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Deloitte & Associés Immeuble Castel Office 7 boulevard Jacques Saadé Quai de la Joliette – CS 90607 13235 Marseille Cedex 02 France

Téléphone : + 33 (0) 4 91 59 84 30 Télécopieur : + 33 (0) 4 91 59 84 59 www.deloitte.fr

Société par actions simplifiée au capital de 2 188 160 €

Société d’Expertise Comptable inscrite au Tableau de l’Ordre de Provence - Alpes - Côte d’Azur Société de Commissariat aux Comptes inscrite à la Compagnie Régionale de Versailles 572 028 041 RCS Nanterre

TVA : FR 02 572 028 041 Une entité du réseau Deloitte

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F-3

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (amounts in thousands of euro)

Year Ended December 31,

Note 2017 2018⁽¹⁾ 2019⁽²⁾

ASSETS

Non-current assets

Intangible assets 6 46,192 84,529 96,968

Property and equipment 7 10,729 10,216 11,672

Non-current financial assets 4 60,469 35,181 37,005

Other non-current assets 111 86 89

Trade receivables and other - non-current 5 - - 16,737

Deferred tax assets 17 - 1,561 1,286

Total non-current assets 117,501 131,574 163,756

Current assets

Cash and cash equivalents 4 99,367 152,314 202,887

Short-term investments 4 16,743 15,217 15,978

Trade receivables and other - current 5 21,412 152,112 18,740

Total current assets 137,521 319,643 237,605

TOTAL ASSETS 255,023 451,216 401,361

LIABILITIES AND SHAREHOLDERS' EQUITY

Shareholders' equity

Share capital 11 2,880 3,197 3,941

Share premium 11 234,874 299,932 369,617

Retained earnings (103,595 ) (137,840 ) (134,912 )

Other reserves 180 (1,099 ) (472 )

Net income (loss) (48,385 ) 3,049 (20,759 )

Total shareholders’ equity 85,956 167,240 217,416

Non-current liabilities

Collaboration liabilities – non-current portion 13 - 10,669 - Financial liabilities – non-current portion 9 4,521 3,175 16,593

Defined benefit obligations 10 2,621 3,697 3,760

Deferred revenue – non-current portion 13 87,005 68,098 40,342

Provisions – non-current portion 18 1,012 38 142

Deferred tax liabilities 17 - 1,561 1,286

Total non-current liabilities 95,158 87,238 62,123

Current liabilities

Trade payables and others 8 24,657 91,655 49,504

Collaboration liabilities – current portion 13 - 20,987 21,304

Financial liabilities – current portion 9 1,343 1,347 2,130

Deferred revenue – current portion 13 47,909 82,096 48,770

Provisions – current portion 18 - 652 114

Total current liabilities 73,909 196,737 121,822

TOTAL LIABILITIES AND SHAREHOLDERS'

EQUITY 255,023 451,216 401,361

(1) The consolidated financial statements as of and for the year ended December 31, 2018 include the impacts of the first application of IFRS 9 and IFRS 15 standards that became applicable on January 1, 2018. The comparative consolidated financial information as of and for the year ended December 31, 2017 has not been restated. See Note 2.d and 2.e for more details on transition measures.

(2) The consolidated financial statements as of and for the year ended December 31, 2019 reflect the impacts of the adoption of IFRS 16 that became applicable on January 1, 2019. The Company applied the modified retrospective transition method. As a consequence, the comparative consolidated financial information as of and for the years ended December 31, 2017 and 2018 have not been restated. See Note 2.f for more details on the impact of the transition.

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F-4

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(amounts in thousands of euro, except share and per share data)

Year ended December 31,

Note 2017 2018⁽¹⁾ 2019⁽²⁾

Revenue and other income

Revenue from collaboration and licensing agreements 13 32,631 79,892 68,974 Government financing for research expenditures 13 11,402 14,060 16,840

Total revenue and other income 44,033 93,952 85,814

Operating expenses

Research and development expenses 14 (67,000 ) (69,555 ) (78,844 )

Selling, general and administrative expenses 14 (17,015 ) (18,142 ) (25,803 )

Total operating expenses (84,015 ) (87,697 ) (104,647 )

Net income (loss) from distribution agreements 15 - (1,109 ) (8,219 )

Operating income (loss) (39,983 ) 5,146 (27,052 )

Financial income 16 2,501 6,002 11,269

Financial expenses 16 (10,535 ) (8,429 ) (4,976 )

Net financial income (loss) (8,034 ) (2,427 ) 6,293

Net income (loss) before tax (48,016 ) 2,718 (20,759 )

Income tax expense 17 (368 ) 333 -

Net income (loss) (48,385 ) 3,049 (20,759 )

Basic income (loss) per share (€/share) 20 (0.89 ) 0.05 (0.31 ) Diluted income (loss) per share (€/share) 20 (0.89 ) 0.05 (0.31 )

________

(1) The consolidated financial statements as of and for the year ended December 31, 2018 include the impacts of the first application of IFRS 9 and IFRS 15 standards that became applicable on January 1, 2018. The comparative consolidated financial information as of and for the year ended December 31, 2017 have not been restated. See Note 2.d and 2.e for more details on transition measures.

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F-5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands of euro)

(In thousands of euro) Year Ended December 31,

Note 2017 2018⁽¹⁾ 2019⁽²⁾

Net income (loss) for the period (48,385 ) 3,049 (20,759 )

Elements which will be reclassified in the consolidated statement of

income (loss):

Change in fair value of short-term investments and non-current financial

assets 4 437

Foreign currency translation gain (loss) 68 (26 ) 5

Items which will not be reclassified in the consolidated statement of

income (loss):

Actuarial gains and (losses) related to defined benefit obligations 10 178 (599 ) 622

Other comprehensive income (loss) 683 (625 ) 627

Total comprehensive income (loss) (47,702 ) 2,424 (20,132 )

_______

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F-6

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,

Note 2017 2018⁽¹⁾ 2019⁽²⁾

Net income (loss) (48,385 ) 3,049 (20,759 )

Reconciliation of the net income (loss) and the cash generated from

(used for) the operating activities

Depreciation and amortization 6, 7 4,393 7,401 16,529

Employee benefits costs 10 381 477 685

Provisions for charges 877 (322 ) (484 )

Share-based compensation expense 14 9,829 2,707 3,826

Change in fair value of financial assets 4 (26 ) 3,786 (4,065 )

Foreign exchange (gains) losses on financial assets 4 3,381 (1,341 ) (280 ) Change in accrued interests on financial assets 4 (204 ) 152 (237 )

Interest received on financial assets (1,442 ) (1,445 ) (1,290 )

Interest paid 16 113 102 204

Other profit or loss items with no cash effect - - 550

Operating cash flow before change in working capital (31,080 ) 14,566 (5,321 )

Change in working capital (16,980 ) (47,096 ) 40,245

Net cash generated from / (used in) operating activities (48,060 ) (32,529 ) 34,924

Acquisition of intangible assets 6,8 (3,062 ) (556 ) (64,130 )

Acquisition of property and equipment, net 7,8 (2,964 ) (873 ) (1,271 )

Purchase of current financial instruments 4 (2,543 ) - -

Purchase of non-current financial instruments 4 (40,728 ) - -

Disposal of property and equipment 50 22 -

Disposal of other assets - 25 (10 )

Disposal of current financial instruments 4 5,646 2,704 -

Disposal of non-current financial instruments 4 11,895 21,513 2,000

Interest received on financial assets 1,442 1,445 1,290

Net cash generated from / (used in) investing activities (29,460 ) 24,279 (62,121 ) Proceeds from the exercise / subscription of equity instruments 491 111 44

Increase in capital, net 62,557 66,006

Proceeds from borrowings 9 1,739 - 13,900

Repayment of borrowings 9 (1,202 ) (1,343 ) (1,982 )

Net interest paid (113 ) (102 ) (204 )

Net cash generated from financing activities 915 61,222 77,765

Effect of the exchange rate changes 66 (26 ) 5

Net increase / (decrease) in cash and cash equivalents (76,539 ) 52,947 50,572 Cash and cash equivalents at the beginning of the year 4 175,906 99,367 152,314 Cash and cash equivalents at the end of the year 4 99,367 152,314 202,887

______

(2) The consolidated financial statements as of and for the year ended December 31, 2019 reflect the impacts of the adoption of IFRS 16 that became applicable on January 1, 2019. The Company applied the modified retrospective transition method. As a consequence,; the comparative consolidated financial information as of and for the years ended December 31, 2017 and 2018 have not been restated. See Note 2.f for more details on the impact of the transition.

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F-7

Change in working capital Note

December 31, 2018

December 31,

2019 Variance Trade receivables and others (excluding rebates related to capital

expenditures) 5 139,012 28,716 110,296

Trade payables and others (excluding payables related to capital

expenditures) 8 (34,662 ) (36,047 ) 1,385

Collaboration liabilities - current and non-current portion 13 (31,656 ) (21,304 ) (10,352 ) Deferred revenue - current and non-current portion 13 (150,195 ) (89,112 ) (61,083 )

Change in working capital (77,501 ) (117,747 ) 40,246

Change in working capital Note

December 31, 2017

December 31,

2018 Variance

IFRS 15 restatements (1)

Variance excluding IFRS 15 Trade receivables and others (excluding rebates

related to capital expenditures) 5 21,412 139,012 (117,6 ) - (117,600 ) Trade payables and others (excluding payables

related to capital expenditures) 8 (24,583 ) (34,662 ) 10,079 5,156 15,235 Collaboration liabilities - current and non-current

portion 13 - (31,656 ) 31,656 (44,751 ) (13,095 )

Deferred revenue - current and non-current portion 13 (134,914 ) (150,195 ) 15,281 53,083 68,364 Change in working capital (138,085 ) (77,501 ) (60,584 ) 13,488 (47,096 )

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F-8

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(amounts in thousands of euro, except share data)

Note

Number of shares

Share capital

Share premium

Retained earnings

Other reserves

Net income

(loss) Total Equity January 1, 2017 53,921,304 2,696 187,571 (116,235 ) (503 ) 12,640 86,169

Net loss - - - (48,385 ) (48,385 )

Change in fair value of short-term investments and non-current financials

assets 4 - - - - 437 - 437

Actuarial gains on defined benefit

obligations 10 - - - - 178 - 178

Foreign currency translation gain - - - - 68 - 68

Total comprehensive loss - - - - 683 (48,385 ) (47,702 ) Allocation of prior period income - - - 12,640 - (12,640 ) - Exercise and subscription of equity

instruments 11 341,979 17 474 - - - 491

Shares issued for the acquisition of C5aR

intangible asset 11,1,1 3,343,748 167 36,999 - - - 37,166

Share-based payment 11,14 - - 9,829 - - - 9,829

December 31, 2017 57,607,031 2,880 234,874 (103,593 ) 180 (48,385 ) 85,956 Impact related to the first application of

IFRS 9 - - - 653 (653 ) - -

Impact related to the first application of

IFRS 15 - - - 13,488 - - 13,488

January 1, 2018 (after impact related to the first application of IFRS 9 and IFRS

15) ⁽¹⁾ 57,607,031 2,880 234,874 (89,454 ) (473 ) (48,385 ) 99,444

Net income - - - - 3,049 3,049

Actuarial losses on defined benefit

obligations - - - - (599 ) - (599 )

Foreign currency translation loss - - - - (26 ) - (26 )

Total comprehensive income - - - - (625 ) 3,049 2,424 Allocation of prior period loss - - - (48,385 ) - 48,385 - Exercise and subscription of equity

instruments 72,055 4 107 - - - 111

Increase in capital, net 6,260,500 313 62,244 - - - 62,557

December 31, 2018 63,939,586 3,197 299,932 (137,840 ) (1,099 ) 3,049 167,240 Impact related to the first application of

IFRS 16 - - (121 ) - - (121 )

January 1, 2019 (after impact related to

the first application of IFRS 16) ⁽²⁾ 63,939,586 3,197 299,932 (137,961 ) (1,099 ) 3,049 167,119

Net loss - - - (20,759 ) (20,759 )

Actuarial losses on defined benefit

obligations - - - - 622 - 622

Foreign currency translation gain - - - - 5 - 5

Total comprehensive loss - - - - 627 (20,759 ) (20,132 ) Allocation of prior period income - - - 3,049 - (3,049 ) - Exercise and subscription of equity

instruments 11 511,035 26 20 - - - 46

Increase capital, net 11 14,375,000 719 65,839 - - - 66,558

December 31, 2019 78,825,621 3,941 369,617 (134,912 ) (472 ) (20,759 ) 217,416

(1) The consolidated financial statements as of and for the year ended December 31, 2018 include the impacts of the first application of IFRS 9 and IFRS 15 standards that became applicable on January 1, 2018. The comparative consolidated financial information as of and for the year ended December 31, 2017 have not been restated. See Note 2.d et 2.e for more details on transition measures.

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F-9

NOTES TO FINANCIAL STATEMENTS

Note 1: The company

Innate Pharma S.A. (the “Company” and together with its subsidiaries, referred to as the “Group”) is a biotechnology company focused on discovering, developing and commercializing first-in-class therapeutic antibodies designed to harness the immune system for the treatment of oncology indications with significant unmet medical need.

The Company has extensive experience in research and development in immuno-oncology, having been pioneers in the understanding of natural killer cell, or NK cell, biology, and later expanding its expertise in the tumor microenvironment, tumor antigens and antibody engineering fields. The Company has built, internally and through its business development strategy, a broad and diversified portfolio including an approved product, three clinical product candidates and a robust preclinical pipeline. The Company has entered into collaborations with leaders in the biopharmaceutical industry, such as AstraZeneca and Sanofi.

From its inception, the Company has incurred losses due to its research and development (“R&D”) activity. The financial year ended December 31, 2019 generated a €20,759 thousand net loss. As of December 31, 2019, the shareholders’ equity amounted to €217,416 thousand. Subject to potential new milestone payments related to its collaboration agreements, the Company anticipates incurring additional losses until such time, if ever, that it can generate significant revenue from its product candidates in development.

The Company’s future operations are highly dependent on a combination of factors, including: (i) the success of its R&D; (ii) regulatory approval and market acceptance of the Company’s future product candidates; (iii) the timely and successful completion of additional financing; and (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies. As a result, the Company is and should continue, in the short to mid- term, to be financed through partnership agreements for the development and commercialization of its drug candidates and through the issuance of new equity instruments.

The Company’s activity is not subject to seasonal fluctuations.

As of December 31, 2019, the Company had two wholly owned subsidiaries: Innate Pharma, Inc.,

incorporated under the laws of Delaware in 2009, and Innate Pharma France SAS, incorporated under the laws of France in 2018.

Innate Inc.'s vocation is to market Innate Pharma's products in the United States, in particular Lumoxiti.

Innate Pharma France SAS aims in particular to:

(i) exploit any commercial license granted by a third-party;

(ii) to carry out, on its behalf or on behalf of third parties, all research, development, studies, development of production and marketing processes for products of pharmaceutical interest and more generally relevant the health sector;

(iii) the registration or granting of any patent or license relating directly or indirectly to its activity;

(iv) manufacture, import and distribute drugs intended for human experimentation;

(v) manufacture, use and import medicines and other products whose sale is reserved for pharmacists.

These two subsidiaries are fully consolidated.

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F-10 1. 1. Significant contracts

The following paragraphs describe the key provisions of significant contracts.

a) Agreements related to monalizumab with Novo Nordisk A/S and with AstraZeneca

2014 Novo Nordisk A/S monalizumab agreement

On February 5, 2014, the Company acquired from Novo Nordisk A/S full development and commercialization rights to monalizumab. Novo Nordisk A/S received €2.0 million in cash and 600,000 ordinary shares at a price of

€8.33 per share (€5.0 million). Novo Nordisk A/S is eligible to receive up to €20.0 million in potential regulatory milestones and single-digit tiered royalties on sales of monalizumab products. The agreement with Novo Nordisk A/S included a right to additional consideration in the event of an out-licensing agreement. Consequently, following the agreement signed with AstraZeneca in April 2015 (as described below), the Company paid to Novo Nordisk A/S additional consideration of €6.5 million (paid in April 2016). Following the exercise of the option by AstraZeneca in October 2018 (as described below), Novo Nordisk A/S became entitled to a second and final additional payment amounting to $15.0 million (€13.1 million) which was recognized as a liability as of December 31, 2018 and was paid in February 2019. There are no other potential additional milestones payments due to Novo Nordisk A/S. These amounts were added to the net book value of the intangible asset and are amortized according to the same amortization plan as the initial €7.0 million recognized in 2014. The net book value of the license amounted to €7.9 million as of December 31, 2019.

Refer to Notes 2.k, 2.l and 6 for accounting description.

2015 AstraZeneca monalizumab agreements

Under co-development and option agreements signed with AstraZeneca in 2015, the Company granted to AstraZeneca an exclusive license, subject to certain exclusions, to certain of its patents and know-how to develop, manufacture and commercialize licensed products, including monalizumab, in the field of diagnosis, prevention and treatment of oncology diseases and conditions. The Company further granted to AstraZeneca a worldwide, non- exclusive license to certain of its other patents to develop, manufacture and commercialize licensed products, including monalizumab, in the field of diagnosis, prevention and treatment of oncology diseases and conditions.

The Company received an initial payment of $250 million under these agreements in June 2015, of which $100 million was paid to the Company as an initial payment for the co-development agreement and $150 million was paid to the Company as consideration for the option agreement. On October 22, 2018, AstraZeneca exercised this option, triggering the payment of $100.0 million, which was received by the Company in January 2019.

Following the option exercise, AstraZeneca became the lead party in developing the licensed products and must use commercially reasonable efforts to develop, obtain regulatory approval for and commercialize each licensed product in certain major markets.

In addition to the initial payment and option exercise payment, AstraZeneca is obligated to pay the Company up to $925 million in the aggregate upon the achievement of certain development and regulatory milestones ($500 million) and commercialization milestones ($425 million). The Company is eligible to receive tiered royalties ranging from a low double-digit to mid-teen percentage on net sales of licensed products outside of Europe. The Company is required for a defined period of time to co-fund 30% of the Phase III clinical trials of licensed products, subject to an aggregate cap, in order to receive 50% of the profits in Europe.

In July 31, 2019, the Company notified AstraZeneca of its decision to co-fund a future monalizumab Phase III clinical development program.

If the Company had chosen not to exercise its option of co-promoting licensed products in certain European countries, it would have forfeited the option to co-promote licensed products under the agreement, and its right to

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F-11

share in 50% of such profits would terminate and sales in Europe would have been instead be factored into net sales used to calculate royalty and milestone payments to it. Additionally, Phase III and regulatory milestone payments that may be payable to the Company would have been reduced and AstraZeneca would have been responsible for the promotion of licensed products worldwide, subject to the Company’s option to co-promote the licensed products in certain European countries. In addition, its share of profits in Europe would have been reduced by a specified amount of percentage points not to exceed the mid-single digits

Refer to Notes 2.a, 2.s and 13.a for accounting description.

b) Agreement related to Lumoxiti with AstraZeneca

In October 2018, the Company obtained an exclusive license from AstraZeneca under certain patents and know-how to develop, manufacture and commercialize Lumoxiti for all uses in humans and animals in the United States, the European Union and Switzerland. Under this Agreement, AstraZeneca is obligated to provide support for the continued development and commercialization of Lumoxiti in the European Union and Switzerland prior to regulatory submission and approval as well as support for the continued commercialization of Lumoxiti in the United States for a specified period. The Company initiated in 2019 to transition to full commercialization responsibilities, which is expected to be completed by the end of 2020. Under the agreement, the Company was obligated to pay a $50.0 million initial payment (€43.8 million), which it paid in January 2019, and a $15.0 million regulatory milestone (€13.4 million), which was paid in January 2020. The Company has reimbursed and will reimburse AstraZeneca for the development, production and commercialization costs it incurs during the transition period.

Refer to Notes 2.t and 15 for accounting description.

c) Agreement related to IPH5201 with AstraZeneca

In October 2018, the Company signed a collaboration and option agreement with AstraZeneca for co- development and co-commercialization of IPH5201. Under the agreement, AstraZeneca paid the Company a $50.0 million upfront payment ($26.0 million paid in October 2018 and $24.0 million paid in January 2019), and is obligated to pay the Company up to an aggregate of $10.0 million upon the achievement of certain development milestones.

Upon exercise of its option under the agreement, AstraZeneca is committed to pay an option exercise fee of $25.0 million and up to $800.0 million in the aggregate upon the achievement of certain development and regulatory milestones ($300 million) and commercialization milestones ($500 million). The arrangement also provides for a 50%

profit share in Europe if the Company opts into certain co-promoting and late stage co-funding obligations. In addition, we would be eligible to receive tiered royalties ranging from a high-single digit to mid-teen percentage on net sales of IPH5201, or from a mid-single digit to low-double digit percentage on net sales of other types of licensed products, outside of Europe. The royalties payable to us under the agreement may be reduced under certain circumstances, including loss of exclusivity or lack of patent protection. The Company recognized €18.8 million as revenue from proceeds related to this agreement for the year ended December 31, 2019, and was also reimbursed by AstraZeneca for certain research and development expenses related to IPH5201. The Company has the option to co-fund 30% of the shared development expenses related to the Phase III clinical trials in order to acquire co-promotion rights and to share in 50% of the profits and losses of licensed products in Europe. If the Company does not opt into the co-funding obligations, among other things, its right to share in 50% of the profits and losses in Europe and right to co-promote in certain European countries will terminate and will be replaced by rights to receive royalties on net sales at the rates applicable to outside of Europe. Additionally, certain milestone payments that may be payable to the Company would be materially reduced.

Refer to Notes 2.s and 13.b for accounting description.

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F-12

d) Agreement related to additional preclinical molecules with AstraZeneca

In October 2018, the Company granted to AstraZeneca four exclusive options that are exercisable until IND approval to obtain a worldwide, royalty-bearing, exclusive license to certain of the Company’s patents and know-how relating to certain specified pipeline candidates to develop and commercialize optioned products in all fields of use.

Pursuant to the agreement, AstraZeneca paid the Company a $20.0 million upfront payment (€17.5 million) in October 2018. The Company recognizes this upfront payment in the consolidated statement of financial position as deferred revenue as of December 31, 2018, until the exercise or the termination of each option at the earliest. Upon exercise of an option, the Company would be entitled to an option exercise payment of $35 million, as well as development and regulatory milestone payments ($320 million) and commercialization milestone payments ($500 million) and tiered, mid-single digit to mid-teen percentage royalties on net sales of the applicable product. The royalties payable to the Company may be reduced under certain circumstances, including loss of exclusivity, lack of patent protection or the specific nature of the compound included within the applicable product. Additionally, the Company would have rights to co-fund certain development costs in order to obtain profit and loss sharing in Europe. So long as the Company elects to co-fund such development costs, it will have a right to co-promote optioned products in Europe.

Refer to Notes 2.s and 13.c for accounting description.

e) Agreements related to avdoralimab with Novo Nordisk and with AstraZeneca

2017 avdoralimab in-licensing agreement with Novo Nordisk A/S

In July 2017, the Company signed an exclusive license agreement with Novo Nordisk A/S relating to avdoralimab. Under the agreement, Novo Nordisk A/S granted the Company a worldwide, exclusive license to develop, manufacture and commercialize pharmaceutical products that contain or comprise an anti-C5aR antibody, including avdoralimab. The Company made an upfront payment of €40.0 million, €37.2 million of which was contributed in new shares and €2.8 million of which in cash. The Company is obligated to pay up to an aggregate of €370.0 million upon the achievement of development, regulatory and sales milestones and tiered royalties ranging from a low double-digit to low-teen percentage of net sales.

Refer to Notes 2.g, 2.i and 6 for accounting description.

2018 avdoralimab AstraZeneca agreement

On January 1, 2018, the Company entered into a clinical trial collaboration agreement with AstraZeneca to sponsor a Phase I/II clinical trial (STELLAR-001) to evaluate the safety and efficacy of durvalumab, an anti-PD-L1 immune checkpoint inhibitor, in combination with avdoralimab, as a treatment for patients with select solid tumors. The Company is the sponsor of the trial and the costs are equally shared between the two partners. This collaboration is a non-exclusive agreement and does not include any licensing rights on avdoralimab to AstraZeneca.

Refer to Notes 2.s and 13.d for accounting description.

1.2 Key events

a) Key events for the year ended December 31, 2019

In January 2019, the Company has received $100 million (€87.7 million) from AstraZeneca in relation to monalizumab agreement and $24 million (€21.1 million) from AstraZeneca in relation to IPH5201 agreement. Both payments were recorded as trade receivables as of December 31, 2018.

In January 2019 and February 2019, the Company has paid $50 million (€43.8 million) to AstraZeneca in relation to Lumoxiti agreement and $15million (€13.1million) to Novo Nordisk A/S in relation to monalizumab rights, respectively. Both amounts were recorded as trade payables - payables related to capital expenditures as of December 31, 2018.

On June 3, 2019, the Company signed an agreement with Orega Biotech amending the license agreement signed on January 4, 2016. Pursuant to this agreement, the Company was required to pay Orega Biotech an amount of €7million as consideration following the collaboration and option agreement signed on October 22, 2018 with AstraZeneca regarding IPH5201(anti-CD39). The payment was made in June 2019 and has been accounted for as an increase of the Company’s intangible asset related to IPH5201. The agreement also includes potential additional payments in the aggregate of €51.5million

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by the Company to Orega Biotech in connection with the completion of development and regulatory milestones, as well mid- single digit to low-teen percentage payments, depending on determinations relating to Orega Biotech’s intellectual property rights for certain patents, on sublicensing revenues the Company receives pursuant to its agreement with AstraZeneca relating to IPH5201.

On July 31, 2019, the Company notified AstraZeneca of its decision to co-fund a future monalizumab Phase III clinical development program.

On September 26, 2019, the Company announced that AstraZeneca will advance monalizumab into a Phase III randomized clinical trial evaluating monalizumab in combination with cetuximab in patients suffering from recurrent or

metastatic squamous cell carcinoma of the head and neck (SCCHN), and both partners will co-fund the trial. The trial initiation is expected in 2020, subject to regulatory and compliance approvals, and will generate to the Company a $100 million milestone payment at dosing of the first patient.

On August 30, 2019, the Company drew down the remaining portion of the €15.2 million loan granted in July 2017 by Société Générale, for an amount of €13.9 million. The repayment schedule started on August 30, 2019.

In October 2019, Innate Pharma successfully completed its global offering, including its initial public offering on the Nasdaq Global Select Market raising approximately $79.1 million (€71.4 million) ) in gross proceeds (€66.0 million net

proceeds) from the sale of American Depositary Shares (ADS) in the United States and a European Private Placement of ordinary shares. The global offering resulted in the issuance of 14,375,000 new ordinary shares, comprising 9,922,227 ADSs, at an offering price of $5.50 per ADS, and 4,452,773 ordinary shares in a concurrent European private placement (including France) at an offering price of €4.97 per ordinary share. Each ADS represents one ordinary share.

On November 22, 2019, AstraZeneca submitted to the European Medicines Agency (EMA) the Marketing Authorization Application (MAA) relating to the commercialization of Lumoxiti in Europe. According to the agreement related to Lumoxiti with AstraZeneca. According to the related agreement, AstraZeneca is entitled to a $15.0 million milestone that was paid by the Company in January 2020.

2) Accounting policies and statement of compliance

a) Basis of preparation

Consolidated financial statements of the Company for the years ended December 31, 2017, 2018 and 2019 (the “Consolidated Financial Statements”) have been prepared under the responsibility of the management of the Company in accordance with the underlying assumptions of going concern as the Company’s loss-making situation is explained by the innovative nature of the products developed, therefore involving a multi-year research and development phase.

The general accounting conventions were applied in compliance with the principle of prudence, in accordance with the underlying assumptions namely (i) going concern, (ii) permanence of accounting methods from one year to the next and (iii) independence of financial years, and in conformity with the general rules for the preparation and presentation of consolidated financial statements in accordance with IFRS, as defined below.

Except for share data and per share amounts, the Consolidated Financial Statements are presented in thousands of euro. Amounts are rounded up or down to the nearest whole number for the calculation of certain financial data and other information contained in these accounts. Accordingly, the total amounts presented in certain tables may not be the exact sum of the preceding figures

b) Statement of compliance

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”) and were approved and authorized for issuance by the Board of Directors of the Company on March 9, 2020.

Due to the listing of ordinary shares of the Company on Euronext Paris and in accordance with the European Union’s regulation No. 1606/2002 of July 19, 2002, the Consolidated Financial Statements of the Company for the years ended December 31, 2017, 2018 and 2019 are also prepared in accordance with IFRS, as adopted by the European Union (EU). For the years ended December 31, 2017, 2018 and 2019, all IFRS that the IASB had published and that are mandatory are the same as those endorsed by the EU and mandatory in the EU. As a result, the Consolidated Financial Statements comply with International Financial Reporting Standards as published by the IASB and as adopted by the EU.

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F-14

IFRS include International Financial Reporting Standards (IFRS), International Accounting Standards (“IAS”), as well as the interpretations issued by the Standing Interpretations Committee (“SIC”), and the International Financial Reporting

Interpretations Committee (“IFRIC”). The main accounting methods used to prepare the Consolidated Financial Statements are described below. These methods were used for all periods presented.

c) Recently issued accounting standards and interpretations

Application of the following new and amended standards was mandatory for the first time for the financial period beginning on January 1, 2018 and, as such, they have been adopted by the Company:

• IFRS 9, which supersedes IAS 39; and

• IFRS 15, which supersedes IAS 11, IAS 18 and the corresponding interpretations (IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31).

Application of the following new and amended standards is mandatory for the first time for the financial period beginning on January 1, 2019 and, as such, they have been adopted by the Company:

• IFRS 16 “Leases”, which supersedes IAS 17 and the corresponding interpretations (IFRIC 4, SIC 15 and SIC 27).

• Amendments to IAS 19 “Employee benefits—Plan Amendment, Curtailment or Settlement”, mandatory for annual periods beginning on or after January 1, 2019.

• Amendments to IAS 28 regarding “Long-term interests in associates and Joint-Ventures”.

• Amendments to IFRS 9 “Financial instruments—Prepayment features with negative compensation”.

• IFRIC 23 “Uncertainty over income tax treatments”.

• Annual improvements of the cycle 2015-2017 (amendments to IAS 12, IAS 23, IFRS 3 and IFRS 11).

Those standards and interpretations have no impact on the Consolidated Financial statements, except as noted below following IFRS 9, IFRS 15 and IFRS 16 application.

New standards, amendments to existing standards and subsequent interpretations have been published but are not applicable in 2019.

• IFRS 17 "Insurance Contracts", published on May 18, 2017 and which will come into force on January 1, 2021.

• Amendment to IFRS 3 "Definition of a business", published on October 22, 2018 and applicable from January 1, 2020.

• Amendments to IAS 1 and IAS 8 relating to the modification of the definition of the term “significant”, published on October 31, 2018 and applicable on January 1, 2020.

• Modification of references to the Conceptual Framework in IFRS standards, applicable from January 1, 2020.

The Company has not early adopted these new accounting standards, amendments and interpretations. These new accounting standards, amendments and interpretations will not have significant impact on our financial statements.

d) Adoption of IFRS 15

IFRS 15 Revenue from contracts with customers, or IFRS 15, which supersedes IAS 11 Construction contracts, or IAS 11, and IAS 18 Revenue, or IAS 18, came into effect on January 1, 2018. The amended accounting policy applied to revenue is presented in Note 2.ss.

The Company decided to apply the modified retrospective approach without any of the practical expedients allowed by IFRS 15. According to this approach, the comparative information is not restated and the cumulative impact of the first application is presented as an adjustment of the opening equity of the year of first application. The modified retrospective approach does not present comparative information, but requires a comparison for the first application year of each financial statement line item affected by the application of this standard as compared to IAS 11, IAS 18 and related interpretations that were in effect before the change. This comparison is presented below.

The impact of the adoption of IFRS 15 is limited to the accounting treatment of the contributions paid by the Company pursuant to its co-financing under the collaboration agreement with AstraZeneca related to monalizumab. Until December 31, 2017, under IAS 18, the Company’s co-financing share of R&D expenses incurred by AstraZeneca were recognized as R&D expenses.

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F-15

In the context of the collaboration agreement with AstraZeneca, the Company and AstraZeneca make quarterly-cost sharing payments to one another to ensure that each party co-finances the R&D performed by AstraZeneca. Consequently, under IFRS 15, amounts due to the partner:

• Are no longer recognized as R&D expenses, but are recorded as a reduction of the transaction price recorded as revenue following the identified performance obligation under the collaboration agreement; and

• Are classified in collaboration liability in the consolidated statement of financial position (instead of a classification in deferred revenue under IAS 18).

When a collaboration liability is denominated in a foreign currency, which is the case in the context of this AstraZeneca agreement, it is translated at each reporting date with the appropriate exchange rate, resulting in foreign exchange gains or losses recorded in the consolidated statement of income (loss).

Application of IFRS 15 generated a deferred tax liability of €3,098 thousand as of January 1, 2018. The Company recorded a deferred tax asset equaling the amount of deferred tax liability as of January 1, 2018 as a result of tax losses carryforward.

The impact of the first adoption of IFRS 15 on the statement of financial position and the consolidated statement of income (loss) as of January 1, 2018 are presented below:

(amounts in thousands of euro)

December 31, 2017 as published

IFRS 15 restatement

January 1, 2018 restated

ASSETS

Deferred tax assets - 3,098 3,098

Total current assets 137,521 - 137,521

TOTAL ASSETS 255,023 3,098 258,121

LIABILITIES AND SHAREHOLDERS'S EQUITY

Shareholder's Equity

Reserves (103,595 ) 13,488 (90,107 )

Total shareholders’ equity 85,956 13,488 99,444

Collaboration liabilities—non-current portion - 17,314 17,314

Deferred revenue—non-current portion 87,005 (25,246 ) 61,759

Deferred tax liabilities - 3,098 3,098

Total non-current liabilities 95,158 (4,834 ) 90,324

Trade payables and others 24,657 (5,156 ) 19,501

Collaboration liabilities—current portion - 27,437 27,437

Deferred revenue—current portion 47,909 (27,837 ) 20,072

Total current liabilities 73,909 (5,556 ) 68,353

TOTAL LIABILITIES AND SHAREHOLDERS'S EQUITY 255,023 3,098 258,121

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F-16

As of December 31, 2018 as

published IFRS 15 impact

As of December 31, 2018, excluding IFRS

15 impacts

ASSETS

Deferred tax assets 1,561 (1,561 ) -

Total non-current assets 131,574 (1,561 ) 130,013

TOTAL ASSETS 451,216 (1,561 ) 449,655

LIABILITIES AND SHAREHOLDERS'S EQUITY

Shareholder's Equity

Retained earnings (138,939 ) (13,488 ) (152,427 )

Net result 3,049 7,349 10,398

Total shareholders’ equity 167,240 (6,139 ) 161,101

Collaboration liabilities—non-current portion 10,669 (10,669 ) -

Deferred revenue—non-current portion 68,098 7,958 76,056

Deferred tax liabilities 1,561 (1,561 ) -

Total non-current liabilities 87,238 (4,272 ) 82,966

Trade payables and others 91,655 3,382 95,037

Collaboration liabilities—current portion 20,987 (20,987 ) -

Deferred revenue—current portion 82,096 26,455 108,551

Total current liabilities 196,737 8,850 205,587

TOTAL LIABILITIES AND SHAREHOLDERS'S EQUITY 451,216 (1,561 ) 449,655

Year ended December 31,

2018 as

published IFRS 15

Year ended December 31, 2018, excluding IFRS 15 impact Revenue from collaboration and licensing agreements 79,892 21,033 100,925

Government financing for research expenditures 1,4060 - 1,406

Revenue and other income 93,952 21,033 114,985

Research and development expenses (69,555 ) (15,542 ) (85,097 )

Selling, general and administrative expenses (18,142 ) - (18,142 )

Operating expenses (87,697 ) (15,542 ) (103,239 )

Net income (loss) from distribution agreements (1,109 ) - (1,109 )

Operating income 5,146 5,491 10,637

Financial income 6,002 - 6,002

Financial expenses (8,429 ) 1,858 (6,571 )

Net financial income (loss) (2,427 ) 1,858 (569 )

Net income before tax 2,718 7,349 10,067

Income tax 333 - 333

Net income 3,049 7,349 10,397

(in € per share)

Basic income per share 0.05 0.18

Diluted income per share 0.05 0.18

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F-17 e) Adoption of IFRS 9

IFRS 9 Financial instruments, or IFRS 9, which supersedes IAS 39 Financial instruments: recognition and measurement, or IAS 39, came into effect on January 1, 2018. IFRS 9 defines new principles covering the classification and measurement of financial instruments, the recognition of impairment provisions for credit risk on financial assets and hedge accounting. The Company has applied IFRS 9 as of January 1, 2018 by recording the cumulative impact in opening equity at this transition date.

Regarding financial instruments, IFRS 9 requires, for non-derivative financial assets, a change of name of the sub- categories of financial assets without, however, modifying the valuation principles of these assets, which remain either at fair value or amortized cost. The valuation models used by the Company remain unchanged.

The modification of the impairment principles for financial assets measured at amortized cost, which now consists of adopting an approach based on expected losses, in practice has resulted in the Company not recognizing impairment and mainly impacts trade receivables, which were nil as of January 1, 2018.

The only impact of IFRS 9 on the financial statements of the Company concerns the recognition of the variance in fair value of the mutual funds. Under IAS 39, the variance in fair value of these financial assets was recognized in other

comprehensive income. Under IFRS 9, it will be recognized in the statement of income. Following the application of the standard, the impact on the opening statement of financial position is a reclassification from the cumulated comprehensive income to retained earnings in an amount of €653 thousand.

The amended accounting policy applied to financial instruments is presented in Note 2.j.

f) Adoption of IFRS 16

IFRS 16 was issued in January 2016 and it replaces IAS 17—Leases, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases-Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease.” IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees—leases of “low-value” assets (e.g., personal computers) and short-term leases (including leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee recognizes a liability to make lease payments, or the lease liability, and an asset representing the right to use the underlying asset during the lease term, or the right-of-use asset. Lessees are required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. The change in presentation of operating lease expenses results in a corresponding increase in cash flows from operating activities and a decrease in cash flows from financing activities.

According to the new standard, the Company determined the lease term including any lessee’s extension or termination option that is deemed reasonably certain. The assessment of such options was performed at the commencement of a lease and required judgment by the management. Measuring the lease liability at the present value of the remaining lease payments required using an appropriate discount rate in accordance with IFRS 16. The discount rate is the interest rate implicit in the lease or if that cannot be determined, the incremental borrowing rate at the date of the lease commencement. The incremental borrowing rate can have a significant impact on the net present value of the right-of use asset and lease liability recognized and requires judgement.

Lessees remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee generally recognizes the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Following analysis carried out by the Company, the contracts impacted by this new standard mainly relate to the rental of premises.

With respect to the transition method, the Company has opted for the modified retrospective approach to contracts previously reported as leases under IAS 17 or IFRIC 4, and, therefore, will only recognize leases on its statement of financial position as of January 1, 2019. Accordingly, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is presented as an adjustment to retained earnings. As of January 1, 2019, the right of use is recognized as assets for their net value (as if IFRS 16 had always been applied) and the present value of the remaining payments is recognized as a liability.

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The Company applies the following practical expedients as allowed by IFRS 16:

• Apply a single discount rate to the assets with similar characteristics;

• Use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease;

• Exclude lease contracts for which the lease term ends within 12 months as of the date of initial application, thus considering them short-term lease contracts; and

• Exclude leases of assets with a replacement value of less than approximately €5 thousand.

The impact of the first adoption of IFRS 16 on the statement of financial position as of January 1, 2019 is presented below:

December 31, 2018 as published

IFRS 16 restatement

January 1, 2019 restated

ASSETS

Property and equipment 10,216 1,097 11,313

TOTAL ASSETS 451,216 1,097 452,313

LIABILITIES AND SHAREHOLDERS' EQUITY

Financial liabilities - current portion 1,347 320 1,667

Total current liabilities 196,737 320 197,057

Financial liabilities - non-current portion 3,175 848 4,023

Provision - non-current portion 38 50 88

Total non-current liabilities 87,238 898 88,136

Retained earnings (137,840 ) (121 ) (137,961 )

Total shareholders' equity 167,240 (121 ) 167,119

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 451,216 1,097 452,313

The weighted average incremental borrowing rate applied by the Company to lease liabilities recognized in the consolidated financial statements as of January 1, 2019 was 2.01%.

The reconciliation between the lease liabilities accounted for at January 1, 2019 and the non-cancellable lease commitments disclosed as of December 31, 2018 is as follow:

Commitments related to operating leases agreements as of December 31, 2018 769

Lease liabilities related to financial leases as of December 31, 2018 2,098

Lease extension (Building "Le Virage") 445

Discount effect (46 )

Exemption 0

Lease liabilities as of January 1, 2019 3,266

IFRS 16 application has no material impact on the consolidated statements of cash flows and the consolidated statements of income (loss) for the year ended December 31, 2019.

g) Change in accounting policies

Except for the adoption of IFRS 9 and IFRS 15 as of January 1, 2018 and the adoption of IFRS 16 as of January 2019, there has been no change in accounting policies for any of the years presented.

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F-19 h) Translation of transactions denominated in foreign currency

Pursuant to IAS 21 The effects of changes in foreign exchange rates, transactions performed by consolidated entities in currencies other than their functional currency are translated at the prevailing exchange rate on the transaction date.

Trade receivables and payables and liabilities denominated in a currency other than the functional currency are translated at the period-end exchange rate. Unrealized gains and losses arising from translation are recognized in net operating income.

Foreign exchange gains and losses arising from the translation of inter-Group transactions or receivables or payables denominated in currencies other than the functional currency of the entity are recognized in the line “net financial income (loss)”

of the consolidated statements of income (loss).

Foreign currency transactions are translated into the presentation currency using the following exchange rates:

December 31, 2017 December 31, 2018 December 31, 2019

€1 EQUALS TO

AVERAGE RATE

CLOSING RATE

CLOSING RATE USD 1.1297 1.1993 1.1810 1.1450 1.1195 1.1234

i) Consolidation method

The Group applies IFRS 10 Consolidated financial statements. IFRS 10 presents a single consolidation model identifying control as the criteria for consolidating an entity. An investor controls an investee if it has the power over the entity, is exposed or has rights to variable returns from its involvement with the entity and has the ability to use its power over the entity to affect the amount of the investor’s returns. Subsidiaries are entities over which the Company exercises control. They are fully consolidated from the date the Group obtains control and are deconsolidated from the date the Group ceases to exercise control. Intercompany balances and transactions are eliminated.

j) Financial instruments

Financial assets

Financial assets are initially measured at fair value plus directly attributable transaction costs in the case of instruments not measured at fair value through profit or loss. Directly attributable transaction costs of financial assets measured at fair value through profit or loss are recorded in the consolidated statement of income (loss).

Under IFRS 9, financial assets are classified in the following three categories:

• Financial assets at amortized cost;

• Financial assets at fair value through other comprehensive income (“FVOCI”); and

• Financial assets at fair value through profit or loss.

The classification of financial assets depends on:

• The characteristics of the contractual cash flows of the financial assets; and

• The business model that the entity follows for the management of the financial asset.

Financial assets at amortized cost

Financial assets are measured at amortized cost when (i) they are not designated as financial assets at fair value through profit or loss, (ii) they are held within a business model whose objective is to hold assets in order to collect contractual cash flows and (iii) they give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI” criterion). They are subsequently measured at amortized cost, determined using the effective interest method (“EIR”), less any expected impairment losses in relation to the credit risk. Interest income, exchange gains and losses, impairment losses and gains and losses arising on derecognition are all recorded in the consolidated statement of income (loss).

This category primarily includes trade receivables, as well as other loans and receivables. Long-term loans and receivables that are not interest-bearing or that bear interest at a below-market rate are discounted when the amounts involved are material.