] person: Ahmad Saeed Mohammed Hasan

Agent for United Arab Emirates PharmatradeP.O.Box :11397, 1 St Floor,Abdul Rehman Al Bahar Building,Deira, Dubai, United Arab EmiratesTel: + 971 4 2666 158Fax: +971 4 2690 942e-mail: [email protected] person: Azza El Sveissy

Middle East, Africa and Asia Region

Representative offices and agencies abroad ‘09 69

Republic of CroatiaBosnalijek d.o.o.Gruška 18, 10 000 Zagreb, CroatiaTel: + 385 1 615 71 22Fax: + 385 1 615 72 37e-mail: [email protected] person: Marina Terzić, director

Republic of MacedoniaBosfarm DOOEL SkopjeBulevar Partizanski odredi br. 101,1000 Skopje, MacedoniaTel: + 389 2 30 90 230 + 389 2 30 90 240Fax: + 389 2 30 90 255e-mail: [email protected] person: Marija Dimitrovska, director

COMPANIESABROAD

Page 71: Annual Report 2009

ADRENALINadrenalinAMINOL®atenololAMLODIL®amlodipineAMOXIBOS®amoxicillinAMPIBOS®ampicillinANGINAL®isosorbide mononitrateAPNEX®aminophyllineARGEDIN®silver sulfadiazineATROPINatropineAZOMEX®azithromycinBETHAGEN®bethamethasone,gentamicinBETHANAT®bethamethasoneBETHASAL®bethamethasone,salicylic acidBOLDOL®tramadolBOSALGIN®metamizole sodiumBOSAURIN®diazepamBOSNYL®sulpiride

BOSOPTIN®verapamilCEPHABOS®cephalexinCEZOLIN®cefazolinCINARIZINcinnarizineCIPROL®ciprofloxacinCLODIL®clopidogrelDIABOS®glibenclamideDIFEN®diclofenac sodiumDIFEN® diclofenac potassiumDILATREND®carvedilolDOXAT®doxazosinDUOCLAR®clarithromycinENTEROFURYL®nifuroxazideESBESUL®sulphamethoxasole,trimethoprimFAVISTAN®thiamazoleFENIX®pantoprazoleFLEXOFEN®

PRESCRIPTION DRUGS

FLUSETIN®fluoxetineFORDEX®metforminFUNZOL®fluconazoleGENTAMICINgentamicinHEPALIP FORTE®essential phospholipids,vitaminsKETOBOS®ketoprofenLANIBOS®digoxinLIDOKAINlidocaineLIDOKAIN 2% ADRENALINlidocaine, adrenalineLODIX®furosemideLOPRIL®lisinoprilLOPRIL®H/ LOPRIL®H pluslisinopril, hydrochlorothiazideLOSTOP®loratadineMETROZOL®metronidazoleMONOCLAR®clarithromycinNAF®sodium fluorideNELOREN®lincomycin

NITROGLICEROL®glyceryl trinitrateNIZON®prednisoneNOMIGREN®ergotamine tartarate,mecloxamine citrate, camilofine, caffeine, propyphenasoneNORACIN®norfloxacinONTRIL®salbutamolPYLOMID®metoclopramideRANIBOS®ranitidineROXAM®piroxicamTENLOP®losartanTENLOP® Hlosartan, hydrochlorothiazideTOREM®torasemideTOZAR®atorvastatinTRAZEM®nitrazepamTRIAX®ceftriaxoneULCOSAN®omeprazoleXICLAV®/ XICLAV 2X®amoxicillin, clavulanic acid

PRODUCT PORTFOLIO

70 Product Portfolio ‘09

Page 72: Annual Report 2009

BOSPYRIN®acetylsalicylic acidBOSTROMBIN®heparin sodium, alantoine, dexpanthenolBRONCHOBOS®carbocisteineCOFADON®propyphenasone,paracetamol,caffeine, codeineCVit®ascorbic acid

DIFEN®diclofenac diethylamineKAMFART®benzyl nicotinate, methyl salicylate,menthol, camphorKOFAN instant®propyphenasone,paracetamol, caffeineLIDOPROCT®lidocaine, hydrocortisone,Al-subacetate, Zn-oxideLYSOBACT®lysozyme, pyridoxine

RHINOSTOP®paracetamol,pseudoephedrine hydrocloride,chlorphenamine maleateRODAVAN N®dimenhydrinateSTOMATIDIN®hexetidineVENOSAN®escin, essential phospholipids,heparinVITAMINE A&E®vitamins A palmitat, tocopherol

MAGALOX® Al-hydroxide, Mg-oxideAl-hydroxide, Mg-hydroxidePARACETAMOLparacetamolPILFUD®minoxidilPOLIBEVIT®B complex vitaminsRANIBOS®ranitidineREUKAP®/REUKAP P®ephedrine

OTC DRUGS

Nutritionalsupplements

ROYAL JELLYroyal jelly

Medical devices

GOLDERM®sucralfat

Disinfectants

HIBIBOS Gchlorhexidine gluconateHIBIBOS Tchlorhexidine gluconateIZOSEPT Ppovidone-iodineIZOSEPT Dpovidone-iodine

Other products

ASEPTANalcoholic solutionALKOSOLalcoholic solutionBAKTICIDalcoholic solutionBENZAL 5benzalkonium solution5% chloride

Product Portfolio ‘09 71

Page 73: Annual Report 2009

BOSNALIJEK d.d. Mirza PašalićBEMUST

PUBLISHER:DESIGN:

PRINT:

www.bosnalijek.ba

+ serving Health

Page 74: Annual Report 2009

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Annu

al Re

port ‘09

Annual Report+Independent auditors’ report ‘09

www.bosnalijek.ba

+ serving Health

+ serving HealthBOSNALIJEK - Pharmaceutical and chemical industry, joint stock company Jukićeva 53, Sarajevo, Bosnia and Herzegovina tel: + 387 33 25 44 00, fax: + 387 33 66 49 71 www.bosnalijek.ba, [email protected]

www.bosnalijek.ba

RESPONSIBILITY PROFESSIONALISM COMPETENCE/EXPERTISE TEAM WORK/COOPERATION OPEN COMMUNICATION/HONESTY RESPECT